In a big move, in early May 2021, the Department of Telecommunications (DoT) gave permission to Indian telcos to carry out 5G trials in the country. According to DoT, it has granted permission to Reliance Jio, Bharti Airtel, Vodafone Idea Limited and Mahanagar Telephone Nigam Limited (MTNL). The telcos will be partnering with vendors including Ericsson, Nokia, Samsung and the Centre for Development of Telematics (C-DOT) for the trials. Jio is likely to use its own indigenous technology to conduct these trials.
The go-ahead for 5G trials has been a long time coming, with approval originally expected in 2019. These permissions will help telcos in validating the 5G frequencies that can be used for commercial launch and India-specific use cases. DoT’s move allowing telcos to use their own spectrum for trials in addition to the experimental spectrum allotted by the department is being well received by the industry.
Over the past many months, telcos, including Reliance Jio and Bharti Airtel, have taken initial steps towards 5G, signalling their readiness for commercial launch. Jio has confirmed that it is developing a home-grown, indigenous 5G network. It is also working on making its own massive MIMO and 5G small cell equipment for commercial deployment. Meanwhile, Bharti Airtel, in January 2021, undertook a 5G test over its network in Hyderabad through non-stand-alone (NSA) network technology. The telco had stated that its network is 5G ready and just needs regulatory approvals to enable the software update to offer 5G services.
The permit to run trials comes at a time when the industry is contemplating a delay in 5G spectrum auctions owing to the catastrophic second wave of the Covid-19 pandemic. Industry analysts are certain that the earlier proposed timeline of December 2021 will be pushed to March 2022 or even 2022-23 if the situation continues to be grim. In a recent earnings call, Gopal Vittal, chief executive officer, Bharti Airtel, India and South Asia, stated that the raging pandemic is expected to delay the much-awaited 5G spectrum auction to either the end of financial year 2022 or 2023.
Interestingly, this delay in auctions, coupled with the upcoming trials, bodes well for all stakeholders. There are several decisions pending, relating to the quantum of spectrum, bands, pricing, etc., and policymakers can use the interim to deliberate on these subjects. Telcos and service providers can, meanwhile, use this period to work on their capex requirements, build infrastructure and develop India-specific 5G use cases.
The pricing of spectrum continues to be a big bone of contention between policymakers and telcos. The base price of Rs 4.92 billion per MHz for 5G spectrum recommended by the Telecom Regulatory Authority of India is one of the highest in the world, and has been vehemently opposed by telcos. As per a recent report by India Ratings and Research (Ind-Ra), such a high reserve price can yield only a 7 per cent return on capital for telcos.
As for spectrum allocation, preparations have been made for the sale of mid-band frequencies between 3.3 GHz and 3.6 GHz for 5G, whereas other countries across the globe are looking at several other bands. The government is yet to clarify whether it will also auction millimetre wave (mmWave) spectrum in 26-28 GHz, something that Indian operators have been lobbying for. It is believed that mmWave-supported 5G will bring the technology’s true potential to the fore as it offers a huge capacity boost, making it ideal for areas with a large footfall, such as airports and stadiums. However, mmWave spectrum performs poorly on coverage and penetration characteristics and thus calls for a massive upgrade in telcos’ existing telecom networks.
India has a lot of catching up to do on this front. There continues to be a massive requirement for small cells and fibre, on towers and underground, to support such high speed, low latency services. A 5G cell site transmits large volumes of data (several GB), which cannot be supported by the current backhaul networks. Rapid fiberisation and the use of microwave and satellite technologies will be the key to modernising the transport network for backhaul services. Such massive network modernisation will come at a huge cost. While the financial credit profile of Reliance Jio is comfortable and that of Bharti Airtel has improved in the past few quarters, the extent of capex that these telcos are willing to incur for 5G is yet to be seen. In its recent earnings calls, Vittal stated that it expects Airtel’s capex spend in financial year 2021-22 to be around Rs 192 billion, of which big sums will likely go towards upgrading the transport systems to improve the 5G readiness of Airtel’s countrywide network. Despite policy and operational hurdles, customer interest in the technology seems to be high. A recent study by Ericsson ConsumerLab shows that at least 40 million smartphone users in India could switch to the technology in the first year of implementation. In fact, India has seen the highest rise in the intention to upgrade, with 67 per cent of users expressing an intention to take up 5G once it is available. Apart from this, the report stated that Indian consumers are willing to pay as much as 50 per cent more for 5G plans that come with digital services.
Over the next few months, India’s 5G trajectory will be guided by technology trials. Much will depend on the bands selected by each telco to run 5G tests. Experts expect that spectrum in the 1800 MHz, 2100 MHz, 2300 MHz as well as the 800 MHz and the 900 MHz bands is likely to find favour among telcos. The trials will also help DoT in planning how much spectrum should be put up for auction and in which bands. Furthermore, the move will help determine 5G viability across rural and semi-urban areas since it is mandatory for telcos to conduct trials in these areas as well.
As noted by Lt General S.P. Kochhar, director general, Cellular Operators Association of India, “5G trials will stimulate the local research and development ecosystem to develop innovative applications tailored to meet commercial needs. It will enable telecom service providers to validate 5G technologies and use cases such as internet of things and Industry 4.0.”
The industry is hopeful that in the run-up to the 5G auctions, the government would be open to revisiting its 5G spectrum pricing and airwave allocation plan, and that the forthcoming 5G trials will pave the way for successful 5G commercialisation in India.
Akanksha Mahajan Marwah