In the past two decades, the telecom sector has contributed significantly to the socio-economic development of India. The telecom evolution has progressed from basic telephony services to high speed data services, thus providing a digital platform for many emerging industries and services such as e-commerce, e-governance, e/m-banking, e-health, e-learning, cashless economy and e-KYC. There are 1.15 billion telecom subscribers, 391 million internet subscribers and about 300 million smartphone users in the country.
Data is growing faster than voice on the back of falling data service and handset prices, changes in subscriber habits and progress on the Digital India front. The demand for data services has increased significantly in the past few years and exploded last year with the rapid penetration of smartphones, and 3G and 4G services. Going forward, 5G networks are expected to provide higher speeds to end-users. They, moreover, have the capability to connect billions of devices like driverless cars, household appliances, healthcare systems and other industries. Unlike legacy data networks (that is, 2G and 3G), 5G technology will provide a one-stop solution for the convergence of data, voice, internet of things (IoT) and machine-to-machine (M2M) devices and, at the same time, will deliver speeds of over 1 Gbps.
Currently, several 5G trials are being conducted in India by network operators and equipment providers in collaboration with premium institutes like the Indian Institutes of Technology and the Centre of Excellence in Wireless Technology (CEWiT) for research and development (R&D) on 5G. The 5G-enabled digitisation revenue is likely to be around $25.9 billion by 2026 while the 5G-enabled industry revenue is expected to add around $13 billion to operator revenue.
Growth drivers of 5G in India
- Digital India: The Digital India initiative, a trillion-dollar opportunity, requires huge investment from the telecom sector to create a connected platform (which will act as a backbone) for all the entities in the ecosystem, from government offices to educational institutes, hospitals, industries and common service centres. The ongoing BharatNet project, which is expected to connect 250,000 gram panchayats, can boost 5G deployment in the country. The BharatNet project, along with the existing optic fibre cable network of operators, can act as a backhaul for faster transmission of data. The government push to the early roll-out of 5G technology will leapfrog rural India to a digital society by providing services such as information, education, healthcare, banking and governance to citizens. According to the United Nations, 5G and IoT can enable the agriculture industry to deliver a 70 per cent increase in food production worldwide by 2050 and farmers can leverage the technology to transform agri processes for better production.
- Smart Cities Mission: The Smart Cities Mission requires huge information and communication technology-based development in terms of smart devices, IoT and M2M technologies, etc. 5G technology will be helpful in addressing challenges relating to the availability of land, energy, clean water and other key resources in smart cities, along with providing greater connectivity. Connected sensors can provide access to real-time data, help municipalities in monitoring and reallocating underused resources, and encourage citizens to cut waste. The technology will also address safety and security issues through surveillance and help connect and control various household appliances.
- Tech-savvy demographic: Affordable 4G services in the Indian market (owing to the reduction in tariffs) have not only helped in higher adoption of data services but also changed data consumption patterns significantly. User experience is the next parameter to judge the quality of service (QoS) and 5G, with its ultra-high speed and ability to interconnect multiple devices, will become popular among India’s tech-savvy youth. The growing market of on-demand entertainment, gaming, augmented reality and virtual reality, etc. will be a driving force for 5G uptake.
- Industry 4.0: The digital drive in the country has also made small and medium enterprises adopt industrial IoT solutions. Process automation, factory automation, automated guiding vehicles, logistics transport tracking and robot control in industries will require 5G technology to control numerous IoT devices as well as to provide seamless high speed connectivity.
There has been a rising demand for new technologies and high speed internet connectivity in India. However, in terms of technology adoption, traditionally, the Indian telecom sector takes a longer time as compared to other countries. For instance, 3G adoption took a very long time and managed to reach 82 petabytes by 2015 although the auctions were held back in 2010. Similarly, 4G technology witnessed a full-fledged commercial launch in 2016 when other developing and developed countries had already achieved commercial success in 4G network. An underdeveloped ecosystem, regulatory challenges, vast geography, lack of affordable service offerings and QoS issues are some of the reasons for the delayed adoption of new technologies in India.
Apart from these, operators and the entire ecosystem have to deal with the issue of high capex. The demand for new technologies in the market supersedes the demand for traditional technologies by a huge margin. Although operators bring in new technology sooner to gain a first-mover advantage, it takes a toll on their balance sheets as it requires huge capex in terms of spectrum, infrastructure, ecosystem development and marketing. While the three leading operators in India are planning to spend Rs 800 billion on network expansion in 4G long term evolution (LTE), the 5G development will require even higher investments as they will have to acquire spectrum that is very expensive, and making a business case at those levels is challenging.
The government commissioned a research team (comprising researchers from IISc., Bangalore, IIT Bombay, IIT Hyderabad, IIT Madras and CEWiT) to work on 5G technology. Although the team has filed 100 patents (of which around 10 have been granted), greater R&D activity and investments are needed from private operators and network players in India. Other countries like the US, South Korea, Sweden, Turkey, Japan and China have started developing the 5G ecosystem for commercial service launch by 2020. Korea Telecom has committed to launch 5G services during the Olympics in 2018.
The government’s push for digital delivery of services through the Digital India initiative will be a key growth driver for 5G. It will not only improve internet speeds and QoS but will also enable the digital transformation of services
Meanwhile, spectrum pricing remains an area of concern. The ongoing consolidation in the industry is likely to free up spectrum, which could be used for 5G if the ecosystem develops in the available spectrum bands. However, if the frequency bands of the 5G ecosystem around the world differ from those available with operators in India, the latter would need to buy new spectrum. Besides, spectrum prices in India are very high as compared to other countries. Considering the high spending requirements for new technology in a low return on investment environment, spectrum pricing needs to be rational for 5G uptake in India. Also, operators will need to spend on establishing backward compatibility of 5G with legacy networks to provide seamless communication services. This is because India is still a voice-centric market and 2G and 3G technologies have a primary presence in the country as compared to the new 4G LTE technology.
Lastly, 5G tests are currently being conducted in higher frequency bands, which come with inherent challenges such as high penetration loss, higher sensitivity to blockage and diminished diffraction, which the system must overcome in order to cater to urban and dense areas.
5G is likely to come sooner rather than later to India as the fundamental platform in the form of the nationwide high speed optical network will soon be ready. Further, the government’s push for digital delivery of services through the Digital India initiative will be a key growth driver for 5G. It will not only improve the internet speed and QoS in the country but will also enable the digital transformation of services such as healthcare, education, entertainment, agriculture and manufacturing. The Make in India initiative will help in providing low-cost and high quality 5G mobile devices and telecom equipment in the market. 5G is not just another technology; it could, in fact, be the enabler of Digital India.