Bharti Airtel and Reliance Jio Infocomm launched their respective 5G services in October and early November, with Airtel claiming over a million subscribers. Both operators are rolling out services in a phased manner.
Jio True 5G services began in the four cities of Mumbai, Delhi, Kolkata and Varanasi, and were subsequently expanded to cover Chennai, Nathdwara, Bengaluru and Hyderabad. Airtel services have so far been launched in Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, Siliguri, Nagpur and Varanasi.
Airtel initiated 5G trials in 2021 and was the first operator to commercially launch 5G. Airtel 5G Plus is available on existing 4G data plans. The SIM does not need to be changed as the existing Airtel 4G SIM is 5G enabled. Jio customers are currently being offered beta trials with unlimited 5G data with up to 1 Gbps speeds. Both operators claim their services will work with all existing SIMs and 5G-capable handsets.
Telecom minister Ashwini Vaishnaw has said that over 200 cities in India will get access to 5G within six months and Jio and Airtel have indeed targeted very tight schedules for national roll-outs. Airtel aims to roll out 5G services in most parts of the country by March 2023 and across the country by March 2024. Jio is looking at delivering 5G to every town, taluka and tehsil by December 2023. Among other operators, Bharat Sanchar Nigam Limited (BSNL) and Vodafone Idea also have plans to launch 5G, but there are no formal schedules yet.
A 5G network requires an entirely new suite of technologies. Given its very high speeds and low latency, it has the potential to revolutionise work processes across entire sectors such as education, healthcare, manufacturing, banking, agriculture, mobility and logistics with new use cases. It could also enable government services with far greater efficiency.
The Airtel 5G Plus service runs on open radio access network (O-RAN) – the platform that has the widest acceptance in the world with the most developed ecosystem. This is compatible with all 5G-capable smartphones. The network promises to deliver 20x or higher data transfer speeds compared to 4G networks, coupled with reliable voice and fast call connects. Since Airtel also uses a power reduction solution, it is also eco-friendly. Apart from carrying the entire portfolio of services that Airtel currently offers, 5G will add features and services such as high definition, low-latency streaming, cloud-based gaming, multiple chatting apps, instant photo uploads, IoT, and a host of business solutions.
The Jio True 5G service is claimed as stand-alone 5G architecture – the network is entirely separate from Jio’s 4G network. Jio claims that the network is indigenous, with most of the capabilities being developed through R&D by Jio alongside its US subsidiary Radisys. Jio claims that it will enable massive machine-to-machine communication and edge computing, among other things. Jio also has the most flexible mix of spectrum across the 700 MHz, 3500 MHz and 26 GHz bands. It is the only operator with the 700 MHz low band spectrum to ensure deep indoor coverage.
One point worth noting is that 5G needs a larger number of base stations since in general, it uses higher frequency spectrum that can carry more data but has less penetration than 4G. Sophisticated carrier aggregation technology and network slicing are required to optimally combine frequencies and then split the network into multiple logical domains so that the same network can prioritise different rates of data transfers for different use cases.
Any telecom network consists of a radio access network (RAN), a core network, a transport network and an interconnect network. Jio’s standalone 5G network needs a new core, while Airtel is leveraging the existing 4G infrastructure to run its 5G. Airtel claims that the use of 4G infrastructure enables stronger signal propagation than with a pure 5G network.
Both operators are partnering local and global firms to ensure smooth roll-outs and better network management. Reliance Jio has multiyear contracts with Ericsson and Nokia for equipment. Nokia will supply equipment from its AirScale radio portfolio, including base stations, high capacity 5G radio antennas, and remote radio heads. Ericsson’s 5G RAN products and solutions and E-band microwave mobile transport solutions will also be deployed in the Jio network.
Airtel has signed agreements with Ericsson, Nokia and Samsung. Airtel also has a partnership with TCS to build O-RAN-based radio over an indigenous 5G stack. TCS has a stake in Tejas Networks, a developer and seller of networking products, which, in turn, owns Saankhya Labs, a 5G software developer. TCS will be the systems integrator, putting the hardware and software together on the O-RAN platform. According to Airtel, the company is looking to eventually refarm 4G spectrum to use it for 5G as well. Airtel is also testing standalone 5G technology architecture applicable to enterprise use cases.
Airtel has also partnered with Aviat Networks Limited for wireless multiband radio solutions. It will deploy Aviat’s outdoor WTM 4800 E-band and multiband solutions to significantly expand backhaul capacity. Aviat’s multiband vendor-agnostic feature enables traffic aggregation from multiple links, which reduces network congestion and gives better data transfer speeds. The dual-channel E-band radio will augment the existing installed microwave network as well as support an accelerated 5G network build-out. Aviat will also undertake maintenance and deployment. Given the policy support for telecom, there could soon be further indigenisation of equipment. Some 31 companies were approved under the production-linked incentive scheme for the manufacture of telecom equipment in 2021-22 and the first products could start rolling out by the end of this fiscal year.
While both operators have avoided setting 5G-specific tariffs as yet, they will probably aim to do this as soon as possible. Jio has committed to paying Rs 880 billion for 5G spectrum while Airtel has committed Rs 431 billion. This is apart from the capex required to roll out 5G networks, the associated R&D, marketing expenses, and other overheads. Between them, Jio and Airtel have been putting up around 2,500 new towers per week. The pace of setting up new base stations is likely to accelerate to around 8,000 towers per week once global supply chain issues with electronic components ease off.
Recouping those costs will require higher base tariffs for 5G and both companies will also have to offer new use cases especially for the enterprise customer. The global 5G experience indicates that only a small segment of power-users shift to 5G once tariffs are differentiated (with 5G at a premium). But the faster network offers new revenue streams apart from simple tariffs as well. More ambitiously, developing an India stack will involve substantial expenses but it will enable increasing the digitalisation of multiple commercial sectors, and better provision of government services, which will translate into new revenues.
Recent surveys indicate that around 40 per cent of urban telecom subscribers would be willing to pay up to 10 per cent more by way of 5G tariffs, while only 2 per cent are prepared to pay 25-50 per cent higher tariff, and 10 per cent are willing to pay 10-25 per cent more. In addition, many subscribers will have to buy new 5G-capable instruments, which is an additional expense for individual users.
So, 5G uptake in India would probably mirror the global experience in that only a small segment of power users would be initially willing to move to 5G. Enterprise use cases and new service offerings (such as gaming, IoT and metaverse-related uses) could generate different revenue streams of many types. For example, operators have demonstrated new use cases at venues such as the India Mobile Congress. These include experiential education using virtual reality, smart ambulances, and various productivity enhancements in manufacturing and agriculture, logistics and entertainment.
India already has a paradigm of cheap data and high consumption with the average 4G user consuming around 17 GB per month. Experience in markets such as South Korea and the US, where there is already substantial 5G penetration, suggests that data usage goes up by a factor of 2x-3x when a user upgrades to 5G. Ericsson expects data consumption to rise to 50 GB per user per month by the end of calendar year 2027, assuming 5G will account for 40 per cent of mobile subscriptions by then. Networks will need to be future-ready for this possibility even though it will also boost ARPU.
India is the second-largest telecom market in the world, with over 1.17 billion subscribers. About two-thirds of those users are on 3G/4G with smartphones and about 30-35 per cent have phones that are 5G capable. Telecom operators must also be hoping that they can ring up a significant user base by keeping initial tariffs low.
The advent of 5G is a potential game changer for the digital environment. It offers large potential externalities because of the way in which it can enable other sectors. Given policy support and adequate competition, the new networks could boost growth and economic activity as well as level the playing field in terms of access to services across income groups and regions.