Reliance Jio is in the lead when it comes to preparing for 5G fixed wireless access (FWA) due to the wider coverage provided by its fifth-generation network, wider holdings of spectrum bands including 700MHz and in-house FWA technology after the acquisition of Miosa, stated Emkay Global in a research note. Jio plans on investing $25 billion in 5G, including $5-6 billion for FWA, showing the operator’s commitment towards the new technology.
In the report, Emkay also expects Bharti Airtel to soon catch up with Jio in FWA, as the company is also busy expanding its 5G coverage by 35,040 cities daily. Airtel can refarm its 900MHz band to counter Jio’s 700MHz band. It also said that Airtel will be able to use e-band microwaves on 5G towers for backhauling as well as leveraging its local cable operator (LCO) model for adding homes.
Meanwhile, Jio is aiming at reaching 100 million connected homes (fibre+5G) with its FWA solution with no particular comment on a timeline. Airtel has not announced its plans for FWA service yet. FWA uses spectrum for providing fixed broadband services in comparison to the use of fibre cable in wireline broadband. FWA will be relevant for homes, small offices, and small and medium businesses (SMBs).
Commenting on the high cost of consumer premises equipment (CPE), Emkay stated, “Assuming payback period of 36 months for a CPE and 50 per cent contribution margin, telcos may require average revenue per user (ARPU) of Rs 780/month. However, if CPE cost reduces to $150/125/100, ARPU requirement can reduce to Rs 685/570/460. With CPE cost at $100, ARPU requirement of Rs460/month will still be at a more-than-double cost of the lowest FTTH plan (Rs 198/month).” It was also suggested that CPE can be made affordable using local manufacturing or production-linked incentive (PLI) scheme benefits or by subsidising telcos. Emkay was in favour of the FWA opportunity for Rs 205 billion per annum with ARPU of Rs 570 and coverage in 30 million homes. FWA can also address the SMBs (50 million) and generate Rs 180 billion per annum, hence capturing 10 per cent of the available market and assuming an ARPU of Rs 3,000 per month. Emkay expects the wireline subscriber growth to diminish just like the growth in wireless, as new homes are being added making it more difficult to attain economically due to the location being remote, the high cost of laying wire and issues around the right of way (ROW).
