According to a report by JM Financial, Reliance Jio with its acquisition of 700 MHz spectrum is planning to create standalone (SA) 5G architecture, which has long-term advantages such as superior quality, ultra-low latency 5G experience and a wider range of applications, particularly for the enterprise segment. This might give Jio an opportunity to attract some of the high average revenue per unit (ARPU) customers from its competitors in the medium to long term.
In contrast, Bharti Airtel plans to launch 5G services based on non-standalone (NSA) architecture, essentially using the same infrastructure used in 4G and adding a 5G layer on top. This significantly cuts down capex as it saves on the expensive 700 MHz spectrum, reduces investment on related hardware upgrades for SA architecture, enables faster 5G deployments, and reduces opex. Thus, the report notes that Airtel may not be at a disadvantage from Jio’s SA 5G architecture in the near to medium term as 5G penetration is low and its use cases are still in the development stage.
However, in the long run, when 5G picks up and use cases get developed, there is a risk of Airtel’s network getting congested as the same infrastructure is being used for 4G and 5G services. The telco may have to shift to SA architecture and may need to acquire 700 MHz spectrum. Hence, as per the report, Jio might have an edge in the long run as it would already have a well-functioning 5G SA infrastructure in place with superior quality 5G experience.
