The government is pushing for a 5G roll-out in tandem with global markets by 2020. Having been a late entrant into the 4G domain, the government does not want to miss the 5G bus. The technology has the power to digitally transform the country. Coupled with new age technologies like the internet of things (IoT) and artificial intelligence (AI), 5G holds the key to the success of government programmes like Digital India and Smart Cities. It is being seen as a likely game changer for India, with the potential to create an economic impact of over $1 trillion by 2035. Of course, the consequent multiplier effect is expected to be much more, given that the country today stands poised at an interesting digital crossroads.

While the government’s enthusiasm to get onto the 5G bus at the earliest is en­couraging, it is important to answer the underlying question – is the industry ready to drive the big revolution?

5G is more than just an incremental technology to 4G. It is a technology that will make the Mbps to Gbps shift a reality for Indians. 5G deployment will require massive technical and infrastructure up­gradation, which will be highly complex and capital intensive in nature. Substantial investments would need to be made in core and radio networks and, of course, in spectrum. In fact, spectrum will be central to India’s big 5G plan. 5G will also require telcos to build capability in the form of skills, competence and new operating mo­de­ls, almost an entire new ecosystem. In con­trast, the current state of network trans­formation in the country is far from what is suitable for 5G. Vendors are awaiting spectrum for trials, while telcos are hoping for rationalised spectrum pricing in the upcoming auctions. In August 2018, the Telecom Regulatory Authority of India (TRAI) recommended a reserve price of Rs 4.92 billion per unit for spectrum in the 3300-3600 MHz band.

It is anticipated that the industry will require an additional investment (over and above the spectrum spend) of over $60 billion to set up 5G infrastructure. This brin­gs to the fore the important question of wh­e­­re will all this money come from? Kno­ck­­down tariffs have left telcos struggling for profitability. Despite consolidation, they are faced with low ARPUs. Will banks extend credit to telcos that have over-stretched balance sheets?

How prepared is India really to adopt 5G? takes stock…

Spectrum availability

The availability of adequate and efficient spectrum is the key to realising India’s 5G vision. The High Level Forum on 5G has recommended the release of spectrum across various bands including 700 MHz, 3.5 GHz and 26 GHz-28 GHz. The De­part­­ment of Telecommunications (DoT) is planning to hold auctions in the second half of the year, most likely post Septem­ber 2019.

It would be interesting to see whether DoT reconsiders the reserve price for 5G spectrum, which the industry believes is very steep at Rs 4.92 billion per MHz and financially unviable for telcos. Interes­tingly, South Korea priced 5G spectrum in the same band at the equivalent of roughly Rs 1.31 billion per MHz during the auctions held in June 2018. This is about three to four times cheaper than TRAI’s proposed spectrum price.

There is a good chance that high pri­ces may become a dampener for timely technology roll-out in India. While, prima facie, Bharti Airtel and Vodafone Idea have neither committed nor refused participation in the auction, they have been ex­tremely vocal about the unreasonableness of the recommended price.

These industry concerns, or rather com­plaints, are not unfounded. Going by the proposed price, if a telco decides to purchase 100 MHz spectrum in the 3300-3600 MHz band (a must to offer full-scale 5G services), it needs to cough up a whopping Rs 490 billion. For the financially strained telcos, this is serious money. Also, for 5G, field trials are extremely crucial, which ne­ce­ssitates the allocation of adequate and timely test spectrum to vendors and telcos. DoT plans to allocate free spectrum for field tests in June 2019, but progress on this front has run into a snag with the government and the industry divided on the allocation period. The vendor and operator com­munities say that a 90-day allocation pe­riod is too short and instead want free spe­ctrum to be made available for at least a year.

Comprehensive trials will include fine-tuning of operations, troubleshooting of different applications and collection of relevant data for more efficient full-scale de­ployments, all of which will take time. Earlier, in August 2018, the High Level Forum on 5G had also suggested a six-month active trial period.

Need for small cells

Small cells are emerging as the key component of the 5G roll-out strategy of telcos around the world. These would need to be deployed at every 200-250 metres on street infrastructure such as electricity poles, street lights, metro pillars, rooftops of public buildings and traditional macro towers to create a hyper dense network for 5G. However, small cell deployment by telcos in India continues to be disappointing. Industry estimates suggest that the current capacity would have to be augmented at least six to ten times, depending on the city, to derive the benefits envisaged for smart city platforms, improved access to healthcare, education and banking, and industrial IoT. Needless to say, this will not be easy, owing to the cumbersome approval process for putting up small cells on street infrastructure as well as due to cost considerations.

Backhaul backing

5G networks will require high capacity backhaul, supported by large-scale (almost 100 per cent) site fiberisation. In contrast, India today has less than 30 per cent of its sites connected on fibre. Complex, cumbersome and costly right of way (RoW) has been a big bottleneck for telcos in roll­ing out fibre.  On the microwave side, E band (71-76 GHz paired with 81-86 GHz) could emerge as a key band for rapid and economical deployment of high-capacity backhaul, particularly in dense urban routes where installing fibre could be a challenge. But the government has failed to take a concrete stand on whether the allocation of spectrum should be done on an administrative basis or through an auction. It has already been over three years since TRAI gave its recommendations on opening the E and V bands for deepening broadband penetration in the country. A timely decision on this front will be crucial for 5G progress.

Money matters

A substantial amount of investment would be required for rolling out 5G services in India. As per Deloitte and EY es­timates, the industry would have to pump in investments of $60 billion-$70 billion for 5G implementation. Interes­ting­­ly, Indian telcos’ annual spend at present is around $2 billion. The three private telcos have an estimated total net debt of nearly Rs 8 trillion on their books, a part of which has been accumulated due to the purchase of spectrum at steep prices during previous auctions.

Clearly, operators are not in a position to undertake the huge additional ca­pex on equipment, infrastructure and networks that 5G demands. Add to this the exorbitant spectrum price that they may end up paying in the upcoming auctions, and there is hardly any capital left for further investments. In the past two years, a major part of the telco capex has been earmarked for 4G network expansion and fibre roll-out. Although sector consolidation has helped in raising industry hopes and investor confidence, any substantial revenue recovery is still a few fiscals away.

Security complexities

In today’s world, anything that is data based carries a security risk. Unlike the previous wireless network generations, the security risks with 5G will be more complex as the connectivity will go be­yond smartphones to billions of connected devices (cars, sensors, equipment, app­liances, etc.). 5G roll-out would demand a complementing robust security ecosystem to be put in place.

Next steps

Clearly, the road to 5G is paved with many challenges – but many opportunities as well. 5G will give a boost to the government’s Digital India vision. Its use cases in remote healthcare and even agriculture can have more far-reaching implications on society than any of the previous wireless generations.

The need of the hour is to focus on the groundwork, remove roadblocks and ensure timely and smooth deployment of 5G. The pricing for 5G spectrum must be reasonable, with relaxed payment terms. Effective spectrum pricing will play a vital role in promoting healthy investments in networks. Players must be incentivised to share fibre networks; in fact, the Fibre First initiative mentioned in the National Digital Communications Policy, 2018 should be implemented aggressively. Bold steps must also be taken to fix the financial health of the industry. The government must push for “Make in India” manufacturing for 5G equipment and handsets. The country also needs 5G use cases and applications that are tailor-made to its requirements.

Moreover, telecom operators need to ensure that 5G connectivity is seamless, especially in the context of the coverage issues faced with 3G/4G. 5G use cases call for consistent and always available network connectivity.

More than focusing on being ahead in the 5G race, the government and the industry must deliberate on important aspects such as standards, technology, spectrum, security and RoW, and work together for a timely and effective 5G roll-out.

While India must not miss the 5G bus, it is also important that the ride is smooth for users and for the industry.

Akanksha Mahajan Marwah