As the underlying infrastructure technology for broadband access and a complementary technology for leveraging technologies such as LTE and IoT, Wi-Fi is a key driver for growth, as envisaged in the Digital India initiative. It can also spur new business models and innovation due to its low cost, and standardised deployment and equipment ecosystem.
A liberal wireless regime focusing on Wi-Fi access is a necessity in India as, it is a mobile-dominant country, and Wi-Fi provides high bandwidths and speeds that may not be possible on mobile networks. In India, where telcos have far less spectrum for mobile services than those in other countries, the importance of a facilitative spectrum regime is more pronounced. Moreover, in comparison with several other countries, the quantum of unlicensed spectrum in India is far lower. India has around 689 MHz of spectrum available for unlicensed use, spread across various spectrum bands. This is very low in comparison with countries such as the UK (15404 MHz), the US (15403 MHz), China (15360 MHz), Brazil (15360 MHz) and Japan (15377 MHz).
Wi-Fi, which has traditionally been provided in the unlicensed 2.4 GHz and 5.8 GHz bands, now has standards in the 6 GHz (Wi-Fi 6E) and 60 GHz (a variant of Wi-Fi called Wi-Gig) bands. This allows for higher bandwidth channels, a greater number of channels and higher speeds. Both the 6 GHz and 60 GHz bands have been unlicensed in several countries.
However, in India, there appears to be a fair degree of policy reluctance in making more unlicensed spectrum available. Policymakers are of the opinion that unlicensed spectrum does not provide direct revenues to the government. However, this is limiting as unlicensed bands have huge economic value. Studies indicating the economic value of unlicensed bands for Wi-Fi access are very limited in India.
The Broadband India Forum recently released a report, titled “The Economic Value of Wi-Fi Spectrum for India”, by Rekha Jain, senior visiting professor at the Indian Council for Research on International Economic Relations and past chair for the IIM Ahmedabad Telecom Centre of Excellence. The report examines the current and potential economic value of key unlicensed existing Wi-Fi bands, as well as that of the V-band (60 GHz) and 6 GHz band in India, which will hopefully get unlicensed in 2021.
Edited excerpts from the report…
Since unlicensed spectrum is free to use, economic value cannot be assessed on the basis of the price paid for spectrum, as is the case for licensed spectrum. The relevant figures for measuring the economic value of unlicensed spectrum are economic surplus (consumer surplus + producer surplus) and GDP contributions for Wi-Fi, V-band and Wi-Fi 6E.
Consumer surplus for Wi-Fi arises due to mobile data offloading owing to better consumer experience with faster access available on Wi-Fi for the same price as mobile data. It is assumed that the consumer is willing to pay for the additional data consumed as part of the free Wi-Fi. Meanwhile, producer surplus arises in mobile data offloading for the service provider as a result of the reduction in network costs (capex and opex) that would otherwise be required to accommodate the increased data usage on mobile networks.
As for the contribution to GDP, studies indicate that higher data speeds, adoption and availability of the underlying equipment, and greater internet penetration result in higher GDP.
The economic value of Wi-Fi access in V-band is calculated in terms of the economic surplus on Wi-Gig and the GDP contributions due to the higher internet speeds made possible on the said band, related device/equipment ecosystems, and short range device contributions.
Meanwhile, the economic value of Wi-Fi 6E is calculated in terms of economic surplus on standard power and low power indoor devices, and very low power; along with GDP contributions due to higher internet speeds, the device/equipment ecosystem, and growth in IoT penetration.
Results and analysis
It has been observed that the economic value of Wi-Fi in the unlicensed spectrum bands under consideration will be significant in 2025, at Rs 12.69 trillion (for GDP at current prices). This is nearly 6 per cent of the projected GDP in 2025. Further, the economic value is projected to rise significantly from 2020 to 2025, showing almost a fourfold increase. Moreover, the average economic value of key applications in existing unlicensed bands for Wi-Fi in 2020 is significantly higher than the telecom sector’s expected revenue as per the 2020-21 budget, at Rs 1.33 trillion.
It is predicted that mobile data offloading will account for nearly 81 per cent of the total economic value of Wi-Fi by 2025. In comparison, in the US, mobile data offloading accounted for around 56.5 per cent and 63.56 per cent of the economic value of unlicensed spectrum in 2017 (actual) and 2020 (projections) respectively. This reflects the greater variety of applications in the unlicensed bands present in the US.
The higher speeds on Wi-Fi in comparison to mobile networks in the unlicensed bands under consideration are expected to enable a significant GDP contribution of Rs 327.15 billion from the existing and potential unlicensed bands (60 GHz and 6 GHz respectively). The lower values from the potential bands are because they are to be introduced in 2023. The penetration is assumed to go from 10 per cent of Wi-Fi in 2023 to 45 per cent of its base value in 2025.
As the 5.8 GHz Wi-Fi routers provide greater speeds than those available in 2.4 GHz, the contribution of GDP due to Wi-Fi offload on this band is higher. This should build a logic for the unlicensing of higher bands, as they provide higher speeds.
GDP contributions due to the V-band device/equipment ecosystem are likely to be significant, at Rs 501.16 billion. V-Band will contribute nearly 11 per cent of the total economic value in 2025. This is assuming that V-band is unlicensed in 2023 and grows to 5 per cent of its base value in 2025.
Wi-Fi 6E will contribute nearly 9.5 per cent of the total economic value in 2025. GDP contributions due to increased IoT penetration will amount to Rs 176.09 billion in 2025, while those from the device ecosystem will be Rs 186.02 billion, constituting nearly 30 per cent of the economic value of Wi-Fi 6E.
The penetration of Wi-Fi hotspots in India is poor – about one-fourth of that in the US and about half of that in China. Globally, there is one Wi-Fi hotspot per 150 people. India will need 8 million additional hotspots to be at par with the global standard. In the absence of a road map for Wi-Fi, a huge economic value is not being leveraged. The PM-WANI Public Wi-Fi Policy, launched by the government in December 2020, is an excellent policy in this regard. However, several aspects need to be ironed out to fast-track its implementation.
Unlicensing more spectrum bands
In comparison to the global availability of unlicensed spectrum, India still has very little unlicensed spectrum available for use. There are many bands that need to be unlicensed in India, as has been done in many other countries. The government must speed up the decision-making process to be in line with global initiatives and make more spectrum available for use.
While the unlicensing of several bands and the consequent adoption of new applications add to the higher economic value of unlicensed spectrum, V-band characteristics and their deployment elsewhere indicates a high potential scenario for India. The same holds true for Wi-Fi 6E.
Need to unlicense higher bands
The huge economic value associated with Wi-Fi access is significant. This should give leverage to the DoT to unlicense more bands, as has been done elsewhere. Higher speeds (on the higher frequency bands) contribute significantly GDP growth. This rationale should be used to support progressive unlicensing.
India has major last-mile connectivity issues, especially in the case of high speed data. Public Wi-Fi could be used for this. Several companies are already using unlicensed spectrum to provide last-mile broadband connectivity. Unlicensed spectrum could be a cost-effective mechanism for providing rural connectivity.