Telecom operators Reliance Jio and Bharti Airtel are not looking at higher tariffs for 5G services during the initial level of launch in metro cities by Diwali. Low penetration of 5G-enabled handsets and some technical limitations arising due to the inability of a bulk of these handsets in supporting certain spectrum bands are the key reasons cited by company executives for such a move.
Instead of coming out with new 5G packs, which are priced higher than the current 4G ones, the two players are likely to upgrade users of certain tariff plans to 5G. This can be done easily as no change of SIM card is required to upgrade subscribers from 4G to 5G as was the case in migration from 3G to 4G. Further, since the service providers would be able to make out which subscribers have 5G-enabled phones, direct messages can be sent to them regarding their upgrade at no extra cost.
Company executives said that since the data usage of 5G users would rise substantially, it would translate into a higher average revenue per user (Arpu) for the operators without any tariff hike.
Currently, only around 8% of handsets in the country are 5G-enabled – 50 million of the total 600 million active smartphones. However, sales of 5G-enabled handsets are projected to rise with the two operators recently announcing the launch timeline of their services. According to Counterpoint Research, during the October-December quarter, 5G-enabled handsets would contribute around 35% to the overall sales of smartphones. With this jump, the total installed 5G phones would go up to around 85 million – 14% of the overall active smartphones.
The technical issue which the operators are likely to face in the initial few months is that not all installed 5G handsets may be compatible with the 5G signals as most of them may be tuned to the spectrum bands used in China. For instance, the milli-metre band, which has been auctioned in India, is not used in China for 5G services. Industry and trade sources said that it is quite likely that sub-Rs 20,000 5G handsets in the market may not be compatible with the spectrum bands auctioned in India. According to Counterpoint’s estimate, currently 25% of 5G handsets in the market are in the sub-`20,000 category. Therefore, the operators would have to depend on the newer shipments which would be designed for the Indian market.
The launch of 5G services by Jio and Bharti would be roughly around the same time. At Reliance Industries’ 45th annual general meeting on August 29, chairman Mukesh Ambani had said that the services would be launched in the four metros of Delhi, Mumbai, Chennai and Kolkata by Diwali, and the whole country would be covered by December 2023. Bharti has a similar timeline. It plans to launch its services in October and extend coverage to 5,000+ towns and cities by March 2024.
Vodafone Idea has still not unveiled its launch plans.