The DoT's decision on barring Chinese vendors for 5G trials also clearly indicates to the telecom operators that going ahead for any spectrum auction, the telcos cannot place network procurement contracts with companies like Huawei and ZTE.
The department of telecommunications (DoT) is shortly going to approve the applications of telecom operators for 5G trials but only with non-Chinese vendors. This means that Bharti Airtel and Vodafone Idea, which have submitted applications for trials with Nokia, Ericsson, Huawei, and ZTE, will be given the go-ahead to conduct the trials only with Nokia and Ericsson and not Huawei and ZTE.
Similarly, Reliance Jio will be given the permission to go ahead with Ericsson, Nokia, and Samsung, but not Huawei. Jio has submitted another application where it would independently conduct the trials and the permission for the same will also be given.
Last month’s decision of the government to bar companies based in countries sharing land border with India from any government procurement and contract, will thus see its first implementation in 5G trials where Chinese companies are not being allowed.
Though the trials are being conducted by private telecom operators on whom the border restrictions do not apply, the government has taken the line that since spectrum is a public asset and will be given by it to the companies, the guidelines can be applied here. The private telecom companies also do not have any objection to permission not being given to conduct trials with the Chinese vendors. Company executives told FE that they have submitted applications with multiple vendors and the government should process the ones it wants and drop the unfavourable ones but it should take the decision expeditiously and not keep the trials hanging for long.
The DoT’s decision on barring Chinese vendors for 5G trials also clearly indicates to the telecom operators that going ahead for any spectrum auction, the telcos cannot place network procurement contracts with companies like Huawei and ZTE. As earlier reported by FE, for upcoming auctions for the 4G/5G spectrum, the government, plans to put in a condition in the notice inviting applications (NIA) that companies which are successful in winning the bids cannot procure equipments from foreign companies which belong to countries which share a common border with India.
Though the plan to auction 5G spectrum is not on the cards this fiscal considering the weak financial health of the telecom firms, auction of some 4G spectrum bands can take place during the current fiscal.
Though, initially the Cellular Operators Association of India (COAI) was opposed to any restrictions being put on Chinese vendors on the ground that geopolitical issues should not be mixed with business, companies slowly prepared themselves for life without the Chinese vendors. For instance, Bharti Airtel has decided not to renew its contract with Huawei for managing its 4G network in Tamil Nadu circle. The 4G networks of telcos like Bharti Airtel and Vodafone Idea have largely been built by Huawei and ZTE. These networks are built on turnkey contracts and managed by the vendors. Companies renew the contract when it comes up for renewal. What Bharti is planning is that as and when the contracts come up for renewal, the contract would not be awarded to Chinese vendors but to European players like Nokia and Ericsson. Sources said that in building a new network, the cost of Chinese vendors is generally 15-20% lower than competition but for managing the network the same cost advantage does not apply and a switchover can easily be done.