Subscribers using 5G services of Bharti Airtel or Reliance Jio can rejoice as they will continue to be charged at 4G rates, at least for the next one year, because of lack of 5G-enabled device penetration and operators not finding suitable use cases to charge a premium for such services.
Industry sources said 5G services do offer users higher speed than 4G, but not any vastly different experience apart from that, so charging a higher price for them would affect the penetration of such services.
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According to an Airtel executive, currently only 12% of smartphones are 5G-enabled. Besides, due to better quality of handsets, the replacement cycle of phones has increased to 30 months from the earlier 18. As a result, monetising 5G services is not possible. He said globally, too, monetisation of 5G services is not happening because of lack of use cases.
“If 5G services are priced at a premium, very few customers will opt for it, so the average revenue from them may be high, but it will not translate into higher revenues and the ecosystem will also not develop,” the executive said.
Reliance Jio is still providing 5G services and expanding it across the country in the beta testing mode. Users who are on a minimum recharge plan of `293 qualify for 5G services without paying anything extra. An Airtel user, on the other hand, can use 5G on 4G plans irrespective of any minimum recharge condition.
Currently, 5G services are available in parts of 14 states/ Union territories.
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For retail consumers, apart from high network speed for gaming and streaming videos, there are no real 5G use cases at present. “The monetisation will happen once these high-quality users are addicted to 5G-like speeds that prompts them to completely switch from 4G,” an industry expert said.
“5G smartphones have gained a good mind share in India, thanks to the continuous efforts of the smartphone value chain especially chipset players. Now with the networks rolling out, we expect this mind share to increase further and people eventually use 5G services,” Tarun Pathak, research director at Counterpoint, said.
“The Indian connected consumer is excited about the advent of 5G in the smart devices ecosystem that will elevate the overall experience. The market is slowly moving beyond entertainment segment, and we are expecting to see more of comfort and convenience devices forming the demand in 2023 and beyond,” said Faisal Kawoosa, chief analyst at Techarc.
While factors like smartphone penetration, marketing 5G services as a rider on 4G, and increased features will gradually drive the retail user growth, experts believe it’s the enterprises that are going to help telecom companies drive return on investments.
“5G is not really about retail users as 4G is enough to cater to their demands as of now. In 2023, the telecom operators will have to focus on marketing 5G use cases for enterprises with regards to private networks in order to drive growth,” said Satya N Gupta, former principal advisor at Telecom Regulatory Authority of India. “Eighty per cent of the corporates want to put 5G within the next three years, unlike 4G where it took the industry five years to get to 20% penetration,” Ganesh Lakshminarayanan, chief executive officer of Airtel Enterprise Business, told FE in a recent interaction.