By KV Seshasayee & TV Ramachandran
The new-age 5G technology has the potential for a major societal transformation in India.” This visionary statement was presented two years ago at the Government High Level 5G India 2020 Forum. Since then, there has been much hype about bringing 5G to the country. At the forum, it was emphasised that this time India would not miss the boat on implementing advancements in communications, like the country did with 3G and 4G. This filled us with ebullient hopes of a truly Digital India at the forefront of the 5G revolution. However, the ground reality, as it relates to implementation, has been a different story—one fraught with conflicting stakeholder positions, and inability to trigger the huge investments required for 5G implementation.
Globally, 5G rollout has begun. As many as 211 operators in 87 countries have invested in 5G technology. As of March 2019, 15 operators around the world have been offering commercial 5G services. In India, not a single large live trial has been initiated, and the guidelines for the release of experimental or trial spectrum are still work in process. With a minimum of 6-12 months of intensive 5G live trials required prior to release, we are already over a year behind other nations. The Department of Telecommunications (DoT) has laid out a 100-day 5G action plan that includes the commencement of 5G trials and policy surrounding this technology. While this is a welcome start, even if spectrum is provided readily and trials are completed rapidly, are we ready to introduce 5G? I’m afraid we are not, particularly with regards to critical infrastructure comprising of optical fibre, thousands of small cells and street furniture in a dense network, millions of public WiFi hotspots, as these have to be created. And what about investments? Deloitte estimates that India needs a massive Rs 5 lakh crore ($70 billion) investment to bring in 5G. Where will this investment come from?
Let’s look at one of the most important stakeholders—the telecommunications service providers (TSPs) who constitute the backbone of the sector. They are fighting to keep their heads above water. The collective debt of TSPs stands at Rs 4.2 lakh crore (according to ICRA). Once at the forefront of global innovation, TSPs are now focused on survival in the face of challenges like the extremely high duties and levies they are subject to, astronomical spectrum pricing, outmoded regulatory framework and a fierce marketplace resulting in one of the lowest user tariffs globally. The will may be strong, but where would they find the business case for huge 5G investments?
So, what can be done to facilitate a more attractive business environment? Spectrum allocation and pricing play the most significant role—Indian spectrum prices are some of the highest in the world and the allocated quantity well below global best practices, while 40% of the spectrum is lying unsold. There is an urgent need to review the auction design and the setting of the reserve prices, as pointed out by expert research agency ICRIER. The spectrum issue needs to be immediately resolved, else our foray into 5G will continue to be very challenging.
Here the government might also like to take a page from Singapore, which decided not to levy any spectrum fees in order to free operators and bring in advanced technologies. This is an excellent strategy to foster an ecosystem for innovation and, in the end, consumers, TSPs and the government will benefit.
The next major issue to discuss is infrastructure. To realise the potential of 5G, we require a dense, high-quality, bend- and pressure-resistant optical fibre network. This enables much faster and reliable speeds that empower 5G technology. Only one operator in India currently has a 4G network that can be upgraded to 5G fairly quickly. The rest, having started operations in 1995, run on legacy networks of 2G, 3G and 4G. While we pleasantly dream of a homogeneous Digital India, the unfortunate fact is that much of our infrastructure is an amorphous mix of technologies with much of it analogue, and cannot support the speeds that 5G needs. It is evident that the road to 5G is laden with some obstacles. The good news is that we do not have to embark on a voyage of discovery to figure our way out. The solutions are clearly defined in the world-class National Digital Communications Policy 2018. To reiterate—the first step towards 5G implementation in India is raising the investments. Recently, two global bodies have strongly advised this and commented on the need for a 5G investment-friendly environment prior to its implementation.
The first, the esteemed International Telecommunication Union (ITU) recently released a report (Setting the Scene for 5G: Opportunities and Challenges) that, among other things, states, “5G is expected to play a key role in digital economies, improving economic growth, enhancing citizens’ experiences, and creating new business opportunities. Despite such benefits, care must be taken in establishing the commercial case, and whether 5G is a real priority for the economy. Until the investment case is compelling, the industry and policymakers should approach investment with caution while enhancing the quality and availability of 4G networks.” ITU further stresses that 5G is likely to increase the global digital divide—since viability is likely to be in dense urban areas.
The second authority, the GSMA, the apex world body for mobile communications, released recommendations in its report ‘India: Becoming 5G-ready’. It emphasises the need for a supportive investment and taxation policy and the necessity to move away from legacy regulatory structures and towards a whole new government paradigm. Indeed, here’s one example of how arbitrary taxes and levies affect TSPs today. Mobile devices are taxed at 12% while the telecom service, which is the key driving technology, is subject to 18%. Both need to be aligned to an even 12%. GSMA also points out “the current state of mobile coverage in India does not warrant the 5% USOF levy, particularly compared to universal service levies in other countries.” It recommends that the current levy be reduced or phased out gradually.
So, does India have a choice whether to adopt 5G or wait it out? We believe not. As the High Level 5G India 2020 Forum pointed out, there are huge economic benefits to be realised across various verticals that we cannot afford to let float away. Illustratively, a recent study modelling Pune as a ‘smart city’ estimated that it can unlock an incremental value of 30% GDP valued at Rs 80,000 crore over six years. This is for an area of 331 sq km and a population of 3.5 million. This study enabled the city to drive numerous digital service initiatives to capture the resulting growth potential of 15% CAGR (Purushottam Kaushik, L&T). And this is about just one city—imagine this evaluation across the country. We can reap mind-boggling benefits!
Since the setting-up, in the fourth quarter of 2017, of the High Level 5G India 2020 Forum, much was accomplished by the group, but far more could have been done in creating awareness as well as infrastructure and issuing the required policies. Even large-scale trials that were planned from December 2018 onwards could have been completed by now, and India could well be auctioning spectrum after correcting the pricing and getting ready to launch 5G services shortly—at least in some locations with requisite infrastructure. Unfortunately, we have missed that bus and will have to race at double speed to try and ensure that the gap already created between us and other nations does not widen further. Moreover, Digital India will have little meaning without 5G. (Chandana Bala assisted with research inputs)