Mobile phone ecosystem for 5G gets ready ahead of spectrum auction

The key challenge now, however, is to bring down the prices of smartphones

A vibrant mobile phone ecosystem to power 5G is already available before the auction takes off and services are launched. Chipmakers and device companies have been at it to make 5G work from day one.  

Rajen Vagadia, president, Qualcomm India and SAARC, said the chipmaker started work in 2020 when the first 5G phones were launched. “We expect 30 per cent (Counterpoint Research says 40 per cent) of all total smartphones in 2022 to be 5G. And we expect it to go upwards of 50 per cent in 2023. So there will be a substantial base of 5G smart phone owners by the time the commercial rollout begins,” said Vagadia.

This would add up to anything between 140-150 million users by the end of next year, he pointed out. If the plan works, the 5G drill will be different from the country’s experience of 4G when the service was launched before enough 4G VOLTE phones were available in the market.

The situation forced Reliance Jio to outsource the phones from Taiwan under its own brand name Lyf. But when the sale of the phones took off, local device makers joined in and Lyf was slowly withdrawn.

This time around, mobile operators might not need to intervene in the market to ensure the supply of devices. All the key companies ranging from Apple, Samsung, Xiaomi, Real, and Vivo to Oppo and One Plus have phones on offer with myriad models at prices which begin from Rs 12,000. The sub-Rs 15,000 5G phones already account for 7 per cent of the total smart phone shipment.

The big push now is to bring this to the inflexion point needed for large volumes by getting the price down to below Rs 10,000. Qualcomm is planning to launch chipsets sometime next year to power such devices with manufacturers though the move has got a bit delayed because of the chip shortage and increase in overall costs.

“We have 139 models of 5G phones available in the country. We will soon breach the Rs 10,000 mark and many devices in the sub Rs 10,000 are on the anvil,” said Pankaj Mohindroo, national president of the Indian Cellular Association.

His prediction is the most ambitious.  About 60 per cent of smartphones next year will be 5G, Mohindroo has projected. And there are over 750 million smart phone users in the country who can be prodded when they upgrade their phone to 5G to take the service.    

But why are mobile device makers pushing 5G phones so aggressively even before the network is available?

For one, with the spectrum auction imminent, there is now clarity on the timeline for 5G services and the wait is over. The services are expected to hit the market by year-end when there will be around 100 million customers with 5G phones ready to be tapped.  

For another, the chip shortage has been more pronounced for 4G devices — very few upgraded 4G chips are coming up — and much less severe for the more advanced 5G chip set.  

Finally, the more high tech 5G chip sets help in providing more value to consumers even if they are being used for 4G; they offer more computing power on their phones, more battery life, and support for better cameras at only a small premium in price.

Building scale to bring down costs is key to expanding the market and that is already happening. Thanks to over 800 million 5G subscribers in China, the cost of the phones has gone down. India can also leverage this advantage given how many of the Indian device players are from China.

Chip makers say most of the domestic 5G phones currently run on the 3.5 GHz band, which is also the default spectrum band for 5G and is up for auction. But most of them are not powered to run on the more complex millimetre band which enables the high speeds required for services such as augmented reality and virtual reality.

However, India is also auctioning a huge amount of spectrum at a very affordable price and while it could be used for powering enterprise networks and FWA, it can also power many new use cases on the mobile phone.

The price of such phones is a dampener. But this will change quickly in the the next year or two, say some chip makers, as volumes go up globally. Made in India phones powered by the millimeter band on 5G are being manufactured by Dixon Technologies which has tied up with  Orbic, a US-based mobile phone manufacturer, and exported to the US. The final destination is the top US telecom operators.  

But to include a millimetre band in a phone is a complex electronics challenge in the front end and it increases the cost of a normal 5G phone by $30-50. It is available globally (as with Apple in the US) but will require scale to reduce the overall cost.

The ball is in the court of the operators on whether they want to make incremental money from new use cases. Mobile phone makers have all the aces ready.   

MOBILE DEVICE MAPPING 
 

• 139 mobile phones on 5G are already available in the market. The starting price has fallen to Rs 12,000.

• Rs 10,000 and lower 5G smart phones are already on the anvil. Qualcomm is launching new chipsets to support them.

• 30 per cent of smart phones in 2022 will be powered by 5G.

• 50 per cent of smart phones will be on 5G in 2023, the first year of 5G services.

• 100 million customers with 5G phones will be available for telcos to tap even before the commercial launch of the service sometime at the end of this year.