The next level

5G will open up opportunities for businesses

India is set to join the league of 5G-enabled nations with the Union Cabinet approving the much-awaited airwave auction for ultra-fast mobile internet networks. With this, services requiring cutting-edge technology can be rolled out even in remote corners of the country, though initially 5G networks are likely to be available only in bigger cities. Deploying the internet of things to artificial intelligence, 5G will open up never-before opportunities from health care to education and agriculture for both consumers and businesses. India is already late in its 5G journey and the telecom industry must not lose time in complaining about issues such as enterprises getting a better deal than telcos or high reserve price for spectrum.

On reserve price, although there is merit in telcos’ argument that most other countries have conducted the 5G spectrum sale at a much lower rate, the Cabinet decision on pricing is in sync with what the Telecom Regulatory Authority of India (Trai) recommended in April during a review of its earlier proposal and has also been endorsed by the Digital Communications Commission. While Trai in its April 2022 recommendation reduced the spectrum reserve price by more than 35 per cent from its 2018 level, the demand from telcos was a cut of around 90 per cent. Indeed, pricing could have been better to ensure that telcos don’t bleed while aggressively bidding for airwaves, the government has made amends elsewhere to address the cash flow concerns of the companies taking part in the auction slated to start at the end of July. The government has done away with the need for upfront payment for winning bidders. It will be spread over 20 years. The spectrum usage charges, earlier levied at about 3 per cent of the telco’s adjusted gross revenue, has been abolished for spectrum allocated under fresh auctions. Nevertheless, the 5G spectrum auction is billed as the biggest, and the upcoming sale of airwaves across nine bands including 5G frequencies, for 20 years, could fetch more than Rs 4 trillion at the base price. Trai has fixed the base price for the 3.5 GHz band — which is widely used for 5G — at Rs 317 crore/MHz, down from its 2018 recommendation of Rs 492 crore/MHz.

Besides pricing, telcos are also upset that the government has allowed enterprises to run captive private networks with direct allocation of spectrum by the Department of Telecommunications. Enterprises have also been allowed to lease spectrum from telcos for their networks, prompting industry associations to slam the move. But an objective look at the scenario may show that telcos have over-reacted. Taking the global benchmark, most other countries are following a similar model of direct allocation of spectrum to enterprises, which make up for the bulk of the 5G revenues. Rather than protesting, telcos can also get spectrum allocated at a price without auction for their enterprise businesses. In fact, a recent study has made the point that enterprise services are emerging as a new value engine for telcos in the process of digital transformation. Every telecom service provider is expected to look at the enterprise opportunity, either on its own or in collaboration. The gains for the economy by allowing business enterprises to embrace 5G would be huge.

The government had made the right start last year by offering a package to the telecom sector in view of the liquidity requirements of the industry, especially financially stressed Vodafone Idea. Although lower 5G pricing would have given a further fillip to the disrupted sector, the time has come for the Indian telecom industry to make the best of the opportunity knocking on its door.