India ramps up supply chain for 5G service launch in 2021 pending spectrum auction
There is excitement about the anticipated launch of 5G telecom services in India, but the government’s spectrum pricing strategy may be a damper. While the evolving ancillary segments are working on the backbone infrastructure for the 5G roll-out following Reliance Industries Ltd chairman Mukesh Ambani’s assurance that Reliance Jio Infocomm Ltd will launch 5G wireless service in the second half of 2021, experts, however, said that India is not 100% ready.
India telecom equipment company Sterlite Technologies Ltd (STL) said India has been developing 5G infrastructure, but a pan-India roll out will require improving the device, spectrum, wireless and fiber optic ecosystem. “India has the capability of rolling out 5G as we have been building the infrastructure for years now. However, for a countrywide end-to-end deployment, India is not 100% ready… At STL, we will start commercial deployment of open-RAN (open radio access) that is required for 5G by second half of 2021,” said Anand Agarwal, group chief executive at STL. The primary impact of 5G roll-out will be on the commercial ecosystem. According to Agarwal, global supply chains have already matured and are 5G-ready, which makes it easier to import raw material (this author finds that very difficult to believe).
Experts said stressed financials of Bharti Airtel Ltd and Vodafone Idea Ltd (Vi) could discourage them to participate in the 5G launch, in view of the costs involving fiberization and the pricing of spectrum. Airtel and Vi are sitting on massive debts but continue to offer among the lowest tariffs in the world. The telcos have also called for affordable spectrum.
Analysts said the spectrum auction in March may see limited participation from Airtel and Vi due to high reserve prices. Jio, however, is likely to buy spectrum in the 700 megahertz (MHz) band, which is best suited for 5G.
Meanwhile, phone makers have also started producing 5G devices too. Faisal Kawoosa, the founder of techARC, said that India imported nearly two million 5G smartphones in 2020. “While most of these were in ultra-premium range, this year, any new smartphone priced above ₹30,000 should support 5G,” Kawoosa said, adding that 7-9% of all smartphones sold in India in 2021 are likely to support 5G, making it nearly four times the imports. However, will those so called “5G” users actually get 5G service, especially when roaming?
The big 3 Indian telcos are likely to voice their concerns to the Department of Telecommunications (DoT) as the National Frequency Allocation Plan (NFAP-2018) has not been updated by the department’s wireless planning cell (WPC) more than a year after several new airwave bands, including the 26 Ghz spectrum, were identified by the ITU-R WRC 19 for 5G deployments worldwide, including in India.
The NFAP is a central policy roadmap that defines future spectrum usage by all bodies in the country, including DoT, the Department of Space and the defence ministry. Telcos want it revised quickly as any further delay could potentially hinder the auctioning of the premium millimetre-wave 5G bands.
“The NFAP-2018 needs to be revised expeditiously by the WPC to align different stakeholders if a meaningful 5G auction is to happen later this year, and the industry will take up the matter with DoT,” a senior industry executive told ET.
In November 2019, WRC-19 identified a set of new airwaves, including the 24.25-27.5 Ghz (popularly known as the 26 Ghz band), 37-43.5 Ghz, 45.5-47 Ghz, 47.2-48.2 Ghz and 66-71 Ghz bands for 5G services. However, none of these bands (primarily the mm waves) have been included in India’s NFAP. Note also that ITU-R WP5D has not yet agreed on a revision of ITU-R M.1036 which would include the new frequency arrangements agreed during WRC 19 for terrestrial IMT deployments.
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India should make 5G spectrum available at affordable rates to ensure the sector remains competitive, the Competition Commission of India (CCI) has advised.
Costly rates would allow service providers with better financial resources to launch 5G ahead of others, it fears.
“The current financial health of the sector as a whole could result in an uneven speed of adoption of 5G by operators, the more profitable ones are likely to be faster off the block,” said the CCI in a study. “In case this scenario unfolds, it will have implications for the level of competition in the long run.”
Reliance Jio is currently the only profitable service provider in India. While it plans to launch 5G later this year, rivals Bharti Airtel and Vodafone Idea have said they do not think the market is ready for 5G services.
India telecom market leader Reliance Jio, second ranked Bharti Airtel and financially stressed Vodafone Idea (Vi) have filed applications for participation in the upcoming 4G spectrum auctions, due to start on March 1. The auction for over 2300 MHz of airwaves—valued at Rs 3.92 lakh crore at base price—though is likely to see limited bidding intensity for spectrum worth less than Rs 48,000 crore, with Jio and Airtel expected to be the main players. Industry executives have confirmed to ET that the three telcos have filed in their applications although Airtel, Jio and Vi did not respond to ET’s queries.
Beijing has expressed deep concerns over India’s new telecom policy that does not permit Chinese telecommunication equipment companies (e.g. Huawei and ZTE) to conduct 5G trials in the country, saying the move is not conducive to the innovation and development of related Indian industries.
On Tuesday, India’s Department of Telecommunications (DoT) granted approval to nearly a dozen companies to conduct a six-month trial for use and applications of 5G technology. The telecom service providers (TSPs) included Bharti Airtel, Reliance Jio Infocomm Ltd, Vodafone Idea Ltd and MTNL who have made deals with original equipment manufacturers and technology providers which are Ericsson, Nokia, Samsung and C-DOT.
There was no Chinese company — Huawei or ZTE — in the list that have been operating in India for several years.
Wang Xiaojian, spokesperson of the Chinese Embassy in India, said in a statement that China expresses “concern and regret that Chinese telecommunications companies have not been permitted to conduct 5G trials with Indian Telecom Service Providers in India.”
“Relevant Chinese companies have been operating in India for years, providing mass job opportunities and making contribution to India’s infrastructure construction in telecommunications,” Xiaojian said.
“To exclude Chinese telecommunications companies from the trials will not only harm their legitimate rights and interests, but also hinder the improvement of the Indian business environment, which is not conducive to the innovation and development of related Indian industries”.
Like the US and the UK, there have been demands from the industry stakeholders like the Confederation of All India Traders (CAIT) to ban Huawei and ZTE Corporation of China from participating in 5G network rollout in India.
Xiaojian said that China hopes that “India could do more to enhance mutual trust and cooperation between the two countries, and provide an open, fair, just, and non-discriminatory investment and business environment for market entities from all countries, including China, to operate and invest in India”
DoT favors price cut for 5G, 700MHz bands
The DoT is also likely to shortly seek a fresh base price for the 3300 MHz-3600 MHz band earmarked for 5G, the 700 MHz band, and other new bands which can be used for the next-gen technology. Following this, Trai will need to start a fresh consultation process for arriving at the prices. The regulator usually cuts prices of unsold spectrum.
Indian network operator Vodafone Idea (Vi) has announced it has achieved peak speed in excess of 3.7 Gbps on the mmWave spectrum band, in Pune city (Maharashtra state). Vi reached peak download speeds of up to 1.5 Gbps in a 3.5 Ghz spectrum trial in Gandhinagar and Pune city.
Vi is conducting 5G trials using mmWave spectrum allocated by the government. Vi received mmWave 26 GHz spectrum bands from India’s Department of Telecom (DoT), along with the traditional 3.5 GHz spectrum band, for 5G network trials.
The trials are carried out in the cities of Pune (Maharashtra) and Gandhinagar (Gujarat). Vi’s 5G trial in the city of Pune took place in a lab setup using a captive network of Cloud Core transport and radio access network. In this trial, Vi has achieved peak speed in excess of 3.7 Gbps in the mmWave spectrum band.
Vi has also achieved peak download speeds of up to 1.5 Gbps in its 5G trial network using the 3.5 Ghz spectrum, with its OEM partners in Gandhinagar and Pune city.
India’s telecom services providers have via the industry body COAI expressed disappointment with TRAI’s recommendations for auction of 5G spectrum bands.
In a strongly worded reaction, COAI called the recommendation a “step backwards” than forward towards building a digitally connected India.
COAI maintained that the spectrum pricing recommended by TRAI was too high, and noted that throughout the consultation process, the industry had presented extensive arguments based on global research and benchmarks, for significant reduction in spectrum prices. “Industry recommended 90% lower price, and to see only about 35-40% reduction recommended in prices, therefore is deeply disappointing,” it said.
It added that charging a 1.5x price for spectrum for a 30-year period will nullify the relief provided by the Union Cabinet in 2021. The industry body pointed out that by introducing mandatory rollout obligations for 5G networks without factoring the huge cost of such a rollout, TRAI has “delinked itself from reality and is running counter to the Government’s efforts of enhancing ease of doing business”.
On allowing private captive networks for enterprises, COAI argued that TRAI was dramatically altering the industry dynamics and hurting the financial health of the industry rather than improving it. Private networks would be a disincentive for the telecom industry to invest in networks and continue paying high levies and taxes, it contended.
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