With the hope of launching 5G technology along with global telcos in 2020, the Indian government has started taking baby steps for the development of 5G in the country. The 5G technology is currently being standardised and India wants to play a role in the standardisation process. Finance minister Arun Jaitley recently allocated `500 crore for research and development of 5G technology and a part of this will be used to set up a research team of 200 researchers from the five IITs of Delhi, Chennai, Bombay, Hyderabad, and Kanpur. This team will work towards creating India-specific use cases for 5G.
Further, the Department of Telecommunications will set up a development centre with IIT Chennai to work on 5G technology. This can, then, be used by telcos, and other players of the ecosystem, to test the technology and use cases.
This is possibly the first time that the Indian government is taking the initiative to play an active role in the development of telecom technologies. Usually, Indian telcos are somewhat behind the global telcos in deploying technologies. They are also not known to conduct extensive trials and demonstrations before implementing a new technology. A spectrum auction is also being planned later this year.
This seems to be changing with Jio’s entry in 2016. The service provider’s disruptive entry was preceded by many trials and pilots mainly because 4G was still a developing technology. With this, India did close the gap between new technology and its launch in the country. Airtel also recently conducted a trial of multiple input multiple output (MIMO), a key technology required for the deployment of 5G.
So, it is not without reason that the Indian government now wants to work to close this gap further. Any new technology is an opportunity for a new player or a country to come up and take on the leadership role.
Deep distress in telecom industry
Even so, a closer look reveals the deep distress of the Indian telecommunications industry. The massive debt of `4.5 lakh crore or $70 billion will make it extremely tough for Indian telcos to invest in the development of 5G. Extreme hyper-competitive market environment means that the concern is right now to plug the losses, increase their market share and reduce losses. All service providers, except Reliance Jio, posted losses in the last quarterly results. It is tough for the telcos to invest in the new technology.
There is another reason why the service providers might be slightly reluctant to join the 5G bandwagon is the concerns around monetisation of 5Gtechnology. In spite of the global hype around 5G, many telcos, including British Telecom have raised concerns around the return of investment of 5G.
5G is unlike any previous technology. It promises ultra-high mobile broadband speed with extremely low latency. This unique combination potentially opens up a host of new and innovative real-time use cases including remote surgery, autonomous driving, augmented reality and virtual reality. But, it also involves collaborating with different industry verticals, and business models are going to be fundamentally different from the prevailing ones.
“I talk to other CEOs around the world in this space, and we have all been struggling a little bit making the business case work,” BT’s CEO Gavin Patterson is reported to have said while talking about 5G at a recent event. Deutsche Telekom and other telcos across the globe have voiced similar concerns. Lack of an business model, coupled with huge debt and falling profits, is sure to evince zero interest from Indian telcos in this technology. Besides, the service providers are still in the process of expanding 4G networks in the country and would like to monetise that before they begin to invest in newer technology.
(The writer is an independent journalist)