There is little doubt that 5G technology will be more powerful compared to 4G. It will not waste power, energy and ultimately weaken access to the internet. The larger frequency will have greater ability to support fast data without interfering with other wireless signals or becoming overly cluttered.
5G is the next technological frontier and will provide a new dimension to the Digital India, Smart Cities & Smart Village missions. It has potentially large contributions to Make in India and Start-Up India missions. The objective is to position India as a globally synchronised participant in the Design, Development and Manufacturing of 5G based technology, products and applications.
The application of 5G technology will result in massive changes for both consumers and enterprises. It will offer consumers incredible broadband speeds at home (up to 20Gb/s). It will also enable companies to make advancements such as smarter, better connected cars, advancements in medical technologies and improved retail experiences through personalization. 5G will not only enable faster connections but will provide improved bandwidth (the number of devices and data that can be handled at once) too. Its benefits will spread further than just smartphones. The improved technology will cover the Internet of Things and will act as a catalyst for a wide range of new consumer and enterprise experiences, including both data intensive and energy efficient applications: high definition video, self-driving cars and advanced Virtual Reality. It will be a boon for consumers enjoying upgraded services at almost the same cost.
There is another angle to the acceptance by consumers i.e. the device support. The non-tech generation will be hesitant to investment on the device that will support 5G. Considering the fact that the speed and performance of 4G is not compromised and the speed is good enough for them to continue.
Whereas the Tech-Savvy generation changes their phone in average 2 years so they will be willingness to invest in the new technology. This will also be a boon for telecom equipment manufacturers who will mark it with new feature and technology upgradation to clients.
At one place consumers will benefit from the new technology but will telecom operators will also reap the benefits?
Telecom sector is taking lot of efforts to adapt 5G. Be it upgrading skill sets, adapting the technology and managing the cost associated with this. Here are the few reasons that will sum-up the discussion on the challenges the Telecom sector is facing:
The Price of the Spectrum– The price to be reserved for spectrum by the network operators is 4.9 billion rupees per unit of spectrum in the basis 3300-3600-megahertz band for national coverage. The prices laid down by Telecom Regulatory Authority (TRAI) is exorbitant.
Gopal Vittal, Bharti’s chief executive for India, told analysts in a conference call that the company would “look seriously at 5G” only if the government brought down the reserve price. According to brokerage CLSA, India’s reserve price is four times that of South Korea’s, while COAI says it is six times the global average. CLSA estimates the current reserve price means companies get just a 7% return on investment even assuming additional margins from the 5G network are as high as 70%. The brokerage said it would be negative for operators to spend so much on a project offering limited returns.
Easy Shift of Consumers to other operators– Considering the tough competition Telecom Service providers cannot increase the cost on the end consumers. Otherwise there will be a shift to other operators. Telecom companies are required by law to port the number out when a consumer wants to start service with a new carrier. According to the FCC, a company can’t refuse to port your number even if you have an outstanding balance or unpaid termination fees.
Price War– Industry have seen their profits and revenue crumble, this is due to crippling price war triggered by the entry of Jio in 2016, which wiped out many players in the industry, leaving just three. Meanwhile, the company’s debt has surged, partly due to the high prices they’ve paid in the past for spectrum and their more recent investments in 4G. Intense competition in the sector since the entry of Jio has weakened the balance sheets of telcos, eroded revenue and earnings and led to consolidation.
Existing Debts– Bharti’s debt at the end of March stood at $16 billion, while Vodafone Idea’s totalled $17 billion. Both have suggested the government delay the auction of airwaves, saying India lacks the infrastructure, including a nation-wide fibre network necessary to support 5G. Telecom companies have said the prices suggested by TRAI are unsustainable and too high. Pointing to low base prices set by countries such as South Korea, on a per MHz basis for 5G airwaves, they say India’s pricing is seven times higher.
It will be boon for consumers as they will secure benefits of higher end technology at lower cost. But it will be win-win situation for Telecom Sector only when the unreasonable prices of 5G spectrum are brought down by the government. Operators expect the government to eventually bring down the prices by 30% to 35%.
The economic benefits from the 5G technology are also quite immense. It has been stated that 5G technologies rollout will help in Increasing GDP, Creating Employment, Digitizing the economy. For India, 5G will provide an opportunity for industry to reach out to global markets, and consumers to gain with the economies of scale. Worldwide countries have launched similar forums and thus, India is in the process of joining the 5G band wagon. To make this project a success flexibility and support will be required by the Government at all stages.
To start one way forward for Telecom operators can be to offer a 4 & 5 G services to consumers at differential pricing. This means to offer 5G services at a higher cost with better coverage and feature rich enabled services.4G & 3G services can be for the masses and 5G rollout cost can be for the classes. This can help telecom to recover portion of high infra cost and rollout cost.
In an era where customer is the king (being habituated to lower tariffs and enhanced services). It becomes imperative how effectively and strategically telecom operators manage the rollout and transition of 5G services which help define their top, bottom line and their very existence.
Kanika Seth Khatri
Assistant Marketing Manager