AI Insights

5G - Not an Evolution but a Significant Revolution

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There is a lot that we heard about the 5G in the past few months. What is 5G and what can it offer? How is it different from other generations? Is India 5G ready? Why is there a delay in 5G spectrum auction? What is the status of the Telco that partnered with China’s Huawei? What costs were incurred on previous spectrums? What impact does coronavirus had on India’s 5G status and recommendations the technology despite for India to cope up with the world technology are some of the main topics covered in the article.

How is 5G different from 4G?

Source: trai.gov.in/sites/default/files/TechnologyDigestMay2018.pdf

Key comparison from 1G to 5G

Yes, 5G is the way. It is one of its kind. We have heard enough about currently imaginary things it is capable of. A research conducted by the Steering committee mirrors that the value of 5G in India is higher than any other country because of lower level investment in physical infrastructure. With its high data speeds as high as 20Gbps with less than 1millisecond latency, it is tremendously useful in bringing a striking benefit to the Indian economy.5G wi-fi networks will offer quicker information speeds to client devices. For Instance, Two-hour movies will be downloaded in 5 seconds vs. 6 minutes on a 4G network.

Following are some of the areas that can hugely benefit from 5G:

i) Infrastructure efficiencies: 5G will enable vehicle Platooning; this technology makes use of 5G’s low latency communications functionality to per cent motors in Platoons with low inter-car spacing no matter journeying excessive speeds.

ii) Manufacturing efficiencies: 5G will enable the use of robotics for precision manufacturing especially when humans are almost incapable to perform such tasks with the necessary precision. It will get easy to manage and track the inventory and boosts the supply chain management (SCM) of the company.

Ex. Recently launched Jio Mart and Amazon Fresh are competing to deliver groceries to an average Indian. Currently, Jio which is available in 200cities gets 250,000 orders per day. Such services can be optimized when efficiency in SCM increases.

iii) It is the entire value chain in the agricultural sector that will be improved- right from precision farming, smart irrigation, improved soil and crop monitoring to livestock management

iv) In the energy sector, ‘smart grids’ and ‘smart metering’ can be efficiently supported enabling growth of alternate energy technologies. Also, low latency communication is critical to managing these grids. Government departments which include DeitY and DoT have to make certain that initiatives which include BharatNet and ‘Smart Cities’ Have an excessive diploma of home value-addition and Indian proprietary technology in order that home merchandise may be promoted. Apparently, this project can be either given to Government-owned BSNL or 5G ready Mukesh Ambani’s Jio.

v) Health care sector: 5G can not only enable telemedicine delivery but also does tele control of surgical robotics and wireless monitoring of vital statistics. This is crucial in such challenging times where it is next to impossible to provide Covid-19 vaccination to at least 60% in the next 1 year.

The medical institutions include Dr Reddys’, Serum and Biocon have partnered with various global institutes and WHO to get a Covaccine. 5G has the capability to enhance the rate at which results are produced due to its Network Slicing capability.

Again, Jio in its 43rd AGM announced that they would be integrating the overall healthcare ecosystem with the help of Jio Health Platform. This will enable people to book online consultations, securely store and share health records, book lab tests etc.

Apart from these benefits 3GPP (3rd Generation Partnership Projects is an industry-driven standard body that has undertaken the standardization of mobile technology for the past 25 years and is currently developing standards for 5G networks based on ITU requirements) have proposed three main tech categories and corresponding use cases for the 5G:

What is real 5G and is India 5G ready?

There are many mobile operators in India and across the world posing to be 5G ready. Is it true? It is important to understand that the real 5G is ready only by having 5G core and not having the same bandwidth and spectrum that they have used for the previous generations like 4G, 3G etc. 5G isn’t really 5G until it operates in standalone mode.

In the late Feb this year, Mukesh Ambani was asked by US President Donald Trump whether his’ mobile operator Reliance Jio has any plans for 5G, to which he replied that not only Reliance Jio has plans for launching 5G but also it’ll be the only 5G network on Earth that will not have a single Chinese component in it. On the other hand, Airtel said that though it’s going to use the existing core for 5G it is not sure about the infrastructure using 4G’s core and whether it will perform effectively or not.

Currently, Reliance Jio has partnered with Samsung networks, a South Korean company, Bharti Airtel with Ericsson’s 5G Solutions and Vodafone Idea Limited (VIL) with Nokia to provide for 5G in India.

Jio in addition to the partner with Samsung, it has also partnered with Google Inc., Qualcomm, Intel and Microsoft to gain a strategic advantage to be the first 5G launcher. Google and Qualcomm have together invested for an aggregate amount of ₹ 34,467 crores in Jio platforms. Airtel has recently deployed its ‘Massive MIMO’ initially in Bengaluru and Kolkata which claims to be India’s first 5G capable technology. It is 5–7 times faster than current 4G. It has partnered with Nokia and Ericson.

What is the Global Status of 5G?

Global 5G development (source: GSMA)

The above picture clearly shows the global status of the adapting 5G right from 3GPP standards and trails to commercial launches of 5G across countries like South Korea, US, China, Australia, Japan etc.

Investment by communications service providers (CSPs) in 5G network infrastructure accounted for 10.4 per cent of total wireless infrastructure revenue in 2019. Gartner predicts that communications service providers in Greater China, mature Asia/Pacific, North America and Japan will reach 5G coverage across 95 per cent of national populations by 2023.

The report says that Greater China leads the world in 5G development, with 49.4 per cent of worldwide investment in 2020 attributed to the region. By 2023, 15 per cent of communications service providers worldwide will operate stand-alone 5G networks that do not rely on 4G network infrastructure, according to the prediction by Gartner.

India is yet to make the 5G core to compete with these tech giants to keep India on par. India has its own ways to do things. So, the government has taken some steps like enhancing the role of Atmanirbhar Bharat by providing the required schemes. Having said this, it is important to mention the ways of the country in a detailed manner:

How is Atmanirbhar Bharat mission relevant to the Anti-China steps?

The Atmanirbhar Bharat mission of the Government strongly influences the steps that Indian telecom operators have earlier decided about.

Telecom operators including Bharti Airtel, VIL and BSNL have earlier decided to partner with a China-based tech giant, Huawei. But now since the Government has banned all the Chinese apps and asked the operators to not to partner with the Huawei, the telecoms had to drop their plans.

The three Schemes namely, the Production-Linked Incentive Scheme (PLI), Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme, which were notified by the Ministry of Electronics and IT (MietY) on April 1, have a total outlay of Rs 50,000 crore.

The PLI Scheme shall extend an incentive of 4% to 6% on incremental sales (over a base year) of goods manufactured in India and covered under the target segments, to eligible companies, for a period of five years after the base year.

The SPECS shall provide a financial incentive of 25% on capital expenditure for the identified list of electronic goods. The EMC 2.0 shall provide support for the creation of world-class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) sheds / Plug and Play facilities for attracting major global electronics manufacturers, along with their supply chains.

As a result, Pegatron, Apple’s second-largest contract manufacturer, and Samsung are believed to have applied to the government’s PLI scheme in order to shift production away from China amid Sino-US geopolitical tensions. None of the top Chinese players like Oppo, Xiaomi, Vivo Realme has applied to this scheme due to the tensions mentioned earlier.

As mentioned earlier, Bharti Airtel has partnered with Ericsson’s 5G solutions, Vodafone Idea with Nokia and BSNL with Ciena to provide 5G in India.

This is not news to Reliance Jio as it has already ready to fully comply with MII (Make in India) policy by building a complete home-developed infrastructure from scratch.

What challenges India to adopt 5G?

India is a country with the utmost diversity. It has people from all backgrounds and sections. Also, the disparity between the rich and the poor is high. 5G technology is not cheap. To provide this technology to all the Indians at affordable costs poses a great challenge. Though this can be overcome by forming a strategic partnership or Public-Private Partnerships (PPPs) there are some issues attached to it. One such issue is the sale and usage of the spectrum. The spectrum cannot be used to trade. It can be only sold because it is a National property.

Historically, the Government of India has auctioned for spectrum bands ranging from 700MHz to 3300MHz for which it received average revenue $10billion from 2010–2018 for 2G, 3G and 4G spectrums.

One common thing in almost all the auctions is that the reserve prices were very high for the telecoms to bid for the spectrum. For the same reason, many times the bands were just left unsold. It poses a great challenge to TRAI (Telecom Regulatory Authority in India) which priced the airwaves at around Rs.50,000 cores for MHz of pan India 5G Spectrum, Rs. 492 crore per MHz of airwaves in the 3300–3600 MHz band. This high reservation of spectrum prices is somewhere a problem to the authority only because bands may get unsold.

The next issue for the companies and the investors is the Debt the telecoms have incurred to meet the competition and more importantly the uncertain times and sudden surge in demand. Reportedly, VIL and Bharti Airtel have asked TRAI to give them 20 years to clear its AGR dues. The following picture briefly depicts the dues of the telecoms:

Note: This is according to DoT’s estimate (source: ET Telecom)

Reliance’s Jio has already cleared its dues of Rs.193cr. It has also agreed to clear the AGR dues of RCom to an extent of its spectrum usage since 2016 apart from the Spectrum Usage Charges (SUC) that it has paid for more than 3years now.

The Fixed Assets Schedule of the balance sheets of these companies indicates that investment on Infrastructure is majorly done by Jio with over 7lakh million in FY2019. It is followed by Bharti Airtel with over 5Lakh million. Irrespective of the weakest balance sheet among the top telecom players and enormous AGR dues, VIL also invested over 4Lakh million in its Plant and Equipment. This simple analysis mirrors us the readiness of the major Indian telecom operators to adopt and deliver 5G.

The following table indicates the Bandwidth range and the Recommended reserved price of the spectrum by TRAI:

Source: Telecomlead.com

It is a difficult challenge for the mobile operators to even get ready for the auction. The Coronavirus pandemic gave a chance to the Telco operators to take their own time to get ready for the auction. Having said this, it is necessary to mention that according to the secretary of DoT who was mentioning about the delay in a spectrum auction in one of his speeches, he clearly said that the authority will not stop the operators to conduct any number of 5G tests in the country but the spectrum auction will not be conducted until next year because of the Covid-19 pandemic due to which the operators are struggling to gather enough revenues.

The operators must strive to clear their AGR (Adjusted Gross Revenue) dues as soon as possible so that they can pocket necessary funds to buy the infrastructure in the coming year

Where’s the solution?

So, here are some workable recommendations that can help India to be 5G ready. They are as follows:

Firstly, The Public Procurement Policy should be implemented correctly. This will help both the Government and the mobile operators to achieve sustainable growth and strategic advantage.

Secondly, due to Covid-19 pandemic, the country is majorly investing in health care and R&D sectors. It can divert its funds partly to the infrastructure to reap long term benefits.

It is a good indication that TRAI is considering lowering the prices of the spectrum due to the pandemic. Thirdly, It is advisable that TRAI, DoT and other associations also consider the AGR requests of the operators like Bharti Airtel and VIL while fixing the final spectrum prices.

Finally, the Government can provide technology awareness through online mode and subsidies to the weaker sections to make them tech ready.

Conclusion

In a nutshell, 5G is going to be something that boosts the hope of the nation which almost lost its sign to become a developed nation at least for the next 10 years due to the novel Coronavirus pandemic and its inevitable phase of recession. 5G is not just evolution but a significant revolution that tremendously improves our standard of living by bringing efficiencies right from precision manufacturing to creating a strong and reliable value-chain.

Nevertheless, it must be optimally utilized. 4G is still not accessible to many in India. The Govt and corporates should strive to get this flaw rectified by forming strategic partnerships to make it available and affordable by all sections of the economy. This will surely help the Government to make at least the people 5G ready if not the technology by the end of next year so that its benefits can be absorbed directly.

The uncertainty is all-pervasive and the companies that deal this best shall be leading India in the upcoming years.

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