In 5G marathon, India decides to sit back and mourn as China, US, Europe race ahead

If the 2G fiasco stemmed from corruption, the death of 5G-enabled telecom revolution even before it began stems from stupidity.

A file photo of Law Minister Ravi Shankar Prasad and PM Narendra Modi | PTI

As Europe and China witness the rollout of 5G, the future generation of telecommunication, India can sit back and mourn the end of its next telecom revolution even before it began.

The final nail in the coffin of the already stressed telecom sector came earlier this week with the disbanding of the Committee of Secretaries (CoS) set up to suggest relief measures for the sector.

While companies were hoping for a settlement on the AGR payments, all they got was a two-year moratorium on spectrum payment, amounting to the relief of about Rs 42,000 crore.

As per a report in the Economic Times, Vodafone-Idea and Airtel together face AGR dues amounting to more than Rs. 89,000 crore, payable within the next few months.

To put things in perspective, Airtel registered a loss of Rs. 23,000 crore in the September quarter, accounting for the AGR dues. The loss exceeded the consolidated revenue from operations, which were around Rs 21,131 crore in the same quarter.

However, it’s Vodafone-Idea that is hanging by a thread. Accounting for AGR, their September loss was around Rs 50,900 crore. Their revenue from operations in the same quarter was around Rs 10,800 crore, almost one-fifth of the loss.

The lack of any debt relief has added to the existing problem of lack of spectrum quantum. As per this report, India’s telecom operators are planning to push back 5G network deployments to as late as 2025 due to high base price, lack of spectrum, and absence of any new bands for auction.

The report quoted the director of the Cellular Operators Association of India (COAI), which includes Airtel, Reliance Jio, Vodafone-Idea and hardware giants Huawei, Ericsson, and Cisco.

The delay in rollout happened for two reasons. Firstly, the pricing was set at Rs 492 crore for 1 MHz. This pricing was not viable for most operators, given the lack of tested use cases, international prices, and more recently, the piling debt.

Secondly, against an earlier availability of 300 MHz spectrum, only 175 MHz remains, with 25 MHz going to ISRO and 125 MHz going to defence. The big three operators, however, were seeking 100 MHz each.

Earlier this week, Ericsson, one of the prominent 5G gear makers, revised its 5G rollout estimate for India to 2022 from 2020. However, with the recent developments, even this revision comes across as highly optimistic.

However, the loss is not constrained to telecom operators alone, but several other significant industries.

The potential use cases of 5G can be categorised under four sections. Firstly, as enhanced mobile broadband capable of delivering speeds in excess of 100Mbit/s both indoors and outdoors.

Two, in the form of Fixed Wireless Access (FWA), which enables operators to deliver ultra-high-speed internet to areas where fiber cable layout is difficult to maintain or install, such as the Himalayan states and the North-East.

Three, as an enabler for Internet of Things (IoT), as it would allow millions and millions of devices to connect to the internet, thus aiding data analytics for numerous private and government programmes.

Lastly, as an enabler for super-reliable low-latency communication. In computing terms, latency is described as that delay (in milliseconds) before the transfer of data begins following the instruction for its transfer. This is critical for industries like healthcare, AI, self-driven cars, and virtual reality applications.

So, which industries are set to lose out because of the delayed 5G revolution?

First, the media and entertainment industry. Already, 4G has enabled a tectonic shift in the way we consume media. From buying pirated DVDs to illegal downloads, the country has moved to on-demand streaming services. Even the news industry has made significant investments towards their video products.

Thus, with the delay in faster mobile broadband services, they are set to lose while their global competitors shall innovate.

As per an ETTelecom and Analysys Mason survey, 83 per cent of the respondents saw the media and entertainment industry as the biggest beneficiary of 5G. Given the employment generation, both formal and informal, in this sector, the 5G delay is going to hurt long-term prospects, beginning with foreign investments.

Second, the healthcare industry. In the age of smart wearables and when the likes of GAFA are investing heavily towards monetising users’ health data, programmes like Ayushman Bharat could have benefited immensely with 5G. With the delay, local innovation on the front of robotic surgeries and remote healthcare shall suffer.

The problem is not of services alone, but of hardware as well. By the time there is massive consumer adoption of 5G, around the late 2020s or early 2030s, the local market will find itself flooded with cheap Chinese smart devices, as it does with mobile phones today, given the headstart they will have in the industry. This will kill advantage programmes like ‘Make in India’ could have used.

As per the same Mason survey, 64 per cent of respondents saw healthcare as the second biggest beneficiary of 5G.

For the same question, the survey puts the automotive sector at 60 per cent. In India, we already have witnessed a trailer for this, given how MG Hector, India’s first ‘internet’ car outsold some of the local models.

Internet- and IoT-capable cars and road infrastructure are indeed the future.

Third, the local hardware industry. While Huawei was granted permission to exhibit 5G case demos last month at the Indian Mobile Congress in New Delhi, following the two-day informal visit of China’s President Xi Jinping, the concerns continue to remain about its deep ties with the Chinese government.

With the delay in 5G rollout extending to 2025, the local capacity-building in hardware becomes a challenge.

Already, operators Airtel and Vodafone Idea, with tremendous exposure to Huawei, would find it hard in upgrading their 5G infrastructure, irrespective of the national security concerns that come with the gear maker.

The piling debt also makes the investment in infrastructure a big challenge. For the implementation of 5G, Massive MIMO (Multiple-input multiple-output) technology is warranted.

The principle can be summed up as follows: any wireless network that ensures transmission and receiving of more than one data signal simultaneously over the same radio channel.

The m-MIMO technology warrants the use of high-frequency spectrum. Thus, telecom companies would be required to constantly add support structures to extend 5G wireless coverage.

From the current 4×4 MIMO combination used today, the 5G setup is expected to feature an array of 64 to 128 antennas.

5G requires more support structures that are far more expensive to install. A conservative estimate puts the requirement at 4 to 5 times the current structures for 5G.

This would also add to the overall costs of the telecom operator, thus making it less viable for the consumer who bears the cost. Alternatively, there is also the question of densifying the network using small cells.

With the current debt situation, pricing woes, and lack of government support, it appears difficult for Vodafone-Idea and Airtel to balance support for local capacity building in hardware and infrastructure investment. Eventually, the dependency would fall on Chinese for the same, which is another long-term loss for India.

Four, the service sector suffers too. Given India’s market size, an early rollout of IoT apps could have fuelled the growth of local industries competitive in data analytics and intelligence.

However, as it has been for a greater part of this decade, India’s second-tier IT firms would now find themselves engaged in creating ripoffs of apps with origins in either the West or China.

If 5G deployment and rollout is thought of as a marathon, China and the United States already have a headstart of at least 5 years.

The 5G telecom revolution, for now, is dead, and there is no way of quantifying the notional loss from it to consumers, companies, and the government, for the loss is so huge. If the 2G fiasco stemmed from corruption, this one stems from stupidity.

The author is a senior sub-editor at Swarajya. He tweets at @tushjain15. Views are personal.

This article was first published on Swarajya.