A controversial call for 5G private networks

A controversial call: Trai's recommendation has made enterprises happy but telecom operators have strongly opposed the move

The battle over 5G captive wireless private networks has been a bitter one. Mobile operators have opposed any move to set aside spectrum for captive wireless private networks at an administered price, arguing that doing so would skew the playing field. Ranged against them are vociferous private network supporters such as the Tatas, ITC and the Broadband India Forum, which has global tech players as members. They see assigning spectrum directly to enterprises as the only way to make Industry 4.0 — with connected machines and the Internet of Things (IoT) — a reality.

On Monday, the Telecom Regulatory Authority of India (Trai) put its stamp on the latter by recommending that those setting up their own isolated private networks should be permitted through a pan-India licence and be given 5G spectrum if they want it at an administered price for five years, which could be renewable. For the uninitiated, a 5G private network is used exclusively for devices and machines within, say, a factory premises, an educational institute, a large office and so on. Trai has put in a caveat: A call on the legality of allocating spectrum at an administered price has been left to the Department of Telecom (DoT).

Trai has also recommended other options for private networks — telecom service providers (TSPs) can lease spectrum to companies which, in turn, can set up their own private networks. The price can be negotiated between the two. They can also invite TSPs to set up a private network in their premises using their spectrum.      

The regulator has also identified administered spectrum in various bands — 40 Mhz in the 3700-3800 band, carving out a similar amount in the 4,800-4,990 and 28.5-29.5 Mhz bands. However, the net worth of the holder of the licence (which will be for 10 years) should not be less than Rs 100 crore. Trai has asked DoT to assess the demand for spectrum for private networks by creating a portal, keeping it open for six months, to include the name of companies, proposed use of spectrum, geographical locations, net worth of the companies and their revenues.

These recommendations are not what mobile operators wanted. For one, they said this could seriously impact the viability of running a 5G network. Said a top executive of a leading TSP: “If enterprises build their own 5G networks with their spectrum, what are we buying 5G spectrum for? Just to serve individual customers and for fixed wireless broadband? The bulk of the 5G revenues is expected to come from enterprises.”

The Cellular Operators Association of India (COAI) has clearly opposed the view that while they will pay auction rates for 5G spectrum, enterprises will get it free. COAI is of the view that enterprises should, instead, buy a Universal Access Service Licence, just as TSPs do, and bid in the auctions, too.  

COAI says that private networks will disincentivise the telecom industry to invest in networks and continue paying high levies and taxes. It wants private networks to be disallowed for the financial viability and orderly growth of the telecom industry.   

In its presentation to the regulator, Airtel had argued that such allocations would affect its other mobile customers. Instead, it has pushed for 5G spectrum leasing so that it can assist those companies that want to set up their private networks. Airtel also pointed out that it has the additional advantage of offering network access outside the confines of an industrial campus with service continuing in the public network. And with slicing of 5G spectrum possible, it can create a customised end-to-end network for a customer.  

Their concerns are understandable. Currently, only 10 per cent of the revenue of TSPs comes from enterprise, but this could dramatically move to 40 per cent with the advent of 5G, said experts. So, everyone is looking at a larger piece of the enterprise pie. But now there are new players in the game in the shape of companies that want to run their own 5G networks or, as analysts explain, those such as Tata Communications (which has supported assigning spectrum to companies) or Amazon Web Services (AWS), which can offer solutions to build and run such networks on behalf of enterprises. What’s more, many of the tech companies that earlier had no option but to tie up with TSPs may now be able to offer solutions to their enterprise customers.

“The Authority, fully considering that Captive Wireless Pvt Networks are not public networks and have no market customers, and noting that there can be only one claimant for a specific location, has, most appropriately recommended, in line with global practices, that the spectrum is assigned administratively, after examining legal implications, if any,” said T V Ramachandran, president, Broadband India Forum. “The Authority has stated that it would recommend pricing recommendations keeping in mind transparency, geographical aspects, factoring of market price etc. These are also most laudable win-win recommendations.”

On their part, enterprises have offered strong arguments in favour of getting their own spectrum. ITC listed three reasons to the regulator. One, the price charged by TSPs could be a deterrent as they can form a monopoly in specific regions based on their licences. Two, it may be difficult for them to get spectrum from telecom companies owing to the unavailability of networks in the region. Three, telecom companies may be divided between their obligation to roll out 5G for public networks and the demands of private networks. 

Tata Communications also argued that deployment of private networks is highly customised and distinct from public networks, demanding more security, bandwidth and latency.

But will DoT find it tenable to offer spectrum at administered price, especially when the Supreme Court has made it clear that all spectrum has to be auctioned? Supporters of the move said DoT is already going down this route by offering backhaul spectrum for telecom operators. And the government is also working on a new law to resolve various contentious issues.     

What Trai has recommended is an enabling policy to push private networks of the kind that exist in many parts of the globe. For instance, Germany has already issued 5G private network licences to over 33 companies — among them BASF, BMW, Bosch, Siemens and Volkswagen. Of course, these networks remain works in progress still. But Nokia, for instance, has deployed a private wireless network in its Chennai factory and has seen 31 per cent labour time reduction due to robotic automation — a clear example of what a private 5G network can do. According to Trai, in over 55 countries, 626 organisations have been granted licences to run a private network on LTE or 5G. No surprise that Trai wants India to be the 56th country to join that party.