How ready is India to sell indigenous 5G technology globally? Jury's out

Though Airtel and Reliance Jio are developing their own 5G technologies, they are still tying up with global gear makers to roll out the network in the country

Is India ready to sell its indigenous 5G technology to the world, taking on the might of global telecom gear makers like Ericsson, Nokia and Samsung?

Finance Minister Nirmala Sitharaman certainly thinks so. In an event at Johns Hopkins University in the US a few days ago, she surprised everyone by saying that though the story is yet to reach the public, India can now provide 5G technology to other countries in the world.  

However, many, including home-grown telecom equipment companies, are sceptical and say that this is wishful thinking. They point out that substantial investment or funding support from big companies (like Tatas buying Tejas Networks) is required to be in this game. But, clearly, the government, which is pushing manufacturing of telecom network products through a production-linked incentive (PLI) scheme, believes that it can be done.

So is India’s ambition to be a global player in the 5G telecom gear space without basis or can it be a reality? The answer seems to be in the middle: it is  a work in progress.

Both Reliance Jio and Bharti Airtel (which has tied up with the Tatas) have announced that they are developing a 5G stack, and want to sell it to the world. But as they roll out 5G networks across the country, in the initial phase, at least, they have gone for the time-tested strategy of signing up with global telecom gear players such as Ericsson, Nokia and Samsung to build their networks. 

As one top executive of a telecom firm says, “We are in a commercial business, so we can’t go wrong or experiment while building the 5G network.”

But unlike at the time of the 2G, 3G or 4G roll-outs, this time around, telecom firms are not dependent only on global vendors. They have been working on their own 5G technology, which is significantly skewed towards software, where India has an edge, rather than hardware, as in the earlier technologies.

For instance, sources in Jio say that for the 5G roll-out, the company will be using its own indigenously-built 5G core. The core essentially controls the network, so it includes software, which is written on a myriad of key functions such as customer billing, call routing, network operations, maintenance, among others. The other part of a core are the servers that store massive data. 

These can be bought off the shelf from global companies like HP, or Dell, among others.

Reliance has been working on building this 5G software stack in India with its own research and development (R&D) team, together with help from Radisys in the US, which it has acquired. Their R&D engineers will also undertake the system integration of the core with the external network of 5G radios, which, too, requires a lot of software. Earlier, global gear makers would provide the entire suite of proprietary hardware, software and services and operate the network as well.

For radios that have a substantial hardware component, Jio is still depending on its global vendors, say sources. After all, the global big boys spend billions of dollars every year on R&D to make the radios more advanced (lighter and using less power, for instance). For Jio, or any telecom operator, the focus is on services.  

But it has also developed its own 5G radios, which have gone through testing on 5G trial networks. In fact, Reliance is investing Rs 1,670 crore in its joint venture with global electronics manufacturing service (EMS) player Sanmina to manufacture 5G equipment in India for the domestic and global markets.

Sources in the know say that such a strategy does three things: First, by having an alternative radio, as well as its own core, Jio has ensured that foreign global gear makers cannot dictate price, especially as price warriors like Huawei are out of the Indian 5G market.

Experts opine that the push by many telecom providers to build their own 5G technology through open radio access networks (O-RAN), where you can use a combination of vendors rather than one global player with proprietary technology, is primarily to ensure that the levers of control are now with the telecom providers rather than the global gear makers.

Second, while Indian telecom firms require huge volumes of radios (there are 3 million radios already installed across India), which only the global players with their large supply chains can currently provide, there is also a need to build an alternative supply chain and manufacturing expertise and scale it up. That is why Jio has taken the first step with Sanmina to start manufacturing 5G gear.

A senior executive at Jio sums up the firm’s strategic intent when he says that it will buy equipment from both global players as well as eventually use its own, so that Jio is in sync with the advancements that are happening in the technology. Jio is also considering utilising its own 5G stack to roll out 5G services in some circles.

Third, observers say that Jio can leverage its experience in India, which has the most complex network in the world, to sell 5G core technology or even 5G radios globally. It could begin by selling in markets in Africa and south Asia, among others, as their requirements would be fewer and a better price could be offered.

Even Airtel has got into a partnership with TCS to build an indigenous 5G stack based on O-RAN and it, too, is looking at the global market.

The Tatas have, in fact, put together a well thought-out strategy to enter the space. They have acquired telecom design and hardware maker Tejas Networks, which can make radios. And the latter has bought over Sankhya Labs, a wireless communications solutions company, which is working on 5G software. TCS will act as a system integrator, putting the hardware and software parts together on an O-RAN platform.

The tie-up with Airtel will offer the Tatas the advantage of an existing live network to test both its proof of concept as well as gauge its performance on a commercial network. And Airtel will get indigenous 5G tech and equipment.  

Experts say that if the plan succeeds, the Tatas could leverage a ready-made global market for its products, since Airtel runs telecom operations in Africa and south Asia. An Airtel executive had pointed out earlier that O-RAN is a disruptive technology and will take time to mature, but they expect it to scale up in 2023-24. And the Tatas are already testing their indigenous 4G as well as the 5G stack.

That’s not all. The Tatas, along with the Centre for Development of Telematics, which developed 4G core and radio technology, has made investments to undertake a proof of concept trial for 4G for BSNL.

They have been supported by the government’s decision that only indigenous technology will be used for the state-owned BSNL’s 4G and 5G foray. Out of the four chosen for doing proof of concepts, only the Tatas were ready to invest in it. That is because they have a long-term play and also the cash for it — even if it fails, say analysts.

Although the trials got extended and many deadlines were missed, the Tatas have now got the contract to build the 4G network for BSNL. The delay may have commercial consequences for BSNL, but it will give the Tatas the chance to hone their skills in building a live network from scratch. And analysts say that this learning will help them once BSNL begins its foray in 5G, which is expected to happen simultaneously.

The third player in the 5G gear space are the home-grown firms. However, they are mostly small, and even those that are of a reasonable size, do not have any orders from operators for 5G equipment. Some of them have been supported by the Universal Service Obligations Fund (USOF), but the money is not significant. You might participate in the PLI scheme, but incentives come only when you produce. And you produce 5G gear only when you have orders. So you end up manufacturing other telecom products that have a market.

Besides, even if telecom companies want to give orders, they don’t have carrier-grade products to offer or even the manufacturing facilities to meet their volumes. Hence, the home-grown players do face serious challenges. Yet,  some medium-sized telecom gear players like VVDN Technologies have designed and manufactured low-power 5G radios (with  specific functionalities) and even export it to the global markets like US, Europe and Asia-Pacific.    

Says R K Bhatnagar, director general of the Voice of Indian communications Technology Enterprises (VOICE), which represents domestic mobile gear makers, “We have 5-6 companies that have made the 5G radio design. But the problem is that they do not have any orders. They need funds to undertake proof of concept. And they cannot plan manufacturing if they do not have any orders. So the government has to help them.”

Bhatnagar feels that the domestic gear makers should concentrate on what could be a burgeoning private network (the government has allowed independent 5G private networks) market and the growing number of government contracts (like the Railways) where the requirement for 5G equipment like radios is not so rigid or so large.

NEXT-GEN PLAY

• Reliance is investing Rs 1,670 crore in its joint venture with global electronics manufacturing service player Sanmina to manufacture 5G equipment in India for the domestic and global markets
• Airtel has got into a partnership with TCS to build an indigenous 5G stack based on O-RAN and is looking at the global market
• Tatas have bought telecom design and hardware maker Tejas Networks, which can make radios.
• And the latter has bought Sankhya Labs, a wireless communications solutions firm, which is working on 5G software. TCS will put the hardware and software parts together on an O-RAN platform
• But home-grown companies are mostly small, and don’t have any orders from operators for 5g gear