Private 5G networks: The next big battle in India's telecom space

Telcos want enterprise service providers to come under the licensing and spectrum auctioning regime but the lobby for a light-touch regime is pushing back

Private 5G networks, where the infrastructure is used exclusively by devices authorised by the end-use organisation, such as those within factory premises, are becoming a growing business in the global telecom sweepstakes.

Last year, Germany issued 5G private licences to over 33 companies — including such major names as BASF, BMW, Bosch, Lufthansa, Siemens and Volkswagen — to run exclusive networks. In France, airport operator ADP Group and French electricity company EDF have joined the same bandwagon. And the UK, the US and Australia are putting in place policies to enable private 5G networks.

So can India, which is expected to roll out 5G sometime next year, be far behind? A battle has already begun over government policy to permit such networks. Telcos want 5G private networks to operate on the same terms as they do. This means operators of 5G private networks should buy spectrum through auctions and pay for licences. Technology players, on the other hand, want spectrum to be offered at an administrative price, as Germany has done.

The Broadband India Forum (BIF), which counts Facebook, Google and Microsoft as members, is pushing for spectrum at nominal fees. As T V Ramachandran, BIF president, explained: “A private network with limited coverage is of interest only to that enterprise. Spectrum required is also small, between 50 and 100 MHz, and it is a closed user group not connected to any external public network with no commercial communication services involved. So there is no reason to auction spectrum, administrative allocation is the way.”

BIF also points out that the lack of interconnection with external public networks precludes the need for a licensing regime similar to that of commercial telecom service provi­ders. A light-touch licensing regime would work just as well.

Predictably, telcos vehemently oppose any suggestion that spectrum should not be auctioned. “One reason is that they want a level playing field. If they pay for spectrum for 5G, how can private networks get it free? Two, private networks should also get a universal access service licence to operate the same services just like they do and pay the same price,” Cellular Operators Association of India director general S P Kochhar pointed out.

The difference of opinion is understandable: everyone wants a share of the 5G enterprise services pie that will be far bigger than 4G. Currently enterprise acc­ounts for less than 10 per cent of telco revenues. This is expected to go up to over 40 per cent with the advent of 5G since the use of 5G increases in factories and other premises. Tech players whom BIF represents, on the other hand, will have an exp­anded market; they can offer network as well as end-to-end enterprise solutions to corporate customers directly. Currently they have to tie up with operators to serve their customers.

The huge expansion of business from enterprise services is because with far higher data speeds, 5G will take manufacturing to a different level. It can enable mach­ine-to-machine communicat­i­o­ns and increase automation, just in time op­e­rations will be possible beca­use of the low latency of 5G, and it will connect workers faster to each other and drive autonomous transportation on the premises. But all this requires storing reams of data. A dedicated private network will provide a much more secure and reliable infrastructure than depending on a public telco network.

BIF said it would be detrim­en­tal for enterprises to wait for the roll-out of large public networks of 5G, with early roll-outs expected only in 2023 and that too in a few cities. The process has already been delayed by two or three years. But that should not mean that Indian enterprises should lose valuable time modernising their operations. Said Ramachan­d­ran: “Many challenges of a 5G public network aren’t there in private networks. Hence, this should be permitted to be deplo­yed immediately to garner wide benefits and kick-start manufacturing and industry 4.0.”

Many argue that the opposition to giving out spectrum on the basis of a Supreme Court order, when allocated licences were cancelled in favour of auctions, has no basis. After all, backhaul spectrum today to connect towers through microwaves is allocated to telcos through an administrative mechanism. And Sunil Mittal-promoted satellite company OneWeb is pushing for spectrum allocation to download from the satellite to its earth stations at an administered price. So why should private networks be treated differently?

Telcos argue that there are huge advantages of enterprises going with their services. The GSMA Association said, for instance, that many small and medium-sized enterprises lack the expertise or resources for their own network deployment. Obtaining these services from telcos and focusing on their core business is much more cost-effective. Also, in many countries unlicensed spectrum earmarked for private networks is raising serious security issues.

What is more, telcos say the new technology enables them to provide a company an equally robust and secure private network at a lower cost. “A 5G network slicing over a telco’s public network makes it possible for enterprises to have the same advantages of a private network without the costs of deploying their own,” said a senior executive of a leading telco. In simple terms, this means creating a dedicated network within a large overall public network. “This makes it possible for enterprises to have the same advantages of a private network at lower cost. And it could provide flexibility in connecting them to the broader public network too,” he added.

All these arguments and counter-arguments are under the radar right now. Once 5G becomes a reality in India, this could be the next big battle in the telecom space.