 "Mukesh Ambani (left) and Sunil Mittal have just announced their roll-out plans")
The growing global 5G equipment and solutions market offers a huge opportunity, and domestic information technology (IT) players, telco giants as well as smaller telecom gear-makers are moving in aggressively to grab a share of the pie.
Bharti Airtel has just announced a strategic alliance with TCS to build 5G networks based on open radio access network (O-RAN) technology to roll out products and solutions initially for India, and later the world. This will entail taking on Reliance Jio, which is readying trial runs of its 5G O-RAN solutions in several Indian cities.
IT companies Tech Mahindra, Saankhya Labs, Cyient, HCL Technologies and home-grown equipment-makers Sterlite and HFCL are also joining the bandwagon.
How will 5G O-RAN technology change things in India? Fifteen years ago, the basic building blocks of telecom networks were based on propri -etary technology controlled by a few global players such as Ericsson, Nokia, Alcatel, Lucent, and Motorola. Telcos had to buy the entire block from one player, which came bundled with software and hardware.
With the coming of 4G, operators wanted greater choice and more high-processing servers, which were available from other vendors. Gear-makers loosened their control over the core equipment, and vendors moved from proprietary to open software. Operators could buy software and hardware separately. There was now an array of new players to choose from — HP, Dell and CISCO for hardware, and Red Hat and IBM for software, apart from the incumbent gear-makers.
But the RAN market remained under the big boys’ control. Analysts say this is because for telcos, the RAN accounted for 70-80 per cent of a netork’s capital cost, so the big gear makers still had their market intact.
With the coming of 5G networks, two things changed. With consolidation, the number of global gear-makers shrank to just four — Ericsson, Nokia, Samsung and Huawei. US-China trade tensions and restrictions on the entry of Chinese 5G gear in many countries — including India — created a near-duopoly, consisting of Eriksson and Nokia. (Samsung, which has a very limited global play, is a new entrant).
Second, with the large investments that telcos, especially in India, have to make on setting up a 5G network, there was increased pressure to reduce capital costs. And that can happen only if there are more vendors and competition.
After all, tariffs have fallen dramatically since Reliance Jio entered the game, with no hikes for nearly two years. Then there is the steep base price for 5G spectrum, among the highest in the world (accounting for over 50 per cent of network cost in India).
The solution is O-RAN. The new standard and specifications were written by the global O-RAN Alliance, having over 150 top global telcos as members. The new standard is based on open software, where various blocks in the network have been disaggregated so that telcos can buy them separately from different vendors. They can also buy software and hardware from different vendors, but need a system integrator to put the various blocks together.
This has huge advantages for operators. Global industry estimates indicate that the savings in capital costs due to competition could be over 40 per cent. Besides, it is easier for telcos to add new services, increase efficiency, and offer faster technology updates.
There are downsides, too. Incumbent operators say lower capital costs will be neutralised by high operating costs, because they now have to spend on system integration. Also, O-RAN is still not proven on 5G — the jury is out on the first standalone O-RAN network by Japanese telco Rakuten. And open source means there could be security risks as well.
O-RAN has three building blocks — the radio unit which receives and transmits the frequency signals, amplifies them and digitises them, and the two base band units (the central unit and the distributed unit), where the data is processed and sent to the network. The central unit, located near the radio unit, can also be hosted on the cloud — either at third-party sites or by setting up one’s own private cloud. Reliance Jio is tying up with Google to build 5G on the cloud.
Many Indian firms are now looking at designing and manufacturing the O-RAN radio — and 5G will require nearly three times more towers. Sterlite is designing a radio which VVDN will manufacture, HFCL will do both, Reliance Jio will outsource manufacturing, and TCS has built a state-of-the-art O-RAN as well as the 5G core. Radio constitutes a substantial part of a RAN cost. Reliance Jio has already designed the core and so has the government-owned Centre for Development of Telematics, which may look for alliances. Mumbai-based PertSol is ready with a solution, too.
There is also scope to play a key role in system integration. TCS has announced it will work with Bharti Airtel in becoming a system integrator, while Tech Mahindra is a key system integrator for Rakuten. Manish Vyas, president (communications, network, media and entertainment) at Tech Mahindra, said recently the company was open to partnering with Jio for the global market for 5G solutions, as it has a footprint with every telecom operator in the world, except in China.
Says a top executive of a leading telecom operator: “All these products will be on trial on our networks. Globally, there is a consensus among telcos that if the product and solution works in a complex network like India, it will work anywhere. With this advantage and our leverage in IT software and price competitiveness, we have an edge over others.”
