Avoidable delay

India would have gained from an early 5G roll-out

America’s roll-out of 5G networks running on 3.7-3.8 GHz has led to a focus on aviation safety concern since this wavelength interferes with radio altimeter signals. Similar issues have not arisen with other 5G networks in the US, and elsewhere, since these operate on different wavelengths. An estimated 750 million subscribers across 90-odd countries already use 5G, and 130 nations have invested in 5G technologies. In India, trials have been conducted by service providers. But it will not have commercial 5G networks until late 2022 at the earliest. This places it several years behind the rest of the world. The tardiness is unfortunate. However, India was also well behind the rest of the world in the roll-out of 3G and 4G. And, in each instance, underlying policy issues led to the late adoption. Reliance Jio, Bharti Airtel, and Vodafone all claim to be “5G-ready” and ready to launch, given pricing and policy clarity. The Telecom Regulatory Authority of India (Trai) has just closed public comments on setting prices and other parameters for a 5G spectrum auction, which is to be held in March. If the auction is successful, telecom service providers will then start rolling out 5G networks.

Trai first tried setting reserve auction prices for 5G spectrum in 2018. The reserve prices of $7-billion plus were too high to attract a cash-strapped, debt-laden industry. The industry was cash-strapped and debt-laden because spectrum charges for 3G and 4G were high, and the government demanded revenue share based on a very broad definition of adjusted gross revenue (AGR). It has only redefined AGR sensibly in late 2021, after over a decade of litigation. The opportunities lost due to late adoption were considerable. Telecom has large positive externalities. Fast reliable networks enable all businesses, and the efficient delivery of government services. The opportunity losses in the case of 5G will be far more than those with 4G or 3G. In practice, the new networks are anywhere between 5 and 10 times as fast as 4G in the same regions. Subscribers can avail themselves of high-speed video streaming while on the move — a 60-minute video can be downloaded in a couple of seconds. The combination of great speed and low latency increases potential usage by orders of magnitude. It’s estimated that 5G will generate only 10-15 per cent of its revenues from voice and data alone, with the rest from value-added services.

Enterprises can create new usages based on very high speed. For example, virtual reality and augmented reality — the so-called metaverse or Web3 — can be seamlessly delivered on mobile. Massive machine-to-machine interactions are possible in real time. This would lead to new advances in the Internet of Things (ioT). It could enable creating fleets of autonomous drones and driverless cars that talk to each other in real time — making them all much safer and also more efficient. The 5G technology also allows for super-fast localised private networks, using bandwidths like 60 GHz, which are now being reserved for these purposes. This enables the easy creation of public Wi-Fi networks. The roll-out would help accelerate gross domestic product (GDP) growth and employment creation. In sum, the government would have gained far more by way of revenues from goods and services tax and other taxes if it had adopted a broader vision. By trying to squeeze the maximum from the spectrum, successive governments have been penny wise and pound foolish. One can only hope the reserve prices for 5G will be pragmatically set and there will not be the kind of policy ambiguity that has led to so many disputes and so much litigation.