Next technological leap

5G should work for all stakeholders

The 5G services in the country have been launched within two months of the spectrum auction. This is a good start, though India took a long time to finalise the reserve price of spectrum and subsequently hold the auctions that generated revenues worth Rs 1.5 trillion. Many others, including the US, the UK, China, Canada and South Korea had rolled out 5G services much earlier. At the high-decibel launch event over the weekend, the telecom industry, which is still coping with financial stress, indicated that India would emerge on top in offering 5G services even as it began late. Leading telco Reliance Jio is targeting December 2023 to offer 5G across every town, taluka and tehsil in India, while rival Bharti Airtel is looking at March 2024 to reach that goal. That’s a tall task, which will have to be powered by significant investments in network infrastructure and device upgrades.

Troubled telco Vodafone Idea has not been able to raise funds for long and has not given any target dates for a pan-Indian 5G launch, leaving it open-ended. That should serve as a reminder to the industry about the importance of financial health while serving telecom subscribers, especially when it comes to capital-guzzler 5G services. Therefore, setting tariffs prudently will not only drive a telco’s 5G initiative but also set the direction for India’s next technological leap. Globally, 5G has not resulted in an upside to the revenue for telcos in the initial years. With that learning, telecom services providers in India, having already spent a lot on auction, must keep their books in shape to be able to meaningfully deploy 5G.

The 5G telecom services, which will mean a whole new universe of cutting-edge technology for enterprises and businesses across sectors, come with the promise of mobile internet at 10 times the speed of 4G. At least one telco has begun the 5G services in metros and select big cities and another will go for the initial roll-out on Diwali. Health care, education, consumer goods, online gaming, and entertainment are among the sectors expected to benefit, riding on artificial intelligence and internet of things. In this context, Prime Minister Narendra Modi at the 5G launch on Saturday said the service would empower the poor and transform the industry. To empower the poor, 5G services must aim to narrow the urban-rural divide, offer access to quality health care and education to the deprived, as well as create employment opportunities.

For 5G to meet the goals and objectives of stakeholders, it should be a disruptive technology at an affordable price. But the industry must not be disrupted with deep discounts. Average revenue per user per month in India is among the lowest in the world, which affects the sustainability of business. Thus, 5G should differentiate itself from 4G ways of fixing tariffs. At the recent 5G auction, spectrum worth Rs 1.5 trillion was bought out of a total of Rs 4.3-trillion worth of airwaves put on sale. While the limited buying can be attributed to the steep reserve fee, even after revision, set by the government, the industry needs to keep its house in order to move to the next generation of technology. How tariffs are fixed would be critical in this regard.