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Does India need 5G at all?

The debate around 5G is getting louder. But before jumping to any conclusion whether India needs 5G or not, it's important to assess its pros and cons

twitter-logoManu Kaushik | October 15, 2020 | Updated 23:41 IST
Does India need 5G at all?
Clearly, the opinion of telecom operators on this issue is somewhat unclear

The debate around 5G is getting louder. But before jumping to any conclusion whether India needs 5G or not, it's important to assess its pros and cons. Clearly, the opinion of telecom operators on this issue is somewhat unclear. While the largest operator Reliance Jio wants spectrum auction to be conducted at the earliest, it didn't ask specifically for the sale of 5G airwaves. Early this year, all private telcos had asked for the lowering of the 5G spectrum rates as they feel the reserved prices are exorbitant. Given that spectrum auction is low on the priority of the government, no action has been taken on how and when to sell it.

Going back to the 5G tech, its need is primarily two-fold: industrial and consumer-led. On the consumer side, there are two broad issues: device ecosystem and use cases. Let's look at the use cases. The two primary use cases of 5G are autonomous cars and enhanced mobile broadband (eMBB). Because driverless cars need real-time connectivity, the low-latency 5G tech makes them safer to use. Globally, no self-driving cars project has reached anywhere close to the commercial production stage. Much like 5G, for which the standards are expected to be specified by 3GPP in December 2022, the concept of the autonomous car is still at a nascent stage.

The other use case of eMBB is nothing but much better internet speeds for the devices. So while there's no end to the desire of having better internet speeds, experts have already predicted that eMBB services are going to cost much higher than 4G data. In a price-sensitive Indian market where over 95 per cent of the consumers are on prepaid plans, implying the low-budget category of users, it doesn't make sense for telcos to invest heavily in 5G just to target the remaining 5 per cent of the users. Just to be clear, 5G tech runs on dense networks which require higher investments than 4G networks.

"Our stand for the last one year has been that there are no 5G use cases in India. There cannot be a single use case or application which cannot be operated on 4G," says N.K. Goyal, chairman of Telecom Equipment Manufacturers Association (TEMA).

"In the absence of monetisable business cases as of now, the launch consumer-driven 5G networks seems distant in the future. The most promising use case for 5G is robotics surgery, but telcos would not invest in tech for just a few use cases, and that's why private 5G networks could take off first," says a telecom consultant.

Private 5G networks are industrial usage of the technology to automate factories, and commercial establishments. For instance, Mercedes-Benz opened its 730 million euro car plant in Germany last month that has its own private 5G network from Telefonica and Ericsson. Even as the technology on the private 5G networks' side is evolving fast, it's not clear that regulations in India would allow non-licensed companies to buy and use spectrum in a localised area.

The other big hurdle for 5G in India is the device ecosystem not having matured enough to attract end users. The prices of 5G smartphones start from Rs 55,000 apiece, which is substantially higher than the average price of 4G smartphone (Rs 12,000). Even in China, which controls 72 per cent of the global 5G smartphone revenues, the average selling price (ASP) of a 5G smartphone is $464 (Rs 34,000) - far higher than the average 4G handset price.

"The initial use cases for 5G are expected to be more for enterprises, rather than retail consumers due to the lack of an affordable device ecosystem. However, it remains to be seen how the telcos would monetise these 5G business cases from enterprises. Development of 5G business cases would be a key monitorable, going forward," says JM Financial in a recent report.

Also read: How Airtel and Vodafone Idea could get their mojo back

Also read: Telecom operators' revenues expected to improve in Sept quarter

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