Bengaluru-based Cloudphysician Healthcare was set up two years ago to deliver ICU services remotely to hospitals in far-flung areas. Trained ICU doctors are in acute shortage in India - about 4,500 doctors cover three lakh beds. So, Cloudphysician puts cameras and software at the bedside to send real-time audio-video feeds from the ICU to its command centre where doctors provide consultation within 30 seconds.
The start-up is heavily dependent on broadband connections when it operates in Tier-II and Tier-III cities of Bihar, Uttar Pradesh, Tamil Nadu and Karnataka. It prefers leased lines for uninterrupted Internet access but these are not available everywhere. Dileep Raman, a US-trained doctor and co-founder of the company, says a robust 5G network could be a game-changer in these cases. "As much as we use it, BSNL has its shortcomings. The latency in 4G is 200 milliseconds. With low-latency 5G tech, we will not only have high bandwidth but will be able to monitor patients with 1,080p high-definition videos. We will be able to observe minute details in eyeballs, skin textures and breathing patterns. 5G is going to be a shot in the arm for players like us. We could even use it as a backbone network."
Companies like Cloudphysician are expected to be early adopters of 5G when India rolls out the fifth-generation wireless technology next year. As early as 2012, Theodore (Tod) Sizer, head of wireless research at Alcatel-Lucent's Bell Labs, had told the media that 5G would be faster, but it would be more about meeting the expectation of service quality. It would be about intelligent networks handling billions of connected devices while remaining stable and operational. The use cases of 5G (see graphic) are many, and India has always been keen to enter the elite club of early adopters.
In his first official statement after taking charge as the telecom minister in June, Ravi Shankar Prasad said that the Department of Telecommunications (DoT) would auction 5G airwaves later in this calendar year and trials would kick off in 100 days. Manoj Sinha, Prasad's predecessor at the telecom ministry, was also vocal about early adoption. However, delays in finalising the master list of spectrum bands, trial permissions and sorting out spectrum-related issues with the Indian Space Research Organisation pushed India back by two years compared to the first-movers. Besides, the DoT still has to make up its mind whether to allow Chinese equipment-maker Huawei, which is facing global bans on security grounds, to sell its 5G gear in the country.
In contrast, several countries have a head start in launching 5G services, including the US, South Korea, Japan, China and Australia. China started field trials last December. South Korean operators - SK Telecom, KT and LG Uplus - commercially launched nationwide 5G networks in April this year in tandem with Samsung's 5G version of Galaxy S10. In the US, Verizon launched its mobile 5G services in a couple of cities in April and would expand to another 20 cities in 2019. According to Ookla, a US-based mobile and broadband network intelligence firm, 51 telcos across the globe have rolled out 5G networks in some form or other, covering 743 locations as on July 5 and the numbers are changing every day.
As 5G reaches a fever pitch (President Trump is already tweeting about 6G, even though the terahertz-based wireless network will not be available for a decade or more), many fear that Indian telcos might be forced to invest in the new technology. This is hardly desirable as 3G and 4G penetration in India is quite low even now. An estimated 50 million users are still using 3G and consumer experience is far from satisfactory in terms of data speed. "With 4G penetration for Airtel and Vodafone Idea still at 25-30 per cent of the subscriber base, limited use cases of 5G and a nascent 5G ecosystem, it will be negative for operators to spend over $7 billion on a project offering limited returns," a June report by Hong Kong-based brokerage firm CLSA said.
Worse still, out of the four telecom players in the country, three are reeling under heavy debt and battling a brutal price war. Market leader Vodafone Idea, with net debt of about Rs 1.18 lakh crore, has posted net losses for three consecutive years. Bharti Airtel recorded standalone net losses in FY2018/19 and is sitting on a net debt of Rs 1.08 lakh crore. Analysts think Airtel may make incremental investments of $5 billion on greenfield 5G rollouts over the next three years to stay in the race. But such investments are going to put additional pressure on the over-leveraged telco.
According to CLSA, the reserve price of Rs 490 crore per megahertz (MHz) recommended by the Telecom Regulatory Authority of India (TRAI) means Indian operators will have to pay nearly four times more than what Korean operators pay. "Even if Jio bids in current auctions, incumbents can purchase spectrum in subsequent auctions. Deferring purchase will likely lead to a cut in the price of the spectrum. The government historically cut spectrum prices by 30-40 per cent if it saw no demand in the previous auction," says the brokerage (see Spectrum Prices).
"From an ecosystem perspective, a few things need to come together - the spectrum being one of them. It is crucial that the government makes spectrum available at a reasonable price that will incentivise subsequent investments in network deployment," says an Ericsson India spokesperson. At present, Huawei, Ericsson and Nokia are the key network vendors operating in India, while Samsung only supplies to Reliance Jio Infocomm.
"The current spectrum prices are not sustainable. Even Jio, which has deep pockets, has expressed concerns. The 2018 telecom policy says that the industry should not be used to extract money. Revenue maximisation should not be the sole objective of the auctions," says Rajan S. Mathews, Director General at the industry lobby group the Cellular Operators Association of India (COAI).
Apart from irrational spectrum pricing, telcos are also bleeding due to low ARPU (average revenue per user), thanks to the ongoing price war. Countries such as Australia, the US and the UK stand a better chance of adopting 5G in the first wave as they enjoy higher ARPU. For example, the ARPU in the US is around $14 compared to $1.5-2 in India.
Users and Use Cases
The initial 5G conversation evolved around machine-to-machine (M2M) communication and Internet of Things (IoT) as the technology goes much beyond voice and data. But in recent months, there has been a shift in perception. It is now widely believed that the first adopters of 5G will be regular mobile users looking to stream videos at higher speeds. Users may also embrace augmented/virtual reality in a big way where new applications are being developed. The International Telecommunication Union (ITU) expects enhanced mobile broadband (eMBB) to be the primary use case for early 5G as large-scale IoT projects, smart cities, self-driving vehicles and industrial automation will take some time.
Potential use cases are still theoretical, says a senior executive of a leading telco who does not wish to be quoted. "Experiments are happening, but how many of these lab experiments will lead to actual products is something we do not know." In the last Indian Mobile Congress, Jio and Ericsson displayed a driverless car. "But will it be built in India?" asks the executive, adding that the country faces an additional challenge as many of these use cases sit at the intersection of multiple regulators.
In the case of driverless vehicles, the Ministry of Road Transport, the DoT and the Ministry of Electronics and Information Technology will be involved. "The moment you mention such products, clearances from multiple regulators will be required. But right now, there is no nodal agency here," he says.
If 5G remains limited to eMBB, will consumers pay more for it? Sanjay Kaul, President (Asia Pacific and Japan) of Service Provider Business at Cisco, says it is unlikely. "In the last five years, 80-85 per cent of the telcos' revenues came from consumers. In five years from now, a majority of their revenues will come from enterprises and verticals. Consumers will appreciate eMBB, but they will not pay more for it. The monetisation will happen by getting IoT and M2M in the mix."
From consumers' point of view, 5G does not make much of a difference. For high-end data users, the primary purpose is to watch videos and live television and play high graphics games, all of which require a constant speed of 4-8 megabits per second available in 4G. If they are getting 4G speed (5-10 megabits per second) at Rs 3-5 per gigabyte (GB), it is improbable that they will shift to 5G (speed up to 100 megabits per second), which is going to cost Rs 50-100 per GB.
Telcos will also assess whether 5G can replace their substantial investments in optical fibre. "If the spectrum pricing goes down, telcos can use 5G as a substitute for fibre. They may not have to provide last-mile fibre connectivity as 5G can take care of it, provided the pricing is low," says another telecom analyst.
According to Tarun Pathak, Associate Director at Counterpoint Research, India will have different use cases than others. "Healthcare, agriculture and enterprises are going to be big. In fact, there may be some use cases in India which you may not see elsewhere."
The Silver Lining
In spite of its intense effort to develop the 5G ecosystem, including plans to set up test beds at IIT-Chennai and IISc, Bengaluru, creating a high-level forum and allocating Rs 500 crore, the DoT may not be able to meet its stated target of having five billion IoT/M2M devices in India by 2022. But that should not disappoint 5G enthusiasts.
Historically, India has been a laggard when it comes to technology adoption. For instance, 2G came nearly a decade after it invaded a large part of the world; 3G entered the country five years after it took over the US and Europe and 4G arrived a couple of years after its global launch. Experts say that the first-mover advantage does not really help in the technology space and learning from the mistakes of others gives an edge to late entrants.
"Adopting a technology better is always beneficial than being a first mover. Take Apple, for example. It is not always the first company to launch a new spec, but it makes things better than others. It is not a question of missing the bus; it is how you are developing the overall ecosystem to make that technology better over a period of time. I think India will do well in this case," says Pathak of Counterpoint Research.
Global examples seem to validate his point. According to a May report by Morgan Stanley titled Checkpoint of Global 5G Race, the initial momentum in South Korea has cooled off due to complaints by end consumers. "Since early April, issues with network quality - especially related to switch-back to 4G in dead zones - and a lack of 5G-specific applications have surfaced as complaints," the report says.
"It is not the technology but the underlying ecosystem that matters. That will define whether a country is going to be a laggard or an early adopter. The real advantage of 5G can only be leveraged in three-four years when the entire ecosystem matures. The financial condition of telcos does not allow them to go the whole hog for 5G. How are they going to monetise 5G investments? We still need to focus on the existing bandwidth in 4G," says Pathak.
"India is going to adopt 5G when the consumers are ready, and the operators are sure about monetising investments. Does a country benefit from any new technology? It does if it generates enough intellectual property rights in areas such as equipment and application development. Foreign players (like Ericsson and Nokia) control the equipment space, even though India is doing some work on the application side," says Mathews of COAI.
Furthermore, China, a global leader in device ecosystem, is going slow with the new technology, and it may be wise to follow suit. Chinese operators are expected to launch full-scale commercial 5G services next year. "However, you cannot just lit up the network; you need to lit up devices, lit up use cases and the entire ecosystem," says a telecom analyst. Therefore, India will do well to look at the upcoming sector trends and fix the network architecture so that investments can be monetised appropriately. After all, putting 5G radios on telecom towers is the least important task in the whole adoption process.