5G war. Crowded 5G network solutions segment may see a price war

Telecom equipment segment could soon see a price war with as many as 10 Indian entities entering the fray to offer 5G network solutions based on open source technologies. Companies including TCS, Saankhya Labs, ITI Ltd., STL Tech, HFCL, Tejas Networks and Tech Mahindra are making their move into the 5G solutions space with an eye not only on the Indian market but also on opportunities in the global arena.

O-RAN (Open Radio Access Network) is the new industry standard for the Radio Access Network supplier ecosystem that enables new vendors to participate in the network solutions space, which until now was dominated by a handful of players, including Ericsson and Nokia.

With the hardware and software technologies for this becoming standardised and open source, new players can enter the market to develop products that cater to some part of the whole operator network.

Level playing field

According to V Sridhar, Professor at the Centre of IT and Policy and IIIT Bangalore, “O-RAN prevents vendor lock-in; provides the carrier with choices; promotes a competitive environment for equipment manufacturing; provides a level playing field between large Network Equipment Manufacturers (NEMs) and start-ups in the space.”

New entrants are investing in developing solutions for Indian operators which can then be scaled up to a global level.

Badri Gomatam, Group CTO of the digital networks integrator, STL Tech, said, “We have been keeping an eye on the O-RAN developments for quite some time and slowly building capabilities to provide 5G technologies. We already have a portfolio of products available, customers in India, Japan and the US, and are investing 3 per cent of our revenue into R&D.”

STL Tech has labs in Delhi and teams in Pune and the US working on 5G network solutions.

Mahendra Nahata, Managing Director of Telecommunications company HFCL, said he plans to invest ₹200 crore in the span of the next 12 months on developing 5G solutions.

Indian operators have already announced their own versions of ‘Made in India’ 5G network solutions, with the most recent being the Bharti-Airtel and TCS partnership. Reliance Jio is also ready with its indigenously developed platform.

Nahata believes that new competition will bring forth innovation in technology as well as drive down the price of network components.

Limited differentiation

But this will not be easy. An industry expert on the conditions of anonymity told BusinessLine that there will be limited product differentiation since everyone will be building on the same software platform. “With O-RAN, the core of the software which operates base stations for the network becomes standardised. Since there is not much complexity to this task companies cannot innovate too much to provide a product that does this task distinctively better,” the expert said.

“The field is becoming too crowded. I am skeptical that new entrants in this space will be able to make too much money fighting a war to decrease the price even lower, selling to only two operators,” he added.

According to the expert, it is unlikely global operators will choose the Indian players as they may prefer to build their own solutions in-house or enlisting vendors that offer an even lower price.

Gomatam from STL Tech, however, remains optimistic. “By investing into this space from the very beginning we have the first movers advantage,” he said. According to Gomatam, STL’s previous track record in the network solutions space is bringing them credibility and customers.

Sridhar said that large IT companies could provide system integration similar to how TCS will integrate various elements of the 5G stack for Airtel.

Reliance and Bharti Airtel developing Indian-made 5G solutions could prove the world that they have the capabilities to integrate a multi-vendor, multi-technology network globally.

May provide advantage

On a strategic level, homegrown development of 5G technologies could provide India a major advantage. According to telecom industry analyst Hemant Joshi, self-dependence in operating a telecom network is even more essential given the geopolitical skirmishes with China and the consequent security and supply chain issues.

“Operators are taking this very seriously and with India’s software and radio capabilities, there is no chance that Indian entities will not succeed,” Joshi said.

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