Companies

For Indian companies, 4G is still the name of the game

Rajesh Kurup Mumbai | Updated on August 18, 2020 Published on August 18, 2020

Representative Image   -  Bloomberg

Despite 5G being at its doorstep, the industry is banking on 4G to improve revenues and ARPUs

For Indian telecom equipment and software providers, 4G is still in vogue and will rake in revenuesas the much-hailed 5G launch is at least two years away. These companies are focussing on further improving the 4G ecosystem to help operators improve revenues and Average Revenue Per User (ARPUs) and, in turn, pare debts before the 5G spectrum auctions.

The move also comes as a surprise as all operators except State-owned Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltdhave launched 4G services.

“Telecommunication is riding on 4G at present, and the current offering of the so-called 5G is basically riding on 4G networks. The actual 5G is expected to be launched sometime by 2022-end, and till then, companies have to use 4G, which is LTE technologyand a step closer to 5G,” Telecom Equipment Manufacturers' Association (TEMA) Chairman Ravi Sharma told BusinessLine.

“Much like a software release on cell phones (like versions 1.0 and 2.0), the new versions of 4G are released from time-to-time. Indian operators are not running the latest versions of 4G in all areas and, hence, will continue updating their technology and infrastructure till they are completely 5G ready,” Sharma added.

The launch of 4G also ushered in the long-term evolution (LTE) technology – this will eventually put an end to the GSM technology, which supports 3G. Starting with 4G, the next-generation of mobile networks will run on LTE or higher technologies.

Uprade to 5G

For instance, Tejas Networks, a developer of networking products for telecommunications service providers, has been building 4G wireless products that can be upgraded to 5G. The company’s products are also 5G-ready on the optical transmission front and it has been investing in LTE technology.

“To become a 5G player, you have to first prove your efficiency in 4G, which is the stepping stone to 5G. So, we are looking at the standards, technology, and building products, even as our current products are upgradeable to 5G from the transport architecture perspective,” said Sanjay Nayak, Chief Executive Officer and Managing Director of Tejas Networks, adding the company’s 4G optical products can be also upgraded to 5G.

“For the country, all the building blocks and ecosystem to migrate to 5G are in place, but the commercial launch is some time away. So, we should be building a 4G network which will be upgradeable to 5G,” Nayak added.

5G spectrum auction

The 5G spectrum auction is also now delayed to next year, mainly to the Covid-19 pandemic and a lack of interest from operators such as Bharti Airtel and Vodafone Idea. The country’s major operators had termed the base price of ₹492 crore per MHz to be too high and that it would further bleed the sector.

Similar is the case with Sterlite Technologies Ltd (STL), which is developing multi-generational radio technologies that support both 4G and 5G, and latest wireless technologies such as Wi-Fi 6/6E. Readying for 5G, STL is also developing solutions with an ecosystem of radio manufacturers, virtual Radio Access Network and opensource software.

“In India, our network creators are advancing digital networks on all fronts. Indian telcos are taking wireless connectivity to all parts of the country and installing 4G with fibre backhaul for towers,” said Badri Gomatam, Group CTO of STL.

“But since 5G spectrum allocation is not yet fully clear, telcos are upgrading their networks by setting up advanced 4G and fibre connectivity, which can be easily upgraded to 5G once the spectrum is available,” Gomatam added.

Need to sustain

“We are still far away from 5G, which is expected only by 2022, even if the spectrum auctions happen next year. The companies need to sustain their revenue and subscriber base and improve their Average Revenue Per User (ARPU) to at least ₹220,” said Sathish Gopalaiah, Partner at Deloitte India.

“For operators, rolling out 5G services is inevitable. But increasing of 4G penetration is equally important to reduce debt and become battle-ready,” Gopalaiah added.

The present ARPUs of telecom operators, which is in the range of ₹120-150 per user per month, is the lowest in the world. The cost of per GB data is about 9 cents, making the country the cheapest telecom market in the world.

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Published on August 18, 2020
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