‘5G auction pricing must be set at reasonable levels for telcos’

Abhishek Law Kolkata | Updated on January 21, 2021

Anand Bhaskar, Managing Director, Service Providers, Cisco - India and SAARC

To make business sense for 5G technology, the ARPU has to be up at ₹250-300, says Anand Bhaskar, MD, Service Providers, Cisco - India and SAARC

For India to become a $ 5 trillion economy, digital will be a major player contributing close to $ 1 trillion of it. The country’s digital transformation has multiple levers at play and it is here that 5G plays a pivotal role, says Anand Bhaskar, Managing Director, Service Providers, Cisco - India and SAARC.

He says the company has already committed a $5 billion investment globally (including in India) through Cisco Capital, to be made towards 5G infrastructure. The ‘Internet of the Future’ strategy has also come into play as it looks to help telecom companies (telcos) adopt to the new normal; while ensuring lower cost of operations for service providers.

In an interview to BusinessLine, Bhaskar talks about the new trends, the investment scenario across telcos, 5G adoption, among others. Edited excerpts:

What are the trends you observed post Lockdown and as Unlocking happened?

With the Lockdown being announced, and work from home picking up, the onus was on the telcos (service providers) to step-up and ensure uninterrupted services. Telcos got their rightful place in the sun, having weathered the storms such as the AGR (adjusted gross revenues), price competitiveness and others in the immediate few months.

The work from home scenarios meant that there would be challenges in managing the transition. Second, Covid-19 brought about a significant uptick in digital leading to higher adoption of home broadband.

In terms of Cisco, we enabled capacity expansion for service providers, increasing automation and enabling work from home, apart from digitizing their enterprise networks.

Now post Unlocking, there is a clear preference for a low touch future. Enterprises will see a significant part of their workforce operate remotely and this will mean integration and digitisation of IT-enabled, manufacturing and other processes. There will be a need for seamless experience at the enterprise-levels. Also in comparison to the initial days, when bandwidth was the concern, the focus is now on seamless experience for users.

How have data consumption patterns been?

In India, average consumption is now close to 13-14 GB of mobile internet bandwidth per month, which is amongst the highest globally.

The fixed broadband segment too is growing by leaps and bound albeit on a smaller base, compared to mobile subscribers, than what it was at a pre-pandemic level. In terms of consumer profile, fixed broadband users are stickier (loyal) with higher Average Revenues Per User (ARPU).

Are companies willing to invest in digitisation?

Yes, the small and medium businesses are investing to build IT-infra. The Pandemic had sped up their adoption requirements. These companies typically look at a quick solution which is easy to install or download on their mobile devices. Service providers are concentrating on the segment too.

Telcos are also readying investments in 5G and preparing for its roll-out. We are also helping them out in terms of back-haul networks, packet core along with the underlying automation & security, their journey to move into Cloud.

Also read: Cisco builds networking lab at IISc

Considering the focus on digital, how critical is 5G roll out?

Reports suggest that it would be sometime next year when 5G roll outs happen. The role of 5G in digital is critical. If India is to be $ 5 trillion economy, then digital will contribute at least $ 1 trillion of that.

Compared to 4G technology which was all about faster speeds, the 5G technology will be about speed and user experience. As there are multiple used cases, the adoption of 5G will speed up.

But would auction pricing and then end-user adoption not play a role in 5G adoption?

Auction pricing has to be at levels where it allows telcos to make reasonable return on their investments. Deployment needs to speed up too.

Over the last few quarters, driven by higher data adoption (by end-users) and revision in pricing, ARPUs have increased to ₹ 150, as against ₹120-125 previously. It is expected to go up further with higher data usage.

Ideally, for 5G technology to make business sense, the ARPU has to be up at ₹250-300. However, a lot also depends on the business plans the service providers come up with.

Initial surveys suggest that 7 -10 per cent of mobile users are willing to pay an incremental charge (that will come with 5G adoption). This means, there will be at least 100 million-odd users, which otherwise is a good number to start with initially.

While early adoption will be from individual users; the 5G business case will need substantial contribution from enterprise use cases too.

Right now, 20-25 per cent of revenues of service provider are from enterprises. If 5G adoption picks up, on expected lines, then by 2025, at least 45 per cent of a telco’s revenue will be from enterprises, which provides a significant growth opportunity to the telecom sector and make viable return on investments for them.

Published on January 21, 2021

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