Progressive and pricey

Telecommunication services in India are set to undergo a radical change with the Union Cabinet giving its approval to conduct spectrum auction for 5G services. 5G technology will enable the delivery of critical services such as telesurgery and the Internet of Things over a mobile network with unprecedented efficiency, in addition to opening the floodgates for innovative applications that require a massive amount of high-speed bandwidth. The biggest benefit for millions of mobile users in a country like India is that 5G promises to make wireless networks close to what wireline broadband networks offer-- uninterrupted service and unlimited bandwidth. However, the Cabinet’s decision to retain the reserve price for spectrum at the levels suggested by the Telecom Regulatory Authority of India (TRAI) could make 5G services unaffordable for many users. As it is telecom operators are faced with huge financial stress with a cumulative debt of over ₹4 lakh crore. At the same time, they have had to invest in rolling out 4G networks to meet the massive demand for data services. In order to recoup these investments, the operators have had to increase tariffs by 40 per cent over the last six months which has resulted in millions of subscribers disconnecting their mobile services. Given the financial constraints being faced by the telecom industry, the Cabinet should have cut spectrum prices further. Even if an operator acquires airwaves at the reserve price, it will have to pay at least ₹70,000 crore. This would further elevate their debt levels which in turn will squeeze the investments required for rolling out 5G network infrastructure. While the Centre has taken other measures to improve operators’ cash flows by reducing the spectrum usage charge and allowing auction price to be paid over 20 years, a lower reserve price for spectrum would have encouraged operators to keep services affordable.

The decision to offer spectrum to private 5G networks of enterprises is a good one. While the Cabinet has done the right thing to disregard the opposition by the telecom operators, it should have set a time frame for the introduction of private networks. Allowing companies and institutions to own spectrum and run private networks will be a gamechanger in enterprise communications. Compared to a public telecom network, a private 5G network will deliver higher efficiencies. This will be critical as enterprises are increasingly digitising their processes. Other developed countries are also allocating spectrum directly to enterprises as they are the best placed to design networks that are suited to run their operations. The Cabinet has rightly asked the Department of Telecom and the TRAI to conduct studies and work out the modalities for enabling private networks but this process should be hastened in a way that both public and private 5G networks can be rolled out at the same time.

There is no doubt that the fifth-generation wireless technology will bring massive improvements in consumer broadband services and industrial applications with the potential to drastically alter societies through its impact on economic and social structures. It is important to ensure that the industry is well-positioned to put the infrastructure in place to bring the benefits of this new technology to consumers.

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