What is slowing down the launch of 5G in India?
Since the introduction of 4G network in India, the only direction in which the consumer has been looking is up. The idea of revolutionary speeds that let you download several gigabytes in a matter of minutes or even seconds is certainly tempting. On top of bewildering speeds, the introduction of 5G in India has been deemed critical to the success of several avant-garde projects and ideas with Digital India and Bharat Net among them. So, why isn’t 5G being launched already?
It is being widely estimated that 5G will be launched in India around 2022, i.e. around 5 years from now. For a technology so ground-breaking and sought-after, everyone is wondering why it is taking so long to arrive. ‘When will 5G be launched in India?’ This is the question that everyone is asking. ‘Not soon enough’ is the answer. The problem lies in the colossal capital expenditure (capex) involved in successfully launching the technology. With the telecom sector reeling in debt and suffering from declining revenues, investing huge amounts of money seems highly improbable right now; and when the investment is estimated to be around $60 billion to -$70 billion, the task at hand becomes even more difficult.
For 5G to be introduced successfully in India, the telecom companies (telcos) will need to overcome their existing financial duress and that is no easy task. With rising taxes and added penalties, the situation looks more dire than promising. With spectrum auctions looming, the telcos have been pushing for relaxations, albeit, without much success. The only respite has come in the form of the recent news that the operators might get relief on spectrum payments with inter-ministerial group (IMG) willing to accept delayed payments. For those operators yet to pay the previous spectrum debts, IMG might also be willing to lower the interest rates from the current 10.5%. The companies will also be given 16 years to make spectrum payments instead of 8.
However, this is nothing more than a simple exercise in propitiation. This does nothing to alleviate the stifling pressure that the telcos are under; the existing debts are still pending and the profits are still declining, and then there is the issue of the inter-connect charges (IUC). There has been no indication whether the annual license fee (currently 8% of the total revenue) will be lowered or not. Furthermore, this is only one of the major obstacles that need to be overcome. Regulatory issues, spectrum licensing structure and operator business models still need to be looked at and modified.
One of the biggest hindrances to the launch of 5G is fibre backhaul, which is a must for the 5G roll out. In India, around 80% of the cell sites are still connected through microwave backhaul and cannot offer the capacity needed for seamless 5G services; a complete fibre backhaul is required. While global telecom giants Verizon and AT&T look to launch 5G services in 2017 and 2018, respectively, the Indian telcos are in a race against time, made more difficult by the weight of debt and dwindling revenues. It is only a matter of time that 5G is launched in India, but it will not be easy or soon. Unfortunately, the speed of the roll out will depend on a multitude of factors including the market demand and hence, take time; there is no premium 5G speed on this one.
5G in India