India’s top telcos have called on the sector regulator to scrap the proposed move to administratively assign 5G spectrum on demand for private enterprise networks through a publicised online portal-based process, warning that such a step could destroy the 5G business case in the country.
The companies have said that such a proposal, if accepted by the government, could potentially rob telcos of their future 5G enterprise revenues – estimated at around 40% of the total for 5G. Revenue loss to such an extent won’t justify capital expenditure in setting up 5G networks, they have argued.
In its latest recommendations on 5G spectrum pricing, the Telecom Regulatory Authority of India (Trai) has suggested that private enterprises directly obtain 5G spectrum from the government and establish their own captive wireless private network (CWPNs). It has also recommended a "light touch' online portal-based regime" for acquiring such permissions/licences for setting up CWPNs. Trai has also suggested that private enterprises have the option to lease spectrum from telcos to set up their own captive private 5G networks.
“By allowing private captive networks for enterprises, Trai is dramatically altering the industry dynamics and hurting the financial health of the telecom industry rather than improving it,” the Cellular Operators Association of India (COAI) said in a statement Tuesday.
The COAI represents Reliance Jio, Bharti Airtel and Vodafone Idea (Vi). It added that “enterprise services constitute 30-40% of the (telecom) industry’s overall revenues…private networks once again disincentivises the telecom industry to invest in networks and also continue paying high levies and taxes."
The COAI, in fact, has urged Trai to revisit its latest recommendations and disallow private enterprise networks to ensure financial viability and orderly growth of the telecom industry that, it said, is more than capable of delivering these services to businesses.
Mobile carriers had earlier told Trai that any proposal to set aside 5G spectrum for private enterprise networks for captive use either for free or at an administrative price would also be legally untenable.
Trai has recommended that the spectrum for private networks be assigned administratively on demand through a widely publicized online portal-based process in a fair and transparent manner. But the regulator has left it to the telecom department to decide whether such administrative allocation would be legally tenable or not, based on DoT’s spectrum allocation policy.
In its 5G discussion paper, Trai had said the likes of Germany, Finland, UK, Brazil, Australia, Hong Kong and Japan had set aside spectrum in the mmWave band for private captive 5G networks, while Slovenia, Sweden and Korea planned to set aside both mmWave and mid-band 5G spectrum for such captive networks.
Subsequently, the likes of Tata Communications (TCL), Larsen & Toubro (L&T) and cigarette maker ITC had strongly countered the telcos’ position, and called on Trai to back earmarking dedicated spectrum private captive networks and adopt global practices to create a private 5G ecosystem for enterprises to drive the government’s Make in India vision.
But another top telco executive said that if operators’ potential 5G revenue flows from the lucrative enterprise business vertical dry up, they would see little business sense in bidding aggressively for 5G airwaves in the upcoming sale.
Bulk of the bidding appetite for 5G airwaves, he said, stems from the strong revenue potential of the B2B enterprise business. But if that revenue stream disappears, telcos won’t have a viable business case to splurge big money on 5G spectrum, especially as they have enough spectrum to continue their existing mobile broadband services operations.”
Technology companies, though, have strongly backed Trai’s call to allow private enterprises to directly obtain 5G spectrum from the government via the administrative route.
“In terms of private networks, Trai’s recommendations address the interests of TSPs (telecom service providers), enterprises and the public as more private networks would lead to more employment opportunities and business, and translate into greater economic output and benefits,” said the Broadband India Forum (BIF), which counts Cisco, Amazon, Google, Microsoft, Facebook-owner Meta, Qualcomm and Intel among its key members.
Earmarking exclusive spectrum for private 5G networks, it said, would also provide an “improvement over average SLAs (service level agreements) of public networks, besides ensuring complete lack of interference between them”.
BIF added that Trai’s call for assignment of spectrum administratively for private 5G networks “is most appropriate” as it has considered that captive wireless private networks are not public networks and have no market customers, and are limited to a specific location.”