India has had delayed roll-outs of 3G and 4G mobile technologies in the past. But the Narendra Modi government’s promise of Digital India requires coordinating India’s launch of 5G with its global arrival. There is a significant hurdle, however: The telecom industry’s stressed finances are likely to play spoilsport.

Unlike 3G and 4G, which largely offered improvements in data transfer speeds on smartphones, 5G will allow a universe of connected devices to interact with each other. The key feature is dramatically reduced latency of less than 1 millisecond (ms) from the present 50ms, along with up to 10 gigabytes per second speed and higher bandwidth. This will enable applications that could not have been possible with longer response times. For example, remote surgery or telepresence would not work if it took time to relay the remote user’s response over the network. A more vivid example would be that of driverless cars, which should be able to “talk" to each other seamlessly across blind turns to prevent accidents.

There are good reasons why India should be at the forefront of the digital revolution. Future growth is going to come from applications and services based on technologies such as the Internet of Things, automation and Artificial Intelligence (AI). Telepresence and remote servicing will be a ubiquitous substitute for people taking a flight, and driverless cars may lead to a disruption in the automobile industry. India wants to create 100 smart cities that will have intelligent power and urban utility systems. All these applications will provide a good opportunity for the services industry as more areas demand cloud computing, Big Data, AI and machine-learning applications. Home-grown giants such as Ola, Flipkart and Zomato have shown that they can build competitive applications and compete with global giants on an equal footing. A timely roll-out of 5G will allow Indian entrepreneurs a chance to experiment alongside their global competitors.

But, of course, there are stressed finances to contend with. The arrival of Reliance Jio Infocomm has forced the widespread adoption of 4G while simultaneously stressing revenue streams. Upgrading to 5G by 2020, as the government hopes, will require massive infrastructure investment.

The 2017-18 Economic Survey noted, “It is important to note that the telecom sector is going through a stress period with growing losses, debt pile, price war, reduced revenue and irrational spectrum costs." If the situation wasn’t grave enough, the unfeasibility of a 2020 5G launch truly becomes apparent in light of the fact that unlike in the US and China, where most towers are backhauled using fibre, more than 75% of the towers in India still employ legacy microwave transmission systems.

Finally, since 5G works in high-frequency bands (also called millimeter waves), its range is restricted. That necessitates the deployment of dense networks—i.e. more than twice the number of towers needed today. Thus, the launch is likely to be spatially fragmented, avoiding areas that are uneconomical for investment. That is ironic, given that 5G is expected to empower remote locations by providing services such as advanced healthcare, high-quality, low-cost education, constantly modulated energy use, and the ability to work remotely.

This sorry state of India’s telecom infrastructure casts serious doubts on the timely launch of 5G services. That will not, however, diminish its indispensability in the global value chain.

Given its strategic importance, the government needs to focus on accelerating the 5G roll-out. The Bharat Net initiative to connect all of India’s gram panchayats with the fibre network is remarkable. But if the roll-out is left for the industry to oversee in the given policy paradigm, India could lose important opportunities for growth.

Under the new National Digital Communications Policy, 2018, the government plans “optimal pricing of spectrum", and a review of levies such as licence fees and spectrum usage charges. If it follows through on these promises, it will ease the industry’s financial stress. Spectrum pricing in India is among the highest in the world, and an explicit move away from revenue maximization will inspire confidence in the industry.

Easing financial stress will not be enough, however. The telecom sector entails playing a long game with high up-front capital costs. Regulatory clarity, certainty and simplicity are musts for enabling investment. Countries such as the US and China that are leading the 5G charge recognize this and are updating their regulatory regimes. India must follow suit. For instance, obtaining right of way (RoW) permission from local governments to install fibre networks has been a bottleneck that hasn’t been resolved even after the department of telecom’s RoW rules. Many states are yet to implement the single-window system under the RoW rules passed in November 2016, and local bodies are continuing to see clearances as a source of revenue rather than impediments in setting up critical infrastructure. Effective implementation of the RoW policy is critical for the expansion of fiberization from the present levels of around 20% to the target of 80% necessary for a widespread roll-out of 4G, which is a prerequisite for 5G.

Fast fiberization of existing infrastructure and reasonably priced spectrum will be critical to the deployment of a reliable 5G network, which could be the backbone of India’s future economic progress.

Will India be able to meet the 2020 target for rolling out 5G? Tell us at views@livemint.com

Close