Industry ramps up supply chain for 5G service launch in ’212 min read . Updated: 04 Jan 2021, 08:04 AM IST
- Experts say stressed financials of Airtel and Vi could discourage them to participate in the 5G launch
There is excitement about the anticipated launch of 5G (fifth-generation) telecom services in India, but the government’s spectrum pricing strategy may be a damper. While the evolving ancillary segments are working on the backbone infrastructure for the 5G roll-out following Reliance Industries Ltd chairman Mukesh Ambani’s assurance that Reliance Jio Infocomm Ltd will launch 5G wireless service in the second half of 2021, experts, however, said that India is not 100% ready.
Equipment manufacturers such as Sterlite Technologies Ltd (STL) said India has been developing 5G infrastructure, but a pan-India roll out will require improving the device, spectrum, wireless and fibre optic ecosystem. “India has the capability of rolling out 5G as we have been building the infrastructure for years now. However, for a countrywide end-to-end deployment, India is not 100% ready… At STL, we will start commercial deployment of open-RAN (open radio access) that is required for 5G by second half of 2021," said Anand Agarwal, group chief executive, STL.
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Experts said stressed financials of Bharti Airtel Ltd and Vodafone Idea Ltd (Vi) could discourage them to participate in the 5G launch, in view of the costs involving fiberization and the pricing of spectrum. Airtel and Vi are sitting on massive debts but continue to offer among the lowest tariffs in the world. The telcos have also called for affordable spectrum.
Analysts said the airwaves auction in March may see limited participation from Airtel and Vi due to high reserve prices. Jio, however, is likely to buy spectrum in the 700 megahertz (MHz) band, which is best suited for 5G.
Meanwhile, phone makers have also started producing 5G devices too. Faisal Kawoosa, the founder of techARC, said that India imported nearly two million 5G smartphones in 2020. “While most of these were in ultra-premium range, this year, any new smartphone priced above ₹30,000 should support 5G," Kawoosa said, adding that 7-9% of all smartphones sold in India in 2021 are likely to support 5G, making it nearly four times the imports.
The primary impact of 5G roll-out will be on the commercial ecosystem. According to Agarwal, global supply chains have already matured and are 5G-ready, which makes it easier to import raw material.
“For STL’s 5G offerings on the fibre and wireless side, beyond the raw materials that we source from India, we also get world-class chemicals and coatings from Europe and some of the best quality electronic components from the US, Japan and Taiwan," he said.
Companies have also readied 5G devices, which will hit the market as soon as the technology is launched, said Sanchit Vir Gogia, chief analyst, founder and CEO, Greyhound Research, adding that this will help the consumer market mature quickly.
"They (companies) all have 5G devices, so the moment somebody introduces 5G, the Chinese players are all set to launch their devices...as are Apple, Samsung and others. So, I think the consumer market will mature very quickly, and by the end of 2021," he said.
Gogia, however, said the consumer market is limited whereas demand from enterprise side will surge once 5G is launched. In fact, many enterprise players have had to "downplay" their solutions for a while now, owing to lack of bandwidth and appropriate network.