Stock up spectrum in 5G auctions: Ericsson
Deployment will be easier and consumer uptake faster, telecom gear maker says
PremiumNEW DELHI : Indian telecom service providers should buy as much spectrum as possible early on in the upcoming 5G auctions rather than staggering their purchases, a top executive at European telecom gear maker Ericsson said. According to him, this will make future deployments easier and ensure that users take up 5G services quicker.
“I strongly recommend operators to get a chunk of all of the new bands being introduced. The more you have, the more possibilities you have in future to offer well-performing services," said Magnus Ewerbring, chief technology officer of APAC at Ericsson. He said the new bands of 3.6 GHz that will enable 5G services will enable very high speeds, which will be attractive enough for existing 4G users to upgrade to 5G.
Ewerbring said that the consumer business for 5G was as high-potential as the enterprise side, with globally 4.7 billion connections expected to be on 5G by 2030, from 50 million in 2020.
“We predict that by 2027, 1.2 billion smartphones to 1.3 billion subscriptions that’s really 4G-5G. The 5G penetration in India in 2027 is expected to be 39% and 4G will be 55%, so that’s 94% of (smartphone base) on either 4G or 5G," he said.
Carriers are preparing for the upcoming spectrum auctions where the government will put on the block more than 72,000 MHz of airwaves across seven bands including new bands of 600 MHz, 700 MHz, 3.3-3.6 GHz and 26 GHz. Consumer demand for 5G is likely to rise once telcos begin launching the services later this year, beginning with metros and top cities.
Ewerbring said Ericsson’s existing gear that has been installed by telcos since 2015 will be able to relay 5G signals through mere software upgrades, making it an affordable way for telcos to get started even as they buy new spectrum that when used can take on higher load, or in other words, support a much larger number of customers. “This is a very favourable way for operators to get into 5G and then, over time, they will introduce more and more radio units and performance will also improve," Ewerbring noted.
The affordability factor becomes important amid estimates by brokerage houses that peg spectrum buys by all carriers at ₹71,000 crore, the bulk of which will be new 5G bands including 3.3-3.6 GHz. Each carrier, which will have to pay ₹31,700 crore for pan-India airwaves at the base price level, is also set to get savings from scrapping the floor of 3% spectrum usage charge (SUC) and removing the charge for spectrum buys in future auctions.
Analysts at ICICI Securities said that modification in SUC will bring annual savings of ₹2,100 crore for Airtel, ₹1,000 crore for Vodafone Idea and ₹2,300 crore for Reliance Jio on Q4FY22 annualized adjusted gross revenue (AGR). If telcos buy 100MHz pan-India in 3300MHz band, and 500MHz pan-India in 26GHz band, the cheapest band by base price, in the upcoming auction, the annual payout for spectrum acquired in the upcoming auction would come to ₹1,200 crore for Bharti, ₹2,400 crore for Vodafone Idea and ₹,100 crore for Reliance Jio.
Ewerbring also backed telcos providing captive 5G networks as a service to enterprises on the ground that, over time, the captive and public networks will get integrated, especially in manufacturing, automation, and logistics industries to give seamless and secure connectivity.
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