Missed Opportunities? India Delays its 5G Rollout (Again) - What's Going Wrong?

What's causing the continuing delays in India's 5G rollout? It is easy to forget that India is a country of over 1.4 billion people and that doing any kind of infrastructure development is much more complex and expensive and, for example,?twenty times the scale of the UK with a population of around 68.5 million. To put this in further context, globally there are still only 450-500 million 5G subscribers.?

?There are a number of factors behind the delay. The relatively slow process of India's decision making has been a persistent barrier. The delay in granting spectrum for trials also hasn't helped in proving the viability for the three private operators involved -?Bharti Airtel,?Reliance Jio, and Vodafone Idea. Indeed, the main issue is financial. The Telecom Regulatory Authority of India (TRAI) recommended that the auction price for 8,644 MHz of 5G spectrum should be around?$66 billion (4,900 billion Indian Rupees).?

?The proposed price is considered very challenging by the operators as the average revenue per user in India is relatively low. Hence it would require a large number of high value and / or high volume applications or 'use cases' to justify the investment in securing the spectrum and building out the 5G network. The sector was granted 5G spectrum to run six month trials, but so far, they have not surfaced the use cases. The majority of successful examples so far are in mainly niche sectors of smaller businesses where there isn't a sufficient volume of players and likely traffic, or a big enough commercial partner network ecosystem to justify the investment.?

With over 70% of the country still requiring fibre rollout, the cost of the hardware and software infrastructure is also a hurdle. The operators were hoping that with around 150 countries already embarking on 5G programmes, this would have brought the price down. However, the slow pace of rollout in many countries, and the financial ravages of the last two years have not brought prices down by anything like the expected amount. There is also a concern that?operators?globally, even in mature markets, have struggled to achieve the desired premium for 5G services and meet their business case targets. Some analysts believe that India's 5G operators will only be able to achieve a premium of less than 10% - and maybe significantly lower - which doesn't make it a very attractive proposition financially.?

?With only around 700 million users using 4G, there are still significant numbers to be migrated from 2G and 3G, and the operators feel there is still a lot more to do to extract the full revenue potential of 4G - furthering reducing the motivation to act quickly on 5G rollout. A number of private 5G networks are also in operation across a variety of sectors and are not restricted by government?spectrum auctions, licensing requirements, and security regulations.

The potentially large use cases such as healthcare, transport, and manufacturing automation / industry 4.0 have been slow to take off. Furthermore the tech start-up community are still largely focused on 4G applications - further reducing the demand pull for 5G.?

?All of these factors have led to a request for an extension of the six month trial period by the three main operators.?

How might the delay impact India's 5G rollout? The delay in the auction could push the rollout to happen from late 2022 through to 2025 and beyond. Despite all the noise about this, it is unlikely to hold back economic development, as most industry sectors are not rushing to install the applications, pursue the digital transformation initiatives, and rollout consumer services that demand 5G. Whilst a number of community level initiatives and Internet of Things opportunities may be delayed a little, again, the intended users are not pushing too hard to introduce the applications or access the supporting 5G infrastructure.?

Has India missed the boat on 5G? Not at all. The spectrum auctions will happen eventually, the infrastructure and 5G services will start to be rolled out, both consumer and business use cases will emerge, and demand will grow. I doubt whether the lack of 5G will stop anyone domestically or internationally from investing in India. It probably won't slow down any of India's other major infrastructure initiatives. The nation’s big social initiative and inclusion programmes are currently not predicated on 5G, and so will continue as planned.?

How might this impact India's plans to close poverty gap? While 5G could help with delivery of education to rural communities, providing access to markets for smallholders, and make access to government services easier, pretty much all of that is doable with 4G. Closing the poverty gap is much more about education, creation of appropriate work opportunities, support for small businesses, building transport infrastructure, healthcare, social justice, and food programmes. Again, none of these are predicated on 5G. Around 50% of the population currently lack any kind of internet or broadband access - crossing this gap with fixed or 4G solutions is a more pressing priority and potentially more achievable and lucrative than full broadband rollout.?

Rohit Talwar is a global futurist, researcher, author, and speaker who works with governments and businesses around the world to explore the forces, trends, and factors that could shape the emerging future. He focuses on disruptive developments such as 5G, cloud, AI, blockchain, and the crypto economy. His latest book Aftershocks and Opportunities 2 provides a deep dive into over 400 technologies that will emerge over the next decade.?

Rohit Talwar - CEO - Fast Future

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