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India sets the pace with 5G deployment

We had the opportunity to attend a conference recently in New Delhi, the 5G India Congress, hosted by the Economic Times. It was well attended with plenty of high-profile attendees ranging from the Minister of State for Communications, the Secretary of the Department of Telecommunications (DoT), Bharti Airtel’s CEO, Reliance Jio’s CTO and other senior delegates. While there were several themes discussed during the event, there were a few key takeaways.

Rapid pace of 5G deployment

After a somewhat tentative start post the completion of the 5G auction last October, India’s 5G deployment has gone into overdrive. Jio and airtel are the two telcos who are setting the pace. Both offered up compelling stats and projected to have coverage across urban India by May-June 2023 in phase 1, while subsequent phases would focus on rural and remote areas, with a majority of POPS covered by March 2024. As of March 2023, India’s telcos had already deployed 116,024 BTS’ across the country, as per statistics released by the #DoT. This is undoubtedly a rapid, if not record, pace of deployment for the first six months post license awards. One should also keep in mind that this pace is being set despite the very limited involvement of the third winner of 5G spectrum, Vodafone Idea Limited (Vi) due to a paucity of funds for CAPEX. BSNL LTD, the state-owned carrier, is also not in the picture for 5G at the moment but more on them later.

Abundant spectrum is available for 5G

The rapid growth of 5G has been enabled by the significant reforms enacted by the Indian Government, with abundant spectrum being made available for 5G, both in the globally predominant #sub6GHz band as well as in #mmWave frequencies. Beyond spectrum, the restructuring of the outstanding debt of the incumbent telcos (a combination of pending license and spectrum usage charge fees) has allowed the telcos to preserve their cash flows and allocate resources towards CAPEX for 5G.

Much work remains to be done on the policy front

However, much more needs to be done, as cited by both Airtel and Jio and also acknowledged by the DoT. The biggest area for improvement is with respect to Rights of Way (RoW). While a new policy was served up a few years ago, implementation has bene patchy due to the divergences between federal and state level policies. The lack of fast access to RoW has constrained the pace of 5G deployments, not only in terms of new towers and small cells that would boost coverage but also in terms of the transport network where fiber connectivity is crucial for backhaul.

There was also the now familiar refrain of the need for a policy “level-playing field”, which has been a matter of debate in India in the past. The oft-heard complaints about OTT players draining the swamp for telcos were heard again and brought up comparisons to the ongoing “fair share” debates raging in Europe. While we believe that these arguments are poorly framed and distracting, there are plenty of other areas that require policy convergence in India and deserve closer attention from policy makers. One example that was raised was that of a consumer looking to stream a cricket match. Today, the Indian consumer has numerous options, from a DTH service beamed to their homes, Cable, or streaming through an OTT application. However, each of these access options, offering up the same content, are currently governed by different regulations in India. This is patently absurd and needs to be streamlined, as do the numerous policy gaps that still need to be plugged.

India’s telcos are squarely focused on the enterprise opportunity

Commentary offered by the CEO of Airtel Business, and the Presidents of Airtel Enterprise and Reliance Jio in their keynotes and panel discussions suggests that India’s telco incumbents are very focused on the enterprise opportunity. For years, incumbent telcos have dabbled with fixed line connectivity services, MPLS networks, SD-WAN and even IoT. However, there are a number of major investment cycles that are already in play or about to kickstart. All of these investments will cater to the surging demand for digital services and applications. India has a unique record of creating digital public infrastructure with platforms like the Unified Payments Interface (#UPI), #Aadhaar (for national identification cards), #GST and more. As a result, new apps and services are being built and offered at record pace.

First, the datacenter segment in India is booming today, as are investments in submarine cable capacity. Not only is the domestic market booming, with demand coming not only from urban India (usually associated with the major metro cities) but also from tier 2 and Tier 3 cities/towns as well. With expanding retail and ecommerce operations across the country, logistics networks are rapidly being added to cater to end user demand for goods and services. However, in most cases, end user data needs to stay within local borders. These regulations are driving investments in datacenter capacity and telcos like Airtel Business are a major stakeholder with their Nxtra datacenter business growing rapidly with plans to expand beyond their current 120 locations across the country. Incumbent telcos are loath to cede this space to the hyperscalers who are also investing heavily in India.

Second, the market for private wireless networks is nascent but will see strong growth in the next few years. Mandala Insights projects this to be a significant market, reaching $240 million in total spend by 2027, as outlined in our report “PRIVATE NETWORKS IN INDIA: MARKET LANDSCAPE AND FORECAST”, published in October 2022. India will see the emergence of a number of deployment scenarios, with three primary options coming into focus. One, enterprises can opt for a managed service from a telco; two, enterprises can “lease” spectrum from a telco and enlist a systems integrator (SI) to build and manage the network for them; three, enterprises can apply for dedicated spectrum licenses from the Government and then build the private network in-house or through an SI partner. The scale and success of the CBRS market in the US can be sharply contrasted with the approach of markets like China which have allowed telco-led models only for private networks. India, however, will play out differently and adopt a more hybrid model, with both telco-led and enterprise-led scenarios for spectrum ownership. Both representatives from Jio and Airtel were vociferous in their commentary that, given a level playing field, no one could put a better, end-to-end package together for the enterprise than the incumbent telcos. Such emphatic pronouncements are easy to do in front of a large partisan audience of telco industry stakeholders. However, the fact remains that a third option may be emerging in India. That is, enterprises who opt for a managed service put together by an SI who “leases” spectrum from a telco. The natural question would be who this mystery telco is. The answer, for the moment, appears to be BSNL. BSNL is already “working” with a number of SIs and other parties to lease their 4G spectrum to package together with a private network solution. Clearly, there are a number of ways in which telcos will be major stakeholders in the emerging market opportunity for enterprise private networks in India.

Closing thoughts

The Indian telecoms market has seen its fair share of ups and downs, with plenty of controversy thrown into the mix like spicy masala added to a curry mix. However, there are palpable signs that the worst is behind the sector and 2023, with enabling policy and regulation, rapid 5G deployment progress as well as investments in digital infrastructure, will be a bellwether for a concerted phase of growth.

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