We all know 5G has huge potential. It not only drives data at high speeds but with significantly lower latency — enabling the possibility of new kinds of applications that were earlier not possible. But unfortunately, some of these applications (like remote surgery, etc) will take some time to evolve and grow, and therefore the operators will need some low-hanging ones immediately, which can enable them to generate additional revenues. These incremental revenues will motivate them to continue expanding 5G networks by making additional investments. And once the base is ready, then the business case of these futuristic 5G applications will also improve. Hence, it is imperative for all the stakeholders (regulators, technology providers, etc) to empower the operators such, that they can pluck these low-hanging fruits easily and with maximum efficiency. This article is about identifying these low-hanging fruits and the specific roles the regulators can play to motivate and empower the operators.
Broadband (Current Situation)
1. Mobile Broadband
Most of India’s broadband connection is nothing but high-speed internet connections. Why? The bulk of the connections is mostly anchored around mobile broadband — the download speeds of which are low, due to bottlenecks in the last mile (spectrum & backhaul). The average spectrum assigned to an Indian operator in no way compares with what those assigned internationally. See the figure below(Page 46 of the TRAI Recommendation Dated 31st Aug 2021).
Also, in India, the spectrum for data gets further reduced as a small portion of it is used for offering 2G services to serve those subscribers who have not migrated to 4G. And on top of this, India’s population density is much higher than all countries on the list (except China)- making mobile data speeds much lower than all other countries.
2. Fixed Broadband
India’s Fixed Broadband connections are just 3.5% of the total broadband subscribers as per the current definition. See the figure below.
In past, the growth of fixed-line broadband has been slow, but recently it has picked up due to high demand driven by the Pandemic. The consumer needs reliable high-speed broadband connections at their home for both work and entertainment. The operators are trying their best to fulfill this demand, but still, the take-off is not anywhere close to what is desired. The reasons: wireline-based broadband takes time to roll out due to the need for digging and negotiating ROW (right of way).
5G Opportunities
Compared to 4G, 5G opens up many opportunities, thereby significantly empowering the capabilities of the operators. These are discussed below.
1. Technological Capabilities
Based on the above discussion one can easily infer that wireless broadband has scale, and can be deployed faster and quicker. The scale helps in driving the cost of the end device down, thereby making it affordable. But there are two key constraints. A) Operator has substantially less spectrum compared to their counterparts in other countries. B) Even if the spectrum problem is somehow resolved, the existing 4G technologies prevent the wireless broadband to emulate capabilities that are available in a wireline connection. What are these capabilities? To a layman, 5G empowers the operator to serve their customers with independent dedicated links (as in the case of wireline), the speed of which (links) is not impacted as other users start to access the same BTS (simultaneously) in which the customer is hooked. (For a more elaborate explanation, please read my note — How is 5G different from 4G?). In other words, 5G technology empowers the operators to offer broadband connections over wireless (faster to deploy) at a dedicated speed, just like they offer it over a wireline connection.
2. Spectrum Quantum
The 2nd most important thing which distinguishes wireline BB (especially fiber) from wireless is its capability to drive very high capacities. The reason:- wireline is a dedicated nailed up connection, whereas wireless is shared with those users hooked up to the Base Station (Tower) simultaneously. Hence, the ability to acquire a large quantum of spectrum becomes extremely important for the operators. As fatter the wireless access pipe the lower the probability of congestion. Fortunately, 5G technology empowers the operators to aggregate a very large quantum of spectrum compared to what is possible in the case of 4G technology. This ratio can go as high as 50 times or even higher. Fortunately, such a large quantum of spectrum is available in the 26 GHz band (Millimeter Wave) whose prices has set quite affordable by the TRAI. Just to get a sense, the price of MMwave is 260 times cheaper when compared to the price of 800 MHz. The reason:- The reach of MMwave is poor and doesn’t travel far, or penetrate indoors, but good enough to bridge the last mile to deliver broadband to an external terminal installed on the wall of a building where the laying of OFC cable will challenging if not impossible.
These unique technological characteristics of 5G make it an ideal candidate for expanding the fixed-line broadband connectivity much faster and quicker.
5G Challenges
Just like any other new technology, 5G also has to overcome some challenges. Most of them are teething troubles and if managed properly will be overcome with time. These are described under.
1. Deployment Cost
Just like any other wireless technology in the past, the deployment cost of 5G will be initially high. The same will be true for the CPE/Handset. But as time progresses prices will fall — driven by economies of scale. We have experienced this even in 2G, (in 1995 the price of a GSM phone was Rs 50K).
2. Network Reach
5G needs a large block of spectrum to drive high-speed internet (at par with wireline). Unfortunately, such a large quantum of spectrum is only available in higher spectrum bands (3.5 GHz & 26 GHz), where the radio waves do not travel far from the base station compared to the lower spectrum bands (800, 900, 1800 MHz). Hence, in order to create a 5G network with similar coverage to 4G, an operator will need to deploy a large number of towers (BTSs). This will be quite a challenge for the operators, as their network deployment costs will increase.
Fortunately, there is an elegant solution to overcome this challenge. Deploy a 5G network that resembles a “wedding cake”. The lowest layer of which will be 700/600 MHz, the middle layer will be 3.5 GHz and the top layer will be the Millimeter Wave (26 GHz). Such an approach will help the operators to have the cake and eat it too. In other words, the network will enable both coverage and capacity at the same time. The capacity will be delivered by the top layer (26 GHz+3.5 GHz), and coverage will be delivered by (700 MHz +3.5 GHz).
But there is a caveat, you need at least 2x15 MHz in 700/600 MHz so that the subscribers don’t experience a sudden drop in data speeds when they are served only by the lowest layer of the model (700/600 MHz) as they are not close enough to the BTS to be served by the other layers (3.5 GHz & 26 GHz).
5G Services (Low Hanging Fruits)
The following services can be categorized as low-hanging fruit which the operators can immediately leverage to monetize 5G technology without having to wait for the technology to mature in India.
1. Fixed Wireless Broadband
As described earlier, 5G can leverage the best of both worlds. It can leverage the capabilities of wireline on data speeds/capacity and that of wireless on faster deployment and economies of scale. Both these capabilities make 5G technology an ideal candidate for expanding “Fixed Broadband” connectivity in the country. 5G can deliver speeds both on downlink and uplink which can easily make such connections in the category of “Ultrafast Broadband” — A category defined by EU countries for broadband connection with download speeds are higher than 100 Mbps.
2. OTT & Linear TV
5G is an ideal candidate for delivering 4K video-based OTT applications and linear TV over wireless. This opportunity wasn’t available in 4G, due to the reasons explained above. Both 5G FWP and the capabilities to drive 4K video over it will empower the operators with a new revenue stream that was not available earlier over a telecom wireless network. Yes, today linear TV and OTT apps are available over wireline, DTH, and other platforms. But 5G empowers the operators to bundle and integrate all these capabilities in one single connection. This will drive costs down, and help the operators with incremental revenues to keep expanding 5G networks till other innovative applications get invented.
5G Regulatory Challenges
In order to enable the operators to leverage 5G effectively, the regulators need to play an important role. These are listed under.
1. License fees
It is understood, that in order to expand broadband connectivity in the country, the DoT is proposing the removal of the license fee for fixed-line broadband services for a period of 10 years. In my view, a similar incentive scheme for rolling 5G FWPs should also be announced. The reason is simple, wireless broadband can be rolled out much faster than wireline. And as the FWP connections increase, the same will drive economies of scale and make “Ultra Fast” broadband even more affordable.
2. Backhaul Spectrum
5G needs huge backhaul capabilities to aggregate and carry access traffic to the switching centers. Without this capability, it will be useless. As per TRAI, only 33% of the current towers (BTSs) have OFC connectivity. With 5G, the operators will need to deploy new BTS sites, and therefore it will be impossible to rely on OFC alone. Hence, the DOT needs to open up the E-Band to the operators. This will make the operators drive 5G access traffic over wireless to the switching centers without having to wait for the OFC network to get deployed (which might take a long time).
3. Spectrum Usage Charge
Though the spectrum usage charge of 5G has been resolved through the cabinet note dated 15th Sept 2021, however, there is no clarity on what the rules of backhaul spectrum like E-Band will be. In my view, the current link—by—link approach to charge backhaul spectrum should be abandoned, with a uniform circle-wide approach. This has been explained in my earlier note — Satellite Spectrum SUC & Implications.
4. Broadcast Regulation
Since 5G networks can be used to drive OTT and linear TV content, the regulations driving those services should be restructured and harmonized. Actions are needed both by MIB and TRAI. These are explained in my earlier note — Broadcasting Sector — Challenges & Opportunities.
5. Price of 700/600 MHz
The price of 600 & 700 MHz still is quite high. Even though TRAI has an excellent job of reducing the prices compared to what it was earlier. Just to get a sense, at the current price a 2x15 MHz block in the 700 MHz will cost the operator Rs 60 K Cr.
Conclusion
As per TRAI (page 5, Rec Dated 31st Aug 2021), Fixed Broadband connection in India is among the lowest in the world at only 1.69 per hundred inhabitants. This looks pretty bad if we compare it with markets like France (44.5), Korea (42.8), Germany (42.7), Canada (41.2), the UK (40.5), the USA (36), Australia (35.2), and Japan (33). 5G FWP provides an excellent opportunity for us to expand and enhance this number. Pandemic has enhanced the demand for fixed broadband connections significantly. We simply can’t rely on wireline-based broadband to meet this enhanced demand. 5G not only has the capability to emulate fixed wireline over wireless but it can be scaled much faster, thereby driving costs down. This will enable affordability, thereby helping with the objectives of NDCP-2018 of providing high-speed broadband connectively to 50% of India’s households.
(Views expressed are of my own and do not reflect that of my employer)
PS: Find the list of other relevant articles in the embedded link.
