For Digital India, government needs to urgently kick start 5G roll out

The government should overcome revenue loss arguments and provide 100 MHz of 5G spectrum to all existing operators at no cost, with clear rollout conditions and targets

By Akhil Gupta

I believe there is unanimity in recognizing that the telecommunication industry by providing necessary connectivity to every nook and corner of India proved to be a lifeline of the country during lockdown where almost all non-field workers were forced to work from home (WFH).

It is quite natural for the Indian telecom industry, which is facing an unprecedented financial crunch due to the AGR ruling (practically equivalent of what COVID-19 is doing to other industries), to expect the government to appreciate and recognize the critical role of this vital industry by announcing various relief measures like reduction in GST rate, license fee, and spectrum charge, etc.

However, the purpose of this article is not to reiterate the need for those concessions. Even if the government is favourably inclined towards the industry’s demands, it will find it difficult to agree since those concessions will directly impact revenue; the fiscal deficit in the current year will go well beyond 5% at the least. And that is with the somewhat modest stimulus package of only 1.75 lakh crore announced so far, which translates to a mere 0.8% of the GDP.

India needs much more. Even if we are not able to be as generous as the USA at 10% of GDP and most other developed countries in between10-20% of GDP, the country will have to and must allocate 4-5% of GDP for kick-starting the economy post-COVID-19 and for the survival of a large section of rural workers, daily wage earners and a very large number of MSMEs.

However, the government must recognize that its objective of developing India as a digital economy can be achieved only if it can ensure the availability of decent broadband connectivity at every touchpoint and for every citizen—be it at residences, places of work, or public areas.

The reason is the consensus that is fast emerging. Based on the experience during the lockdown, a fairly large percentage of organizations are likely to ask their employees to work from their new offices—HOMES—permanently. This will necessarily require reasonably high-speed broadband for uninterrupted workflow.

I would like to highlight two facts that need attention here.

One, there is not even a remote possibility of providing the “real broadband”, that is the wireline with Optic Fiber connectivity to each such touchpoints. It will be too expensive, economically unviable, time-consuming, and a logistic nightmare, particularly with all the digging and the permission for Right of Way. Accordingly, any solution to meet this requirement has to necessarily be ‘wireless’.

Two, 4G with its constraint of the spectrum and, thereby, capacity will be great for coverage and ‘low speed’ broadband, which would barely suffice for mobile use. However, as mentioned above, the speed required for uninterrupted work from home cannot be provided with 4G networks with current capacity constraints.

Club these facts with the need for India to strategically keep pace with the rest of the world on 5G and, thereby, keep pace with rapidly developing and evolving digital world and the answer is the introduction of 5G NOW and not after a few years.

To make this happen, the government will need to step in since under the current proposition more than INR 40,000 crore will be required per operator to take 100 MHz of 3500 MHz spectrum which is considered an absolute must for a decent 5G network. Going by the current financial health of the sector, it looks unlikely, and in fact almost impossible, that any operator will be able to buy such spectrum.

The National Digital Communication Policy 2018 (NDCP 2018) clearly states that the aim of policy and thereby the government is to spread broadband across the country as soon as possible and not the maximization of revenue. In keeping with this policy and the existing dire need for wireless broadband as discussed above, I suggest a few steps that can help the country achieve both the objectives.

The government should immediately provide 100 MHz of 5G spectrum to all the existing operators free of any one-time charge with clear rollout conditions and targets with respect to coverage and capital investment in 5G networks. To begin with, say for the next two years, the requirement as minimum rollout should be the provision of ‘Fixed Wireless Broadband’ at least in specified cities and towns or districts where the immediate need for such broadband is higher.

The operators accordingly would not have to incur very large capex that would be required for a ubiquitous mobile network on 5G—especially when on a mobile network there neither are too many use cases as yet nor are inexpensive handsets available.

Instead, the operators would be able to ‘selectively’ choose clusters with a higher concentration of demand for ‘Fixed Wireless Broadband’. The 5G network so rolled out would be supplemented with ‘outdoor antenna device’ and in-building WIFI to ensure very good quality indoor reception of the signal and high broadband speeds. Accordingly, the overall capex and opex per customer will be much more economically feasible.

So what will be the outcome? The approach will help us achieve the following objectives:

• India will enter the 5G era virtually at the same time as the rest of the world;
• It will help bridge the availability big gap of decent speed broadband at a very large number of touchpoints;
• The country will become absolutely ready to deploy fully mobile 5G networks in a few years as more use cases emerge;
• The government will immediately start earning additional returns from the increased revenue of operators;
• The telecom industry will get the much-needed additional revenue; and
• The scarce capital will get spent on networks rather than spectrum—something that should have been done as a policy right from the beginning.

However, to get this done, the government will need to overcome arguments from Naysayers about “foregoing a large one-time spectrum charge“. The reason is simple: such imaginary revenue by way of the auction of 5G spectrum is unlikely to come to the government at rates specified any time soon—at least for the next few years, by when the reserve prices would have to fall to a fraction anyway.

On balance, there cannot be a better win-win situation for the Indian consumer, the Digital India dream, and the country’s telecom industry, corporate sector, and the economy.

The author Akhil Gupta is Vice-Chairman, Bharti Enterprises & Executive Chairman, Bharti Infratel

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