DoT explores direct spectrum allocation for private 5G networks amid telco opposition

To assess the market potential for directly allocating spectrum to enterprises for establishing private 5G networks, the Department of Telecommunications (DoT) has recently released a new study. However, telecom operators have consistently opposed this idea.

Telecom companies in India have made significant financial investments, amounting to several thousand crores of rupees, in the deployment of 5G infrastructure across the country. These investments include spectrum acquisition during government auctions, setting up advanced network infrastructure, and upgrading existing systems to support 5G technology.

Private 5G Networks: A key revenue opportunity

One of the key areas where telecom operators see the potential for strong returns on these investments is in the provision of private, captive 5G networks for enterprises. These networks are designed to offer dedicated, high-speed, low-latency connectivity that can be tailored to the specific needs of individual businesses or industrial facilities.

Private 5G networks have a wide range of applications, especially in sectors such as manufacturing, logistics, healthcare, mining, and energy, where reliable and secure wireless communication is essential. For example, in a smart factory setting, a private 5G network can support real-time monitoring, automation, robotics, and predictive maintenance. Similarly, in ports or airports, private 5G can power seamless logistics and operations.

Telecom companies see this enterprise demand as a significant new revenue stream beyond traditional consumer services. By offering customised network solutions to large businesses, operators aim to diversify their income and improve their return on investment (ROI) in 5G technologies. This is particularly important given the high capital expenditure involved in acquiring spectrum and deploying infrastructure at a national scale.

However, any move by the government to allow direct spectrum allocation to enterprises, bypassing telecom operators, could threaten this business model, which is why the industry is closely monitoring policy developments in this area.

While industry stakeholders have long advocated for direct spectrum allocation to businesses, the DoT had previously concluded that the device ecosystem was not yet mature enough to support it. However, that assessment was made some time ago, and the technological landscape has since evolved.

With the release of this new study, telecom operators may once again find themselves at odds with the DoT, resisting any move toward direct spectrum allocation for enterprise use.

Lt. Gen. S.P. Kochhar, Director General of the Cellular Operators Association of India (COAI), commented,“The quantity of spectrum and its valuation were benchmarked during the spectrum auction, with the assumption that licensed access service providers would be the ones fulfilling enterprise demand for private 5G spectrum.”

Telecom companies are unlikely to shift their stance. If large corporations are granted spectrum directly for private 5G deployments, it could negatively impact telcos’ revenues. The operators have structured their investments and pricing strategies based on the expectation that enterprise-grade 5G would be a significant long-term revenue source. A move towards direct allocation could undermine their revenue projections and return on investment (ROI) from 5G infrastructure.