An uphill task ahead for telecom service providers

The 5G network architecture needs to support up to ten times the capacity of the current 4G infrastructure, requiring a massive spike in Capex

With major telecom players gearing up for the launch of the 5G network, the industry needs a lot of investments for network densification and active and physical infrastructure. Even though 5G has been launched in several cities across India, its complete roll-out demands an extensive undertaking.

A quick look at the data on global 5G infrastructure and one can note that China’s 1.5 billion subscribers are served by two million towers as compared to 7,00,000 towers in India. Of these, only 30% of towers in India are fibreised, compared to 70–80% in China, Japan, Korea, and the USA. These data points indicate that India needs 2X–3X more infrastructure to meet the increasing demands for data and deliver better Quality of Service (QoS) to users. For network densification closer to the point of data consumption, numerous cell sites, thousands of small cells, and IBS solutions would be necessary. Large-capacity new datacentres must be constructed to compute many Exabytes. This opens up several greenfield possibilities for the entire infrastructure ecosystem.

These data points appear to show that India needs 2X–3X infrastructure to deliver this data demand and provide better Quality of Service (QoS) to users.

Similarly, 30% to 40% of towers constructed in the 2G era have significant levels of outdated equipment. To reach the level of automation and efficiency of the modern world, telcos and tower companies will need to improve the infrastructure in such locations gradually. Several topologies have changed since then, necessitating an upgrade to eliminate old inefficiencies. Thus, telecom brownfields present a potential for

the business.

It is also important that operators increase the capacity of existing sites while they set up new sites to upgrade and expand 5G coverage. To reach the coverage goals, operators plan to commission 2,500 new base stations and upgrade 2,500 existing ones per week. However, the disruption in raw materials brought on by COVID, such as the rise in commodity prices, spot purchases, and semiconductor shortages, has temporarily impeded the operators’ ability to increase execution speed. The telecom industry is working nonstop to clear all obstacles to meet infrastructure needs significantly and hence aid in the development of the country.

In a nutshell, the expected challenges to prepare for the complete roll-out of 5G services will revolve around three perspectives.

Huge surge in data demand due to 5G: The massive amount of data that 5G networks must process, store, and distribute may put a burden on data centres. It raises the demand for computing power as well as supporting infrastructures, such as storage, communication, and edge computing. For international investors and developers, datacentres in the nation have already established themselves as one of the most alluring growth opportunities. Investments are pouring into the datacentre market as numerous new markets are emerging at once, and existing datacentres are expanding quickly in important cities like Mumbai and Chennai.

Operators must increase the capacity of existing sites while they set up new sites to upgrade and expand 5G coverage.

Push for Capex to catch up with the demand: During the last five years, the telecom and digital industry has seen the largest increase in its percentage of overall Capex across all businesses, going from 9% in FY13–17 to 17% in FY18–22. And this number is bound to increase in the coming years. According to estimates, the 5G network architecture will need to support up to ten times as much capacity as the current 4G infrastructure. In India, just 35% of all towers are currently fibreised, or connected by optical fibre, as opposed to the optimum need of 70% for the introduction of 5G services.

A surge of infra may cause supply chain issues: 5G is no more a vision but a reality that is shaping up fast. But India has to do a lot of catching up clearly. Even though the infrastructure gaps do create many opportunities with such a sudden surge, it might lead to various short and long-term challenges for the vendors. With 5G knocking on the doors, this high demand for infrastructure is expected to last for a period of months. The market is ready for 5G acceptance, but it would be interesting to see how efficiently the supporting infrastructure gets set up in conjunction with suppliers and manufacturers.

5G is ushering in a new world era for many industries, including but not limited to retail, entertainment, automotive, manufacturing, etc. From autonomous vehicles to connected logistics, smart healthcare to the industrial Internet of Things, and smart factories to augmented, and virtual reality – 5G will facilitate innovations of all kinds. Thus, a lot depends on how well the industry prepares for the next five years to meet the ambitious plans of 5G technology.

By Rajesh Kaushal

Rajesh is Business Head - Communication and Information Solutions at Delta Electronics India

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