No business basis for deploying 5G networks in case of direct allocation of spectrum to entities for private networks: TSPs

According to a telecom industry group, there would be no commercial justification for telecom service providers to set out 5G networks unless the problem of spectrum allotment to private businesses is resolved quickly.

In a letter to Communications Minister, Ashwini Vaishnaw dated June 8, Cellular Operators Association of India (COAI) Director General SP Kochhar wrote: " If private captive networks for enterprises are set up independently by other entities, this would mean dramatically altering the industry dynamics and hurting the financial health of the industry."  Reliance Jio, Bharti Airtel, and Vodafone Idea are all represented by the COAI.

" Telecom service providers' business cases will be seriously harmed. And this will reduce income to the point where the TSPs will no longer have a viable business case, and there will be no reason for them to put out 5G networks," he added.

The telcos' position contrasts sharply with those of the country's largest IT firms, such as Tata Consultancy Services (TCS) and Tata Communications , which want the government to give 5G spectrum to private companies directly, as recommended by the sector regulator.

The TSPs are aiming the enterprise segment with the 5G auction in order to raise income and overall productivity and efficiency. " Wherever 5G has been deployed around the world, there has been very little revenue growth in the retail sector as a result." Kochhar added. According to him, only the enterprise segment can increase income and efficiency.

The letter was sent to K Rajaraman , Secretary, Department of Telecommunications, and PD Vaghela, Chairman TRAI, among other senior DoT officials.

Telecom companies are using 4G networks to meet the entire country's voice and data needs. Despite significant capital investments in 5G networks, operators' retail sales are unlikely to improve, given India is a price-sensitive market, particularly in the consumer component , the letter stated.

The government's goal is to meet the demands of numerous industry verticals by ensuring that they have the connection they require to support their use cases, which Telecom service providers can readily supply under their current licence conditions. Kochhar further added: " Giving away dedicated spectrum fo private captive networks will eliminate the necessity for TSPs to put out 5G services due to a lack of business justification."

The Cabinet has yet to approve 5G spectrum pricing for the much-anticipated auction. COAI has stated that, if approved by th government, such a plan might deprive telcos of future 5G enterprise business earnings, projected to be roughly 40% of overall 5G business revenues , and demolish the 5G business case in India. Following which, TRAI advised that private firms lease spectrum, from telcos in its answer to the DoT's back-reference this week.

(With PTI inputs)