The new captive-private network deployment rules announced Monday will break down the business case for service providers to invest heavily in airwaves and next-generation mobile broadband network deployment, telecommunications industry executives told ET.
“The new rules will definitely hit the 5G business case of telco’s and reduce their appetite for expensive C-band 5G spectrum in next month’s auction to around 40-50 units,” a top executive of one of the three private service providers told ET said.
Technical companies are also not entirely happy about the situation.
The telecommunications department’s decision to undertake demand studies and then seek recommendations from the sector regulator could severely delay direct spectrum allocations to businesses and give telcoes a first-move advantage in the 5G network game, they said.
Telco, for its part, is also upset about DoT’s decision not to charge companies any license / access fees for direct spectrum allocations to set up captive 5G networks to connect their facilities across the country, and rather a nominal processing fee of Rs 50,000.
This will enable large technology companies to connect their factories via private 5G networks and pay modest rental line costs to operators, telcos said. Such a scenario would rob telcos of potential 5G enterprise revenue and create uncertainties about the viability of their 5G offerings, they said.
There is “no real skin left in the 5G enterprise game for telco”, as the rental line costs that large technology companies would pay are estimated at a small 1% of the latter’s revenue, the CEO quoted above.
At the time of going to press, ET’s inquiries to Bharti Airtel, Reliance Jio, Vodafone Idea and the Cellular Operators Association of India (COAI) were unanswered.
Operations executives said the latest captive deployment rules could intensify disputes between telcos and technology players over the control of 5G spectrum to be used to build captured non-public networks (CNPNs). Telco’s fears that access to 5G spectrum without auctions will enable technology companies to offer similar 5G enterprise services at a much lower cost and undermine their 5G business.
However, technical players have said that companies could eventually lose out to telecommunications companies to exploit the emerging market for captured private 5G networks due to likely delays in direct spectrum allocations.
TV Ramachandran, president of Broadband India Forum (BIF), said DoT’s decision to undertake demand studies and then seek Trai’s recommendations “is a smart way to postpone this option (read: direct spectrum assignments) completely”. He added that “enterprises and industry 4.0 have clearly lost ground as there is no time frame for the DoT study or the regulator’s recommendations on this matter”.
BIF counts technology companies such as Tata Consultancy Services, Cisco, Amazon, Google, Microsoft, Facebook owner Meta, Qualcomm and Intel among its key members.
However, some technology players are more optimistic and say they can always hire spectrum telco to set up captive private networks if direct orders take time. “Even if DoT’s demand studies and Trai’s recommendations take time, we could go for rent at telco or even be technology partners for our end customers,” said a manager of a top Indian IT firm.
Businesses can set up captive 5G networks by hiring spectrum from operators or by getting the latter to set it up for them.
However, analysts say that the deployment of private 5G networks poses B2B monetization risks for telcoes. “If companies acquire (private) spectrum directly, they will not utilize the airwave ownership of operators, and this could lead to loss of revenue generating opportunity for telco’s,” BofA Securities said in a report.