For Telecom Service Providers And Tech Players, Private 5G Networks Offer The Next Big Chance

Farmers and orchard owners know one truth: When you have a whole tree to pick, go for the low hanging fruit first and ship them to market quick.

Then go for the fruit in the higher branches which call for more time and skill to pick.

The post 5G telecom service business is no different.

Hardly a day passes without one or thew other of the two leading telecom service providers in India – Airtel and Reliance Jio — announcing 5G services in yet another state or region.

Six months after 5G was launched in India, the coverage for lay users is there almost everywhere.

What is left unsaid is how many consumers are actually enjoying 5G speeds on their mobile phones.

This is because 5G-ready handsets are still relatively thin on the ground — and only a small fraction of the estimated 600 million smartphones in use are capable of receiving 5G.

Most users are not ready to throw away their existing handsets and upgrade to a 5G phone: cost is a barrier. 

So the telecom providers who paid very stiff fees at last year’s government auction to acquire 5G-ready spectrum, and rebuilt their backend hardware, are nowhere near seeing returns on their investment. 

And this in spite of not raising the tariff for 5G usage — yet. 

Making money from the consumer end of 5G services is a slow and arduous process — the ARPU or average revenue per user is among the lowest in the world, in India.

But there is another, more immediate opportunity for Airtel, Jio, Vodafone-Idea (when it overcomes its current challenges) and for the new player who bought 5G-suitable spectrum: Adani Data Networks:  The private 5G network business for corporate and enterprise customers… the low hanging fruit, so to speak. 

HPE (formerly Hewlett Packard) defines it this way: “Private 5G is an ultra-secure, restricted-access network that provides bandwidth to a business. It establishes better coverage… more thorough and reliable coverage for the given user-base. Aside from this, private 5G networks have customization capabilities that even 5G Wi-Fi does not offer, allowing for industry- and business-specific conditions and requirements.”

And in a blog on “5 cool things about private 5G”, Cisco, a leading contender for this business, suggests an even wider application:

“It’s also a potential game-changer for enterprises, manufacturers, universities, hospitals, the public sector and beyond. For many of these organizations, a private 5G network will be the way to go.”

Enterprises in India have not been slow to see the advantages of owning their own private — also known as captive — 5G network: Weeks before the formal rollout of 5G services in India last year, Airtel successfully completed a trial  deployment of a  dedicated 5G network, using  trial spectrum, at the Bengaluru plant of Bosch Automotive Electronics.  

The faster data rates helped the company speed up the automatic optical inspection of semiconductor circuits on the assembly line.

Towards the end of 2022, Airtel helped the Chakan (Pune) plant of Tech Mahindra, become India’s first 5G-enabled auto manufacturing unit. It led to sharp improvements in the speed at which software was ‘flashed’ onto the onboard devices of a vehicle.

Reliance on its part claimed multiple enterprise wins for its “Jio 5G Solution in a Box” for enterprises, a pre-packaged core network for indoor and outdoor deployment at the client premises.

The pure telecom providers may not have the private 5G field entirely to themselves: The challenge has already come from established information technology leaders who see a new opportunity and a new business stream presented by enterprise-grade 5G.

Consider these developments in recent months:

— HCL Tech has joined a three-way consortium to deliver 5G solutions to businesses. It will harness its management and automation skills, leverage chip maker Intel’s 5G-ready solutions built around the Xeon processor family (and mostly developed in India) along with Radio Access Networks or RANs from US-based  networking specialist Mavenir.

— L&T Technology Services has partnered with wireless technology leader Qualcomm to provide end-to-end solutions to the global 5G private network industry. To canvass overseas business, it has set up a 5G centre of excellence  at  Santa Clara in the US Silicon Valley.

— Tata Communications has opened a Private 5G Global Centre of Excellence in Pune where industry clients can test and try out their use cases. The company has coined a mantra: ‘5G, the 5M way’, where 5M stands for the interplay between Man-Machine-Material-Method-Market.

—  Telecom networking leader Ericsson has collaborated with Capgemini to set up a 5G lab for industries in Mumbai.

These strategic tie-ups are aimed at fuelling the private 5G business — not at directly providing these services. 

But that too is happening: Last week (27 February) saw one of the biggest names in the tech services sector, enter the lists:

Infosys has announced that it is offering what it calls private 5G-as-a-service for enterprise clients worldwide.

To reduce complexity for potential users, it has pre-integrated the 5G stack (or protocols) from multiple vendors and pre-tested them against different use cases and promises that its offering will be ‘reliable, secure and cost effective’.

Nokia is another global telecom player who has announced that it will aggressively bid for a chunk of the private 5G market in India which it estimates will be a $240 million market by 2027 with the potential of more than 2,400 sites across the country. 

“We have had a leadership position in private networks across the world and we have more than 500 deployments globally. This business is growing very fast and we see the same kind of trend in India too," Nokia India chief marketing officer Amit Marwah said in an interview with Mint, last month.

Ericsson, on its part, has set up a separate unit  to grow the private 5G business in India either on its own or in partnership with the telecom providers who already have 5G spectrum under their belt.

5G-Assisted Colonoscopy

One way or the other, key industry verticals have already realised the benefits of adding 5G to their arsenal: in a path breaking experiment in December last, Apollo Hospitals joined with Airtel, Amazon Web services, HealthNet Global and edge computing specialist Avesha, to carry out a 5G-driven, artificial intelligence-guided colonoscopy procedure.

Thanks to the superior speed and low latency (the time gap between sending a packet of data and its receipt) of 5G the colon cancer reportedly got detected much faster, and more accurately.

This holds out the hope that this procedure, known to be both long and uncomfortable for the patient, can be much less traumatic in future.

Private 5G networks are poised to drive many industry arenas as this graphic suggests.

Pricing Problem

But one problem has cropped up and as of now the government has not taken a call on what its stand will be.

This flows from the application from many companies, like Capgemini, Infosys, L&T, Tata Communications, Tata Power, Tejas Networks for allocation of spectrum for setting up their own private 5G networks, instead of going through service providers. 

Such direct allocation to large industry users of 5G is not unusual globally, and the Broadband India Forum representing many of the world’s big tech players like Amazon, Google, Microsoft, Meta, etc, is lobbying for major enterprise users being allotted 5G-ready spectrum without charge and without their having to bid afresh in spectrum auctions.

What route will the government take?

The last heard on this subject was in December 2022,  from LiveMint which  suggested that  the department of Telecommunications  has asked the Telecom Regulatory Authority (TRAI) to suggest a pricing mechanism. 

This indicates which way the wind is blowing and going on the recent record of this government, it is unlikely that it will surrender any opportunity to   milk the cellular 5G spectrum for all it is worth.

But one way or the other it cannot delay a decision much longer. Because at the frenetic pace of 5G deployment worldwide — and the competitive edge it promises — every day lost for India’s enterprises to fast-track their processes by setting up their own private 5G networks is a chance for someone, somewhere to slip ahead.