No biz case for 5G roll-out if concerns on private captive networks not addressed: Telcos body
Industry body COAI has warned that there will be no business case for roll-out of 5G networks, if telecom operators concern on the critical issue of private captive networks is not addressed immediately.
In a letter to Communications Minister Ashwini Vaishnaw, COAI said if independent entities are allowed to set up private captive networks with direct 5G spectrum allotment by the telecom department, “the business case of TSPs (Telecom Service Providers) will get severely degraded”.
“This will diminish the revenue so much that there will be no viable business case left for the TSPs and there will not remain any need for 5G networks roll-out by TSPs,” it said.
The comments of COAI — whose members include Reliance Jio, Bharti Airtel, and Vodafone Idea — assumes significance as telecom operators and tech companies have locked horns over the hotly-contested issue of 5G spectrum allocation and captive private networks.
Private enterprises have asserted that giving spectrum directly for creation of captive networks, without any dependency on telcos, would accelerate the digital agenda — a stance that telecom operators have vehemently opposed.
“Giving away dedicated spectrum for private captive networks will render the roll-out of 5G services by the TSPs needless because of lack of business case,” Cellular Operators Association of India (COAI) said in the letter, seeking the ministers urgent intervention in the matter.
COAI members, during their interactions with their corporate clients, (also serviced by other entities) have learnt that these other entities are committing to corporates that they would be able to set up private 5G captive networks of their own by direct allotment of spectrum by Department of Telecom (DoT), the association said.
Globally, it argued, wherever 5G has been rolled out, it has been seen that there is hardly any consequent revenue increment from the retail segment. The revenue and efficiency enhancement can happen only from the enterprise segment, it informed.
“In this regard, as you are aware that the needs of voice and data of the entire nation is being adequately met by the TSPs through their 4G networks today. As such the revenues of TSPs are not going to increase from the retail segment despite very heavy capital investments for roll-out of 5G networks,” COAI Director General, SP Kochhar wrote in the letter.
This is further amplified as India is a highly price-sensitive market especially in the consumer segment.
So, the new segment that would be benefitted by 5G services of the telecom operators is the enterprise segment including manufacturing, logistics, education, hospitals, campuses and factories.
Telecom operators have also conducted successful 5G trials for many of these use cases in the last one year. With 5G auction, the telcos are targeting the enterprise segment for revenue enhancement and overall increase in productivity and efficiency. “This is where TSPs 5G business case lies,” COAI asserted.
If private captive networks for enterprises are set up independently by other entities then this would mean dramatically altering the industry dynamics and hurting the financial health of the industry and will strike at the very heart of such a business case, it reckoned.
“If independent entities set up private captive networks with direct 5G spectrum allotment by DoT, the business case of TSPs will get severely degraded. This will diminish the revenue so much that there will be no viable business case left for the TSPs and there will not remain any need for 5G Networks roll-out by TSPs,” COAI rued.
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