The Indian Telecom Industry

FINAL REPORT

Submitted to: Mr. Sujit Kumar

Submitted by: Group-6 | Sec-B
Aaditya Goyal | Neha Khairwal | Sakshi Baheti
Samiksha Jain | Sankalp Tigga | Tanya Rani | Yash Jalan

Contents
Which communication technology is on the radar?.........................................................................1
Is India 5G ready?...........................................................................................................................2
Technical Implications of 5G..........................................................................................................3
Spectrum Costs.............................................................................................................................3
Business implications:..................................................................................................................4
Initiatives of other stakeholders in the evolving business ecosystem.......................................6
What impact will be on the business models for Telecom Operators with evolution of 5G?..7
How will 5G change the world?....................................................................................................7
Why should there be infrastructure sharing?............................................................................8
References....................................................................................................................................10
Which communication technology is on the radar?
5G is the fifth generation of mobile broadband technology that will eventually replace, or
at least augment, the existing 4G LTE connection. With 5G, people will experience
exponentially faster download and upload speeds. The time taken by devices (Latency) to
communicate with each other over a wireless network will also drastically decrease. It
will be able to handle a thousand times more traffic than today's system and would be 10x
faster than 4G LTE.
5G is needed because:

 There is relentless growth in the usage of mobile data all over the world, primarily
due to immersive entertainment. There are 4.39 billion internet users in 2019, an
increase of 366 million (9 percent) versus January 2018.
 IOT is also gaining momentum at lightning speed and millions of "things" are also
expected to be added to the network over the due course of time
 Due to Smart Cities which will highly rely on connectivity among the devices
5G in Global Context
5G is the catalyst that is soon going to boost mobile technologies. Implementation of 5G
has increased productivity and enhanced economic activities globally. Realizing the
potential of 5G, several operators are investing in this technology.
United States:

 T-Mobile invested in 5G networks with a multi-year deal of USD 3.5 billion

with Nokia with a complete suite of equipment and services to start deployments
in 2019
 Sprint launched 5G services on mobile devices on its 2.5 GHz spectrum at the
beginning of 2019
China:

 China Mobile has started conducting trials for 5G in many cities and will start the
usage of 5G pre-commercially by the year 2019 before its commercial launch by
2020 with an expected ~ 10,000 5G base stations across locations
South Korea:

 SK Telecom acquired spectrum in the 3.5 GHz and 28 GHz frequencies for
coverage and hotspot based capacity

United Kingdom:
 Vodafone shall be using frequencies in its 3.4 GHz band for 5G trial across seven
cities in the UK and is expected to commercially launch in the year 2020.

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Is India 5G ready?
 India is not a big gun in technology development or manufacture of
telecommunication equipment. 5G is also likely to depend upon either technology
imports or equipment made by foreign vendors in India, like its predecessor
technologies.
 Despite being home to over one billion mobile subscribers, the Average Revenue
per User (ARPU) for telecom service providers in India has reduced from INR
123 in 2015 to INR 69 at the end of 2018.
 The industry has a cumulative debt of 7.7 trillion and revenues under INR 2.5
trillion
 Close to 30 percent of their revenue goes to the Government in taxes and levies.
 As a result of falling ARPU, mounting losses, increasing debt and declining
revenues, the telecom industry is facing severe financial distress.
 For equipment such as base stations, 4G LTE product carrier, Ethernet switches,
gateway controllers, optical transport gear, etc., the import duty has further
increased to 20 percent.
 The debt-ridden telecom service providers have to improve their finances before
they prepare a roadmap for acquiring 5G spectrum or investing in equipment as
5G deployment is a costly affair.
5G Initiatives in India

 The Indian Government has launched a program titled ‘Building an End-to-End

5G Test Bed' to advance innovation and research in 5G.
 Ericsson installed their first public access 5G testbed at IIT Delhi in July 2018 for
developing applications in the broadband and low latency areas providing access
to the industry and institutions to work on India specific usage scenarios and
applications.
 In September 2017, the Government of India constituted a High-Level 5G India
2020 Forum to evaluate and build an action plan for 5G deployment in India by
2020.
Barriers to 5G in India

 India imports almost 90% of equipment for the telecom market. India exported
telecom instruments of worth USD 1,201.7 million in 2017-18 and imports were
of 21,847.92 million. To change this, The Telecom Regulatory Authority of India
(TRAI) has recommended measures to bring imports to ‘net zero' by 2022.
 Since the global ecosystem for 5G has matured and become highly competitive,
building an indigenous industrial and R&D capacity will have its own set of
problems
 High-priced spectrum is another barrier on the road to 5G. TRAI's recommended
price of INR 492 crore per MHz is 375% higher than what operators in South
Korea paid.

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Technical Implications of 5G
Although India is targeting for 5g services in 2020, it is yet to allocate 5G spectrum to
operators even for 5G trail use cases. The entire 5G ecosystem, which involves original
equipment manufacturers (OEMs), infrastructure, spectrum, and edge devices, is
currently missing.
The existing incumbent's companies are already deploying devices that are 5G ready and
also developing a fiber network. The existing companies Airtel and Vodafone are
planning to have a fiber JV just like they did by forming Indus Towers.
The golden triangle of 5G technology requirements is Latency, Connection Density,
and Throughput. Moving and looking at Connection Density - 5G networks can provide
up to a million connections per square kilometer compared with 4G, which has a typical
connection density of 2,000 connections per square kilometer. One of the fundamental
requirement for a business that communications and are instantaneous and ultra-reliable,
such as remote surgical procedures and self-automated driving is low latency. The very
high connection of 5G is its vital capability that will enable Mass-Machine Time
Communication (M-MTC) use case and satisfy the demands of a coming generation and
will increase IoT applications like Smart Wearable Technology, Smart Home Technology,
Smart Cities, and Smart Grids.

Spectrum Costs
As per the TRAI’s recommendation, the 3300-3600 MHz band is expected to be the
primary band for 5G services. The price of 5G spectrum is set 30-40 % higher than
global rates. Bands will be auctioned as a single band and in blocks of 20MHz each at
Rs 492 crore per megahertz while in South Korea the same band is priced at Rs 69.62
Crore.

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Bharti Airtel has said that at this price it will not participate in the auction and Vodafone
has said that the auction should be delayed to 2020 whereas Reliance Jio is backing up
the rates and auction timing decided for 5G spectrum.
Since the Spectrum pricing of 5G is very high, how could government approach spectrum
pricing given that the financial condition of telecom industry and uncertainties associated
with it is already very high?
Recently the Indian government has asked TRAI to keep auction prices such that it is
affordable for the companies and can result in availability in the rural area possible.
The government should perform a review of the telecom regulator’s recommendations on
upcoming spectrum auctions, including reserve prices.
The DoT (Department of Telecommunication) has also made request to TRAI (Telecom
Regulatory Authority of India) to ensure competition and sale of full spectrum. This
would lead to reduction in price of spectrum. Historically, always 40% of total spectrum
is put up for sale. Given that, 700MHz band remained unsold in the last auction in 2016,
TRAI is trying to fix the base price for 700MHz band at Rs. 6,5868 crore per Megahertz
which is 43% below target set in 2016-17 auction. Due to all this, the scenario may seem
to change this time.
For airwaves in the 800MHz and 900MHz band, TRAI had suggested to lower prices by
21% and 51%, respectively. This may also reduce 5G spectrum prices.
Government should keep in mind to have enough spectrum in each round of bidding and
should not threaten telecoms by stating that their license will be renewed only if they are
able to buy fresh spectrum.
The other way is to determine if the design is right, that is keeping tariffs affordable or
even subsidized. The main purpose of an auction is to ensure that every bidder has the
same chance of winning a license. This can be assured through good auction design.
Along with this, government should also think of decreasing the levies on telecom which
is 30% presently, reduction in License fee, Spectrum Usage Charges fees. Also, the
company should be given more time for repayment of spectrum brought during the
auctions

Business implications:
5G is expected to benefit the service sector through improved network performance
characteristics as well as enabling technologies such as IoT, AI, robotics, etc.
The seven prospective sectors where 5G has the maximum potential to revolutionize the
industry are:

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 Agriculture-Introduction of digitization and adoption of technologies is expected
to boost the agriculture sector by improving the productivity of yield. It is
expected to increase the earnings of the farmers through transparency in the value
chain. The agricultural industry is expected to benefit with about concerning
smart irrigation and climate change alignment, soil, and crop monitoring and
precision farming
 Automotive-The concept of Vehicle to Everything (V2X) would undoubtedly
help collision avoidance, real-time traffic routing, pedestrian’s safety alerts,
emergency braking, etc. Though in Indian context fully automated autonomous
vehicles might not look like a possibility shortly more so because of the lack of
compliance to traffic rules rather than lack of technology
 Energy & Utilities-Digitization of energy would help in efficient utilization and
environmental sustainability. Remote monitoring through wireless devices will
reduce the effects of climate change and also control the lighting environment.
Users would also be able to analyze electricity consumption patterns across
different devices
 Healthcare-In the field of healthcare, 5G enabled technologies such as IoT, big
data analytics, artificial intelligence (AI), and machine learning (ML) can
overhaul the healthcare system. From remote diagnosis for complex cases,
performing pre-planned surgeries in remote locations to capture the vital health-
related signs along with features to detect failing implants, thereby minimizing
healthcare hazard. Also, digitization of data will reduce disparities in terms of
delivery of healthcare across the country.
 Manufacturing-Benefits in terms of synchronized planning, smart factory,
intelligent supply chain, and dynamic fulfillment. IoT application would have a
significant impact on efficiency and safety and also flexibility in operational
processes. It is expected to reduce factory equipment maintenance costs by up to
40% and increase manufacturing productivity by 10-25%. Remote assistance and
robotic control would increase precision as well as manufacturing activities in
hazardous environments and thus improve the process quality and reducing
production time
 Media & entertainment- Immersive experiences in terms of online AR/ VR
gaming such as replays, player views from different angles, real-time language
translation between players, sharing of real-time data Distributed performance is
expected to have the capability of distributed content sourced from various
locations in real time.
 Smart cities- In the smart city context this could enable use cases such as: Video
surveillance and analytics enabling security, assurance and mitigating concerns
over safety, intelligent transport and traffic management, smart grids and metering
systems with smart street light for improvised management and conservation of
energy, thereby, keeping a check over pollution and also solid waste management.

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Initiatives of other stakeholders in the evolving business
ecosystem
Consumers
 Consumer’s top priority is reliability. Consumers are ready to pay extra for 5G, as
they would be able to enjoy faster internet.
 As per the PWC survey, on average, consumers are ready to pay an extra
$4.40/month for 5G internet on mobile and an extra $5.06/month for 5G internet
service in the home.
 The initial high prices of 5G will likely come down over time due to competition
and maturing of the market.
 Reliability, cost and speed are the major issues with the internet connectivity but
the consumers are largely satisfied with the current internet services with 92% and
87% of users somewhat satisfied with their mobile and home services
respectively.
 Unlike 3G and 4G, where enhanced broadband was the only use case, 5G
technology will deal with augmented reality and IOT.
Government
 The government has formed panel to evaluate and approve road maps and action
plan to achieve the target of rolling out 5G technology in India by 2020. The
Centre has reserved a fund of about ₹500 crore for R&D of 5G.
 As compared to other cell towers, 5G towers are more dangerous due to its
ultrahigh frequency and intensity. Mini cell towers are to be installed in every 2 to
8 houses, which will greatly increase radiofrequency radiation (RFR) exposure.
 RFR is emitted in the electromagnetic spectrum which is not inherently dangerous
but its exposure at very high levels can be harmful due to the ability of RF energy
to rapidly heat biological tissue.
 According to this, mobile connections will hold one-third to one-half of all
connected devices allowing a large number of individual users to access the web
resulting in high traffic.
Telecom Equipment Manufacturers
 The Telecom Equipment manufacturers can be classified into consumer-end
equipment (i.e. handsets) which are dominated by Apple, Xiaomi, Samsung and
others; and network equipment (i.e. switches, antennae, routers, etc.) largely
dominated by global players such as Ericsson, Cisco Systems, Intel, Huawei
among others. This is due to the high capital-intensive nature of the industry as
well as high investment in R&D.
 Given the extensive growth in the subscriber base along with the planned
introduction of 5G, there is a high potential for the telecom equipment industry.
 Ericsson is in the process of developing an offering wherein with specific
software upgradations, the existing infrastructure could be used for 5G network.
Moreover, the handset manufacturers are also set to launch their 5G enabled

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 handsets in India. Samsung has confirmed the launch of Galaxy Fold (5G
enabled) handset in India, once 5G becomes a reality.
Other Industries
 Transportation is one of them. Having low latency is extremely crucial for self-
driving cars else there is a risk of an accident. 5G can be leveraged for the same.
 5G will also give a boost to the manufacturing sector in terms of factory
automation and speeding up processes.
 In healthcare, medical services will not be restricted to geographical boundaries.
Gas, oil, electricity and such critical infrastructure will be much better connected with the
aid of 5G. This would facilitate seamless transition into smart cities.

What impact will be on the business models for Telecom

Operators with evolution of 5G?
With the evolution of 5G, business model innovation and technological advances towards
5G along with greater industry consolidation, will transform network economics.
Business models should focus on data and video market segments along with greater
industry collaboration with Network Sharing is essential.
Telecom Administrators ought to move from suppliers of network to aggregators and
initiators of third-party offerings. They will have to be proceed to extend the boundaries
of what current revenue model permits. Whereas they have customarily taken after
Business-to-business and Business-to-consumer models, progressively imaginative
Business-to-business-to-consumer models are more likely to be the standard within the
future.
In the end, they will need to ensure that they continuously challenge established models if
they are to truly innovate their business model. Operators need to act accordingly to
consider which options will suit their business best in the “5G world”.
Prospective business models of Telecom Operators are:
1. Connectivity Provider
2. Partnership with external entities
3. Digital Services provider

How will 5G change the world?

The previous generations of mobile communication (2G, 3G & 4G) led to the
connectivity among people. People from different countries could be connected with one
another with the use of these technologies. It also gave us the possibility of streaming
video and audio, seamless ride hailing and the advancement of social media. However,

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when we talk of 5G, we have the possibility of a world where not just people but all the
things are connected – cars to the street lights, doctors to the medical devices of their
patients, driverless cars, and so on. This would require a huge increase in the level of
connectivity.
In fact, many of the benefits are unknown to us. Who would have thought of the business
models of Uber, Zomato, Oyo rooms that grew with the support of mobile broadband?
Moreover, with the continuous increase in IoT and internet enabled devices there has to
be an increase in the bandwidth that can cater to those internet needs. Here, 5G will be
able to provide that infrastructure to effortlessly connect a multitude of devices.
Notwithstanding the benefits, there are certain red flags related to 5G that need to be
addressed:
1. With the increasing number of inter-connected devices, there are security
concerns of cyber-crime and cyber theft.
2. According to many reports, the radiations emitted by 5G are linked to as many as
20 ailments, including type-2 diabetes, heart diseases and cancer.
3. The cost of the new technology should also be considered so that it is not beyond
the affordability of the masses.

Why should there be infrastructure sharing?

 In order to densify the network for more coverage, it is becoming difficult to
acquire sites for access network
 Cost of deployment of 5G technology is quite high and operators should consider
different methods to lower these cost
 Mobile operators are facing the issue of increasing network capacity to handle the
growth in traffic. This directly points out to the increase in the cost to handle the
network and that the profit of operators would be low
Infrastructure sharing can happen on basis of:

1. Technology

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Sharing Pros Cons
form
Passive  Significant Capex saving  Availability of free space in existing
infra  Full differentiation and complete sites
structure control of spectrum
 Control over sites to be shared
MORAN  Limited Capex savings as  Requires long term commitment
/ compared to passive structure between operators
MOCAN  Reduction of network footprint by  Difficult to exit the from sharing
sharing operators agreement
Core  Further CAPEX saving compared  Complexity of operation and tight
network to MORAN/MOCAN integration
 Maximum sharing for operators to  Difficult to differentiate services
share existing infra

2. Ownership

Sharing form Pros Cons

Service  Removal of depreciating cost  Coordination of operation
provisioning  Ownership still with operator  Challenges in
(Unilateral/Mutual differentiation
)
Joint venture  Cut down CAPEX cost for new  Regulatory risks
deployment  Challenges in
 Risk is reduced differentiation
3rd party service  Cut down CAPEX cost for new  Loss of strategic control
provider deployment and flexibility
 Can objectively arbitrate  Lack od equity
disputes/issues participation

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References
1. https://zvelo.com/impacts-5g-part-1-wireless-technology-device-growth/
2. https://www.pwc.com/us/en/advisory-services/publications/consumer-intelligence-
series/promise-5g.pdf
3. https://www.datacenterknowledge.com/industry-perspectives/5g-must-make-use-
different-technologies-including-wifi
4. https://www.ecommercetimes.com/story/85046.html
5. https://www.cisco.com/c/dam/en/us/solutions/collateral/service-provider/ultra-
services-platform/5g-vision-series-vertical-value-creation.pdf
6. https://www.financialexpress.com/opinion/what-is-india-doing-to-get-ready-for-
5g/1189115/
7. https://www.zdnet.com/article/five-industries-that-will-be-most-affected-by-5g/
8. https://www.communicationstoday.co.in/services/indian-telecom-equipment-
industry-will-5g-drive-the-future-growth/
9. https://economictimes.indiatimes.com/industry/telecom/telecom-news/adopting-
5g-is-a-matter-of-survival-for-telcos-ericsson/articleshow/69165359.cms
10. https://www2.deloitte.com/content/dam/Deloitte/in/Documents/technology-media-
telecommunications/in-tmt-the-catalyst-report-one-noexp.pdf
11. https://idsa.in/system/files/issuebrief/india-tryst-with-5g-msharma-200319.pdf
12. https://www.livemint.com/industry/telecom/in-relief-to-telcos-trai-told-to-review-reserve-
price-for-5g-spectrum-1560427181378.html
13. https://www.businesstoday.in/sectors/telecom/coai-urges-govt-to-ease-telecom-sector-
financial-woes-review-spectrum-prices/story/350625.html
14. https://www.financialexpress.com/opinion/welcome-rethink-on-spectrum-
pricing/1069389/
15.

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