By Emanuel Kolta, Research Analyst at ABI Research
5G plans in India
Early 5G deployers in the US, South Korea, Japan, China, and the UK expect that accelerated 5G deployments will stimulate economic growth, establish geopolitical superiority, and even gain advantages in terms of military and intelligence powers. The Indian government is also convinced about the advantages of 5G connectivity, including how it can help the country leapfrog traditional developmental barriers and advance the vision of “Digital India.The Indian Department of Telecommunication (DoT) expects that the cumulative economic impact of 5G on India can reach US$1 trillion by 2035. Based on the characteristics of India, 5G provides an opportunity for local products and services to reach out to global markets, and also to utilize economies of scale. Therefore, DoT identified three main priorities for 5G from an Indian perspective:
-Deployment: Rolling out early, efficient, and pervasive 5G networks to maximize the value offered by this new technology. We expect this will take place in 2021.
-Technology:Building India’s industrial and R&D capacity in the design and IP dimensions of 5G.
-Manufacturing:Expanding the manufacturing base in 5G for both semiconductor fabrication as well as assembly and test plants.
Despite the fact that Bharti Airtel and Huawei successfully conducted India’s first 5G trial in February 2018, mobile service providers have yet to announce their plans for large-scale 5G deployments, and the auctions for 5G spectrum are still pending.
4G will remain the largest mobile data conduit
The estimated Indian mobile internet penetration is 35%, according to the Internet and Mobile Association of India (IAMAI), and ABI Research expects significant growth in both mobile penetration and existing smartphone users’ data usage (26% in the next five years). This would lead to an upcoming boom in the total Indian mobile data traffic and additional pressure on local MSPs, who are already struggling financially with the current pressure on their tariffs not expected to change short-term.
ABI Research expects that operators will stabilize and evolve their relatively fresh 4G investments to satisfy this booming data traffic demand. Further improvements are also expected to cloudify existing infrastructure, move forward to distributed network architecture and implement an agile operating model. Despite the global hype around 5G, 4G will stay the largest mobile data conduit until 2025.
Large-scale Indian 5G deployments expected to start from 2021
Both Vodafone Idea, Airtel, and Jio plan to carry out significant infrastructure developments in 2019, including Massive MIMO deployments and the wider application of Network Functions Virtualization (NFV) and Software-defined Networking (SDN). Despite how these improvements will help usher in the 5G era, ABI Research does not expect that commercial 5G will be launched short-term. Rather, the exact launch date heavily depends on two main factors:
Price of 5G capable handsets:ABI Research estimates that the number of 5G-capable devices will grow significantly faster than the number of 5G subscriptions in India. The expected growth in 5G handset shipments indicates that the speed of 5G network rollouts forms one of the major bottlenecks for further 5G growth. The variety of the available 5G capable devices and their prices heavily impact the Indian MSPs. In cases where smaller Chinese device manufacturers such as OPPO and Vivo can offer engaging, low-end 5G phones, Indian operators would have more pressure to deploy their 5G network earlier.
Right timing and price of the 5G spectrum:Unlike developed markets like the US or the Nordic countries, earlier spectrum allocation does not necessarily accelerate 5G deployments in India. Major Indian MSPs don’t prioritize 5G deployment, based on the relatively late start of the Indian 4G era. Large-scale rollouts started at 2016 in India, thus operators try to preserve their 4G cycles and monetize existing investments. As 5G’s business cases and the revenue potential is still unclear in India. Uncertainty and too early auctions would cause unsuccessful spectrum auctions, because Indian MSPs willingness to pay for 5G frequencies is currently marginal.
India has traditionally been a late adopter of new cellular network generations. For example, LTE was first ratified late 2008 and the first network to light up was TeliaSonera’s, a year after. India’s networks appeared in 2014 and the market became very competitive with Reliance Jio’s entry in 2015. The India market has traditionally been driven by prepaid subscriptions with cost-conscious subscribers. It is very likely that 4G will remain the data conduit for many years to come, but due to its very high population concentration, and overall large population, 4G networks may soon be exhausted. However, until leading MSPs cannot see the return of their 5G investment secure, they will not spend significant resources to deploy 5G commercially, and continue to demonstrate 5G capabilities with small-scale, marketing purpose deployments. ABI Research expects Vodafone Idea, Airtel, Jio will start their large scale commercial 5G deployments after 2021, however as India has outstanding potential,market adaptation may be faster.