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India Must Contain Chinese Dominance In 5G By Looking To Create A Global Consensus On Spectrum

India’s ambitious plans for rolling out 5G by next year could stumble over a number of structural issues ranging from spectrum to right of way. But of immediate concern is the World Radiocommunication Conference (WRC), scheduled to be held in October in the Egyptian resort of Sharm-el-Sheikh.

The WRC is organized every four years by the International Telecommunication Union, which is a UN body.  All UN member states are expected to attend and help formulate a global consensus on the allocation and use of spectrum, and we are talking of spectrum for 5G. So Indian industry is concerned that India be a major player in this. Official sources told SNI that “India has already submitted its position on various issues for the WRC preparatory process through the Asia-Pacific Telecommunity, which is to harmonise and consolidate views from the member states of the Asia-Pacific region.”

This could help India shape a consensus that takes into account its interests.  India could even play a leadership role there. The point is the global strategic flux is impacting the WRC.  The US, Japan and South Korea are going ahead with their own plans on spectrum and appear to have indicated as much to the WRC.  

This leaves the field open to players like China that could end up dominating the proceedings. It would seek to shape the global consensus on spectrum in a manner that would benefit its telecom industry. Therefore, industry insiders warn that India cannot go by whatever consensus emerges in Sharm-el-Sheikh since it will determine the course and direction of 5G, where China is a powerful player.

India already presents a divided house. The Department of Space has locked horns with the Department of Telecom on spectrum and even rejected the “Indian position” at a key meeting involving regional states.  So neighbouring states may end up taking their cues from China!

On the issue of spectrum pricing, industry and government appear to be at odds.  Industry cites the example of the US and South Korea where spectrum for 5G has been auctioned giving a good return for both governments. (US $2.7 bn, South Korea $3.3 bn). But the Telecom Regulatory Authority of India has recommended a base price for auction which is at least 30-40 per cent higher.  Airtel and Vodafone-Idea have told the government they are in no position to bid for such high priced 5G spectrum.

Add to that the Department of Space has refused to free up spectrum critical for rolling out the 5G network, identified by the Department of Telecom in its Making India 5G Ready report (prepared by the High Level Forum), citing its own requirements. This automatically limits the amount of spectrum the telecom operators can avail of, which in turn will affect the quality of 5G services.

They telecom operators have also objected to the three months period announced by the government for trialling 5G equipment. They say trials should be allowed to continue for at least a year. The government is reportedly considering their request.

Media reports have mentioned three companies (Ericsson, Nokia and Samsung) whose equipment could go for trial with their respective telecom operators but an industry insider pointed out that “there is no comment yet from the government or material stating this.”

The Chinese company Huawei (blacklisted by the US government on grounds of security), has also has submitted its proposal for trials with Vodafone and Airtel.  How India will negotiate this is yet to be seen although privately, official sources have told SNI that the government is under considerable pressure to keep Huawei out.

Right of Way is another issue.  In the US, the Federal Communications Commission has adopted new rules that will help speed up the spread of 5G. Notably, the new rules will prevent short sighted municipal authorities from blocking 5G infrastructure.  State governments and lower level authorities have been given reasonable deadlines within which to act on 5G infrastructure.

This is not the case in India where laying fibre networks even in a city like Delhi is complicated with the state government, municipal corporations, even the Delhi Development Authority and Metro Rail applying different sets of rules and standards and pricing them differently.  This pushes up the cost. It explains why India has the lowest density of fibre network.

The point to understand is that 5G is not just an improved 4G.  It is an entire ecosystem that will sustain a number of services, not just telecom.  So everything from transport systems to entertainment, education to health, will be driven by 5G.  For that reason, it requires a far denser network of communication towers. But some states have sought to capitalise on this by levying property tax on the towers (this has been upheld by the Supreme Court).  Telecom towers are a major component of telecom infrastructure but are treated as immovable property and not as goods under GST, so they do not qualify for input tax credits.

Industry says the government must look beyond the revenue earning potential of 5G, which in any case could start yielding returns only around 2035 if implemented now.  Clearly, India needs to lay the foundations of 5G before embarking on it.