Explained: Private 5G networks and why telecom operators don't like them

On June 9, the Cellular Operators' Association of India (COAI) wrote a letter urging the government against allotting 5G spectrum to private captive networks, claiming that it will diminish their revenue to the point where offering 5G will pointless.

In the letter, addressed to Union Minister for Communications Ashwini Vaishnaw, COAI said enterprises will have the most use for 5G networks, and private captive 5G networks that cater to only them "will diminish the revenue so much that there will be no viable business case left for the TSPs (telecom service providers) and there will not remain any need for 5G Networks rollout by TSPs".

Essentially, COAI is telling the government to ensure only TSPs get the rights to offer 5G services — both to the public and enterprises.

Prime Minister Narendra Modi will launch the 5G services in India during the inauguration of the Indian Mobile Congress in Delhi on Saturday morning.

A private captive 5G network is basically a network set up by a private entity for the use of just one organisation. It is similar to a captive coal mine in that the 5G service offered by this captive network will only be utilised by the enterprise concerned, and no one else.

The COAI's argument is that enterprises are the biggest users of 5G networks and, if private entities are allowed to offer captive networks to enterprises, the TSPs' retail revenues are not going to increase despite their pumping heavy capital into the 5G rollout, especially in a price-sensitive consumer market like India.

In the letter, COAI said, "The new segment that would be benefitted by 5G services of the TSPs is the enterprise segment including manufacturing, logistics, education, hospitals, campuses, factories, etc. Our TSP members have also conducted successful 5G trials for many of these use cases in the last one year. With 5G auction, the TSPs are targeting the enterprise segment for revenue enhancement and overall increase in productivity and efficiency. This is where TSPs 5G business case lies."

COAI implied that there is no great demand for 5G right now as "the needs of voice and data of the entire nation is being adequately met by the TSPs through their 4G networks today".

Further, COAI argued that TSPs are capable of catering to the connectivity needs of industries. "Giving away dedicated spectrum for private captive networks will render the rollout of 5G services by the TSPs needless," COAI said.