India is gearing up for 5G — what are the parallels we can draw from its global rollout

The key reason for this is a lack of differentiated use cases between 5G and 4G — there is no killer-app or an immediate "I need 5G" scenario.

For example, 4G adoption rocketed due to movie streaming and the proliferation of services like Netflix, or gaming, which was not possible with 3G.  But there is no one app or service which requires 5G to work and cannot be done on 4G. That said, 5G has the ability to create new use cases, such as Internet of Things, connected cars, automated factory settings and other enterprise use cases. While new uses will evolve, but they have not yet taken off in other advanced markets, which explains the low penetration.

UBS says in its study that in most markets with greater than 10 percent of 5G penetration, the usage centred on broadly the same apps which are used for 4G, while consuming more data.

UBS says 5G ARPUs are at a 10-15 percent premium. Further, 5G opens up new revenue opportunities, the most prominent being the fixed wireless segment, especially given India's low home broadband penetration.

On capex too, the UBS data shows 5G rollouts resulted in a modest increase of 300-500 basis points' higher capex on sales as operators take a gradual approach.

Recently, 5G was in the news for all the wrong reasons after telecom service providers wrote a letter to the government, asking it to not allot 5G spectrum to private players setting up captive networks for the use of individual enterprises, which will ultimately dilute the telcos' revenues and lessen the business attraction of offering 5G services. They said enterprise revenue could account for around 40 percent of earnings from 5G services.

Currently, enterprises can build private networks by applying for a Captive Non-Public Network (CNPN) licence and can get spectrum assigned directly from the government for a period of 10 years. The only critereon being that the allottees must have a minimum networth of Rs 100 crore and must pay a non-refundable application charge of Rs 50,000; they don't have to pay entry or licence fees.

CNPN is cheaper, hence the furore. A CNPN licensee is not allowed to offer commercial services, while spectrum acquired through auctions is expensive because it is eligible for commercial services.

However, the timeline for this is uncertain. The Department of Telecommunications will conduct demand studies and then seek recommendations from the telecom regulator. As per reports, this process could 1-2 years.

The Cellular Operators' Association of India (COAI) has opposed this, terming it a backdoor entry for big technology companies to get into the 5G business.

"The spectrum should not be provided on administrative basis as it leads to no business case for the rollout of 5G networks in the country ... there will be no viable business case left for telecom service providers and there will not remain any need for 5G rollout by TSPs," a COAI statement reads.