Indian telcos are opposing delicensing of the 6 Ghz bandwidth while consumer companies are supporting the move. We examine the economic rationale for delicensing of this spectrum band that is critical to the 5G rollout.
Indian telecom services providers– Reliance Jio, Vodafone India (VI) and Bharti Airtel–have opposed the delicensing of the 6 Ghz spectrum, as reported extensively. Companies such as Google, Facebook, and Cisco, on the other hand, are arguing for complete delicensing of 6 Ghz, citing the examples of countries like the US and Korea.
The telcos argue that partial delicensing will create an unequal system, where they (the telcos) will end up paying license fees while the others will not. This is partly true. Consequently, the telcos want the entire 6Ghz under the hammer for auction and argue that 6Ghz is critical to the 5G rollout which is slated for the second half of 2021.
There is a major problem with this argument. Wi-Fi demands of the economy are going to increase geometrically, particularly as it relates to education, pharma, entertainment sectors, which are pushing for new consumption models. Even within an enterprise, there will be a surge of data consumption in the new post-Covid economy with a significant portion of the workforce operating from remote locations.
Realizing this, the government of India has already announced a major push for public WiFi hotspots and has announced an ambitious plan to set up around 2 million hotspots in 2021.
WiFi already carries more than half the Internet traffic and, in the face of the pandemic, this is likely to jump. Consequently, the pressure on the spectrum needs will also grow exponentially.
In the face of all this, the telcos’ demand not to delicense the 6Ghz airwaves appears a tad hollow. In fact, given the massive upsurge of speeds in a 5G network, it stands to reason that the consumers be provided with the infrastructure to consume the high-bandwidth content seamlessly, something that the telcos would want. However, arguing that this can be done only by using the mobile network, simply ensures that the telcos are throttling the consumer by denying the benefits of 5G on a much larger scale.
Second, let’s consider the price issue. It is nobody’s argument that the telcos are not price-sensitive. However, the bruising price wars that they have fought with one another has, to a great extent, eroded their ability to increase the prices in a market that is growing rapidly. The telcos have had to balance out between a grow-at-all costs thesis and a profitability one–the former dictated by the last entrant Jioand, the latter, by the existing players.
While Jio could and did hammer the prices down, competitors such as Airtel and Vodafone India (VI) were left with no option but to focus on value – speed, spread, coverage not to forget freebies such as Amazon Prime and Netflix subscription.
At the of the day, Jio achieved its objective, becoming the second company in the world to acquire 400 million subscribers.While one understands the anxiety of the telcos over the delicensing of the 6Ghz spectrum, the sheer volume of the economy’s need will trump their balance sheet requirement.
As Indian enterprises embark upon the digital journey with IoT, AI/ML, Robotics, UHD video streaming, etc., the need for speed is going to be paramount. Given that most industry experts agree that the data volumes are going to go up by almost 40% in case of enterprises and around 70% in case of households, WiFi is expected to be a clear and unambiguous need which is likely to shoot up in enterprises and homes.
Second, in emerging areas such as telemedicine, e-learning, virtual classroom, high bandwidth will be a hygiene factor and lack of the same will hamper the very operation of such businesses.
Experts argue that even for the telcos, there will be a need to offload the growing traffic from mobile to WiFi, something that we have seen in the past. The telcos argument of not delicensing will arrogate such offloading only to the license holders and not to other players who will be offering services and demand faster throughputs. There is very little merit in the case for all such players to only enter through the telcos.
At the end of the day, the best solution could be to have both telcos and other players in the same bucket for 6 Ghz. However, if there is a forced choice, then clearly that option needs to be in favour of delicensing.
(L Subramanyan is Founder and CEO of Trivone)