Skip to content
Investments in 5g galore, but some questions need to be answered

5G has the potential to transform the world like never before. Triggered by what’s going on over the past 18 months, 5G can really lift the world out of economic rubble and set it on a path for future growth. The technology can make a difference of up to $ 3.5 trillion to the global economy by 2035. And the positive impact it will bring to society through uninterrupted connectivity is immeasurable. However, for all of this to happen, the world, especially India, needs to step on the pedal to invest in rolling out the 5G network.

5G requires massive and rapid investments!

The need to deploy and evolve 5G use cases will require significant changes in network infrastructure. Network builders will need to invest in all aspects of the network, from spectrum and radio access network (RAN) to transmission and backbone networks. In India alone, the investment will amount to around $ 30 billion. For 5G to unlock its full potential, these investments must be made quickly. The expected delay in 5G deployments will hurt the long-term prospects of several industries in India. For example, telehealth use has increased 38-fold from the pre-COVID-19 baseline, and 100 million students have registered in the past six months for online training. This momentum will only intensify with widespread 5G coverage.

Investments are pouring in, but obstacles remain

Demand for new 5G use cases has triggered investment from telecom operators and other network builders. Telecom operators around the world have increased their CAPEX to accelerate the deployment of 5G. Already, nearly 70 operators have invested (in the form of trials, planned or actual deployments) in 5G public networks while nearly 400 are investing in licenses, trials or 5G deployments. However, some telecom operators are still reluctant to prioritize investments in 5G. Some of the reasons are:

Initial CAPEX commitments: Deploying 5G networks requires billions of dollars in upfront costs that operators will have to incur before offering the first GB of 5G data. To give you an idea of ​​the scale of the investment, rolling out 5G in Delhi, India can cost a telecom company $ 1.15 billion. At a time when telecom operators, especially in India, are under financial constraints, the initial investment may be limited.

5G standards organized locally: In many emerging markets, authorities have developed local 5G standards that do not align with global standards supported by 3GPP. Local standards often pose many challenges related to hardware changes, increased time to market, smartphone overheads, and interoperability. For example, if the standards for 5G chips are different in each country, a global chipset manufacturer will have to manufacture different chips to different standards, which will increase the cost and time to market.

Regulatory frameworks: One of the other main reasons telecom operators delay investing in 5G are regulatory frameworks. In a number of markets, especially emerging markets, the regulatory framework is often not uniform. Regulations, standardized processes and bureaucratic obstacles often hinder network deployment which defeats the very purpose of the investment.

Monetization of 5G use cases: The business case and economics of 5G remain unclear in some geographies, possibly delaying large-scale investments. The stagnation of ARPUs across the world means that the recovery of investments may take longer. Additionally, some CSPs aren’t exactly aware of 5G monetization opportunities that go beyond simply billing consumers for faster data.

Obstacles must be removed

To lead the 5G revolution, network providers need an environment that allows them to make large-scale investments. Here are some of the things that can be done to create this:

5G standards must be harmonized globally: Efforts must be devoted to the harmonization of global standards for the technical characteristics of 5G. Adopting globally harmonized standards will provide a competitive playing field between suppliers and suppliers in all geographies. The adoption will also attract businesses to set up their stores with the confidence of serving domestic and international markets.

Governments must play a more active role in funding: In countries where 5G is flourishing, governments have intervened in infrastructure development through aggressive funding initiatives. In the United States, the Federal Communications Commission has passed an ordinance establishing the 5G Fund for Rural America (“5G Fund”), which will make available up to $ 9 billion in federal grants over 10 years. This has played a role in increasing their CAPEX by telecom operators for extended 5G coverage. In emerging markets, governments should lend a hand to telecommunications operators. Budget spending on digital infrastructure will not only help prepare the world for 5G, but will also boost initiatives such as building broadband highways, connecting rural areas, upgrading government networks, and more.

The mindset must evolve towards an open network: Open source is the future of networking and efforts must be focused for its greatest adoption. It can open up new avenues for deploying and operating wireless networks, fostering innovation and competition, and can enable operators to realize substantial savings in CapEx and OpEx. This approach has resulted in significant savings ranging from 30 to 40% of the total cost of ownership (TCO).

Regulation must be more conducive: A favorable regulatory environment always sends the right signals to investors. Regulators and lawmakers must come together to reduce regulatory burdens such as adjusted gross revenue, spectrum pricing and spectrum usage charges on telecom operators. A comprehensive mapping of long-term policies should also be carried out to promote domestic manufacturing and research and development. This framework must be developed by the authorities in collaboration with network operators and private actors.

A collaboration ecosystem must be built: There is a strong need for more models of collaboration to enable an environment of increased investment. We can already see some global coalitions and initiatives such as TIP, O-RAN ALLIANCE, Evenstar among others bringing together private actors to build the networks of tomorrow. There should be more collaborations between governments, regulators and academia to create new business opportunities and innovative business models that attract more investment.

For 5G to truly transform the world, it must cross the world. While most of the global telecommunications community is investing in the 5G revolution, few are still hesitant. By providing them with the right environment and breaking down financial, regulatory and mental barriers, we can drive more strategic investments to mainstream 5G.

The author is Ankit Agarwal, Managing Director, STL. The opinions expressed here are personal.

(Edited by : Priyanka Deshpande)


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.