5G distribution: Technology and telecommunications companies need to dance

The auction for the 5G network should start next month. But the controversy over the distribution of 5G terrestrial waves to private companies is refusing to subside.

As the government allows direct spectrum allocations to independent companies to set up private 5G networks, global technology giants and India’s large IT companies are keen to acquire the same.

This directly pitted them against telecommunications operators such as Reliance Jio, Airtel and Vodafone. Indian telecommunications companies fear that such a distribution will enter the lucrative 5G corporate business, with technology companies gaining market share.

Industry experts believe that while private companies need to get 5G, the government needs to create a level playing field in terms of pricing to make it a win-win situation for both telecommunications and technology companies.

“Globally, 5G licenses are also given to companies. There are many private networks. You do not need to go to the telecommunications operators to get your own private network. The government has started auctioning telecommunications spectrum and now they are trying to follow the global thing (in the allocation of 5G spectrum). If 5G is made available to technology companies, they will build their private network and have their centers in India, ”said B. Balakrishnan, chairman of Exfinity Ventures and former CFO of Infosys. DH.

He said private companies should be allowed to receive 5G over the air, but that telecoms’ concerns about a level playing field should also be addressed.

“If you look at telecommunications, their profitable business is businesses. So these players can’t afford to lose a profitable business after spending so much money on the spectrum, “Balakrishnan added.

Read | India will have 500 million 5G subscribers by 2027: Report

Most analysts predict that the business rationale for 5G will be highly dependent on corporate business. Some estimates suggest that about 40% of the total 5G revenue of local telecoms companies will come from the corporate business alone.

“5G has more cases of corporate use. It will see more applications in autonomous driving, intelligent manufacturing, telehealth, digital learning and much more. If technology companies have their own 5G spectrum, they can present PoCs (proof of concepts) to customers, independent of telecommunications. Having your own network will help penetrate Industry 4.0 much better, ”said Pareekh Jain, IT outsourcing consultant and founder of Pareekh Consulting.

The Indian market may not hold the key

However, industry insiders also suggested that the Indian market may not be the real motivation behind owning a 5G network for Indian IT services companies such as Tata Consultancy Services and Infosys, among others.

Although the Indian market is of great importance to companies such as Google, Microsoft, Facebook and others; Indian IT companies are more inclined to acquire 5G over the air to demonstrate their experience to global customers to participate in major transformational deals in the telecommunications sector.

“Technology companies want their own range to be able to develop different uses. First, these companies will showcase their capabilities, and then they will be able to participate in 5G-related digital transformation contracts worldwide. This is critical because India has not yet implemented 5G. For Indian IT companies, the domestic market may not be of immediate interest compared to telecommunications or other technology companies, ”said Jane of Pareekh Consulting.

Other analysts said 5G would open up a wide range of opportunities for all IT services companies worldwide. In India, smart manufacturing will gain momentum amid the government’s drive to do in India.

“There are many opportunities in the IoT and the IoT industrial space that will be created with the introduction of 5G in India. We have already seen global technology companies like IBM, Qualcomm see some traction and these companies are in a good position to cash in on the emerging opportunities in this space. Among Indian companies, TCS, Tata Communications, Tech Mahindra and Infosys, among others, can also benefit, “said Mrinal Rai, chief analyst at global consulting firm ISG.

There is no conflict of interest

While the struggle between telecommunications and technology companies for spectrum allocation continues, most experts believe that the relationship between the two groups of companies is symbiotic in nature. Because many of these technology companies work as service providers for Indian telecom companies. For example, companies such as TCS, Tech Mahindra and IBM work with Airtel in various fields. Similarly, Google and Facebook are companies that invest in Reliance Jio Platforms.

“There is no conflict of interest. The IT company provides a service and the telecommunications operator is a customer, ”Balakrishnan said. “These companies compete in some areas and cooperate in others. So in this case, it is not a conflict of interest, “said a source.

From this perspective, 5G has the potential to change the industrial landscape in India with accelerated digital adoption. Therefore, the government needs to find a good balance on various aspects, including pricing for deep cooperation between telecommunications companies and technology companies. Because any unhealthy competition delaying the introduction of 5G could be costly for India given the current uncertain economic environment.

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