5G Allocation: Tech and Telecom Companies Should Tango

The 5G network auction is set to start next month. But the controversy surrounding the allocation of 5G airwaves to private companies refuses to die down.

With the government allowing direct spectrum allocations to independent companies to establish captive private 5G networks, global tech giants and Indian IT bigs are keen to acquire the same.

This has brought them directly into conflict with telecom carriers like Reliance Jio, Airtel and Vodafone. Indian telcos fear that such allocation will hit the lucrative 5G enterprise business and technology companies will grab a huge market share.

Industry insiders believe that while private companies should receive 5G airwaves, the government should create a level playing field on pricing to make it a win-win case for telcos. as for technology.

“Globally, 5G licenses are also granted to companies. There are many private networks. You don’t need to go to telecom operators to get your own private network. The government has started to auction spectrum to telcos and now they are trying to follow the global trend (in 5G spectrum allocation). If tech companies are given 5G, they will build their private network and have their captive hubs in India,” said V Balakrishnan, Chairman of Exfinity Ventures and former CFO of Infosys. HD.

He said private companies should be allowed to obtain 5G airwaves, but telcos’ concerns about a level playing field in network pricing also need to be addressed.

“If we look at telecommunications companies, their profitable business is companies. So these players cannot afford to lose profitable business after spending so much money on spectrum,” Balakrishnan added.

Read | India to have 500 million 5G subscribers by 2027: report

Most analysts predict that the business case for 5G will largely depend on the enterprise business. Some estimates suggest that around 40% of the total 5G revenue of national telcos will come from the enterprise business alone.

“5G has more business use cases. You will see more applications in autonomous driving, smart manufacturing, telehealth, digital learning and many more. If tech companies have their own 5G spectrum, they can show PoC (proof of concept) to customers without relying on telcos. Having your own network will help Industry 4.0 penetration much better”, Pareekh Jain, IT Outsourcing Consultant and Founder of Pareekh Consulting.

The Indian market may not hold the key

However, industry insiders were also of the opinion that the Indian market might not be the real motivation to own a 5G network for Indian IT service companies like Tata Consultancy Services and Infosys among others.

Although the Indian market is very important for companies like Google, Microsoft, Facebook and others; Indian IT companies are more interested in acquiring 5G airwaves to showcase their expertise to global clients to participate in major transformational deals in the telecom sector.

“Tech companies want their own spectrum so they can develop various use cases. First, these companies will showcase their capabilities, and then they will be able to participate in 5G-related digital transformation contracts globally. This is critical because India does not yet have a 5G implementation. For Indian IT companies, the domestic market may not be of immediate interest compared to telcos or other technology companies,” said Jain of Pareekh Consulting.

Other analysts said that 5G would open up a wide range of opportunities for all IT services companies globally. In India, smart manufacturing will gain momentum thanks to the government push for ‘Make in India’.

“There are many opportunities in the IoT and Industrial IoT space that will be created by the launch of 5G in India. We have already seen global tech companies like IBM, Qualcomm seeing some traction and these companies are well positioned to capitalize on emerging opportunities in this space. Among Indian firms, TCS, Tata Communications, Tech Mahindra and Infosys, among others, may also benefit,” said Mrinal Rai, principal analyst at global consultancy ISG.

No conflict of interest

While the dispute between telcos and technology companies over spectrum allocation continues, most experts believe that the relationship between these two sets of companies is symbiotic in nature. Because many of these technology companies work as service providers for Indian telecommunication companies. For example, companies like TCS, Tech Mahindra and IBM work with Airtel in various areas. Similarly, Google and Facebook are investee companies in Reliance Jio Platforms.

“There is no conflict of interest. The IT company provides a service and the telecom operator is a customer,” Balakrishnan said. “These companies compete in some areas and collaborate in others. So there is no conflict of interest.” interests in the current case,” a source said.

From this perspective, 5G has the potential to change the industrial landscape in India with accelerated digital adoption. Therefore, the government should strike a fine balance on various aspects, including the price of deep collaboration between telcos and technology companies. Because any unhealthy competition that delays the launch of 5G can be costly for India given the current uncertain economic environment.

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