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HomeArticlesBroadcast TechnologyDebt 5G Implementation ridden telcos & skill gaps will remain as top challenges
Saturday, 20 July 2019 10:38

Debt 5G Implementation ridden telcos & skill gaps will remain as top challenges

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Will Govt postpone revenue collection & offer free spectrum? 

If you go out and tell someone that 5G is coming soon, you may see that man scowling and yelling at you, “go and ask the government to first run 3G properly then think about 5 or6G.” Yes, this is not a general perception but a ground reality. Lack of fiber based broadband activity and larger dependence on satellite is not going to fulfil our objectives, whether it is 4 or 5G. 

5G can indeed be a great enabler of digital transformation as envisioned by the Modi government, but to enable this, our telecom companies will have not only have to invest massively but also reskill and upskill their employees. Are they ready? Perhaps not! 

Not only 5G, India also talks about artificial intelligence, Internet of Things (IoT), machine learning and so, but the problem is that it is country which is aiming to reach moon but is unable to treat and save children dying of ‘chamki’ fever in Bihar. 

Today several Asian wireless carriers are in the process testing 5G networks, with plans to introduce them commercially in 2020. South Korea’s SK Telecom Co. launched its 5G network for public use in April 2019 and called it the world’s first such full commercial roll out. China issued 5G licenses to its three main operators earlier this month, raising the prospect of services starting as early as this year. 

India plans to deploy 5G in 2020. 

The first challenge in India would be the investment needed for the launch of network. As per Telecom Regulatory Authority of India (TRAI) estimates, it could be as much as $70 billion. 

Rajan Mathews, chief of Cellular Operators Association of India, said: “Spectrum pricing is too expensive in India and the telecom companies will have further stress in their balance sheets if they wish to participate in the upcoming auction. But they have an option of buying at a later date." 

 

Skill Gaps: 

According to Raghav Gupta, director – India & APAC at Coursera, an American online learning platform, “There are huge gaps in terms of the current skillsets of employees and the needs of the industry. Globally as well as in India, telecom industry is actively focussing on reskilling employees in technology and data science topics.” 

As per Nasscom, nearly 40% of India’s total workforce has to be re-skilled over the next five years to cope with emerging trends like AI, IoT, machine learning and blockchain. It added that organizations are in need of digitally-educated professionals who are also well-possessed of the skill which is needed for business strategy. 

According to a spokesperson of Telecom Sector Skill Council (TTSC): “The speed of innovation in the telecom industry needs to be matched, which can only be achieved through reskilling. There should also be a net shift to newer forms from the outmoded technology. An imbalance is created if there is no coherence between the two, leading to loss in the long run.” 

Ashwinder Sethi, principal, consulting at Analysys Mason said: “To build the 5G networks, the existing employees may not have the required skillsets. To address this, many global operators are taking support of consultants who are experts.”

He added: “On the commercial side of 5G, use cases are not very defined at the moment, as a result, monetization aspects of 5G need to be explored. One of the major skillsets required on the 5G front is to identify business cases of the 5G use cases.” 

 

Debt sunken telcos can’t take any more burden & war: 

While the government is hell bent on 5G and made it popular before anyone can taste its fruit, the over stressed telecom sector is financially unable to take 5G. It is in $59 billion of net debt and is hardly managing to survive. They are certainly not ready to compete without money. That means 5G may kill a few more telcos. 

As per various reports, India is seeking to raise $84 billion this year from a sale of airwaves. This will expose telcos to word war like situation where they may soon decide how much more pain they can endure for a high-speed wireless network that can offer better user experience in streaming, gaming and entertainment. 

From Netflix to Amazon Prime Video manufacturing to education and health care, 5G could be the catalyst for India’s digital economy that has the potential to reach $1 trillion by 2025, according to a report by Deloitte. 

5G is such an overwhelming fear for telcos that if they lose on it, they may not survive. According to Alok Shende, a Mumbai-based principal analyst for telecom at Ascentius Insights. “Any player missing on the 5G service offering is likely to see erosion of market share. There’s all the more case for maintaining competitive parity to remain in the game. Offering a forward path to customers is important.” 

5G will boost augmented reality, virtual reality, connected cars, autonomous drones, smart homes and cities, and change our rural set ups, according to Prashant Singhal, global head of telecommunications at Ernst & Young. 

He added: “5G is capable to address challenges due to lack of infrastructure in health care and education. For instance, an experienced surgeon in a major urban hospital can advise an in-theatre doctor in a small town to perform a surgery over a real-time 5G connection or a holographic image of a teacher could be beamed to a classroom in a village.” 

Though there are millions of subscribers, competition has driven data tariffs to less than a dollar for 1 GB, the cheapest in the world. The monthly average revenue per mobile user is also among the lowest, at about $2, compared with about $8 in China and at least $40 in the U.S. This has made the war grim in India. 

Reliance Jio, in Sep 2016, made telecom operators face or flee the field with cheap data rate. It made data revolution possible in rural India with free calls. This caused Sunil Mittal’s Bharti Airtel has run up a net debt of about $16 billion. Vodafone Idea merger was also a step to survive. 

Ambani’s energy-to-retail conglomerate that has spent more than $36 billion to build the telecom unit, has too in net debt of almost $28 billion, and is now backed by cash and equivalents of $11.3 billion. In January, Ambani, said in a speech that his network is “fully 5G ready". 

 

Govt wants to pile up cash: 

Selling airways is too lucrative for government. They rely on airwave auctions to replenish their coffers and fund their deficit budgets. Telcos are smarter as they know if the government authorities don’t garner enough demand for the airwaves, they usually cut the price by as much as 40% in the subsequent round. 

5G spectrum auctions have witnessed great participation in developed countries. Germany raised 6.55 billion euros ($7.3 billion) In June 2019, more than the government’s highest estimate of 5 billion euros, while Italy got $7.6 billion last year, more than twice what authorities expected. 

Experts say that 5G in India is positive given the growing appetite for data, increasing digital transformation and the need to quickly adopt new technologies. It has the potential to transform lives and play a key role in socio-economic development. 

 

Way forward: 

4G added $100 billion to the world’s GDP, and now the 5G spectrum is expected to add more than $550 billion to the world’s GDP over the next five to 10 years. However, India was late into 3G/4G space in actual commercial deployment. 

Now the question is can India break into the 5G party at an early stage when applications, or apps, are still on the drawing boards and premium pricing prevails? Are their policy choices before the Narendra Modi government, which can enable and incentivise India’s telecom companies and technology giants to capture premium markets in the 5G space? 

Experts feel that the government, along with the telecom companies, technology industry and other stakeholders consider giving spectrum for free to existing, well-established telecom players like Jio, Airtel, Vodafone, BSNL among others in 20 big cities in proportion to their existing market share in each city. Spectrum for 5G in other cities and towns should be allocated the usual way depending on existing or new players. 

They said that government should alter traditional approach to technology and find new ways to make 5G sustainable. But will Modi government postpose revenue collection?

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