5G Allocation: Tech and telecom companies need to dance the tango

The auction for the 5G network is expected to start next month. But the controversy surrounding the allocation of 5G waves to private companies will not die down.

As the government allows independent companies to directly allocate spectrum to build their own private 5G networks, global tech giants and Indian IT giants are keen to acquire them.

This put them head-to-head with telcos like Reliance Jio, Airtel, and Vodafone. Indian telecom operators fear such an award could eat up the lucrative 5G business sector as tech companies would capture a large market share.

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Industry experts believe that while private companies should benefit from 5G waves, the government should level the playing field on pricing to make this a win-win scenario for telecom operators and tech companies.

“Globally, 5G licenses are also issued to companies. There are many private networks. You don’t have to go to telecom providers to get your own private network. The government has started auctioning off spectrum to telecom operators and now they are trying to follow the global trend (in 5G spectrum allocation). When tech companies get 5G, they will build their private network and keep their hubs captive in India,” said V Balakrishnan, chairman of Exfinity Ventures and former CFO of Infosys. IE.

He said private companies should be allowed to receive 5G radio waves, but telecom operators’ concerns about fair terms for network prices should also be addressed.

“If you look at telecom operators, companies are their profitable business. So these players cannot afford to lose a 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 depend heavily on the company’s business. Some estimates suggest that around 40% of the total 5G revenue of national telcos will come from corporations alone.

“5G has more enterprise use cases. There will be other applications in autonomous driving, intelligent manufacturing, telemedicine, digital learning and many more. If technology companies have their own 5G spectrum, they can present PoCs (Proof of Concepts) to their customers without being dependent on telecom operators. Owning your own network will contribute much better to Industry 4.0 penetration,” said Pareekh Jain, IT outsourcing consultant and founder of Pareekh Consulting.

The Indian market may not be the key

However, industry insiders also opined that the Indian market may not be the real motivation for owning a 5G network for Indian IT service companies like Tata Consultancy Services and Infosys.

Although the Indian market is of great importance for companies like Google, Microsoft, Facebook and others; Indian IT companies are more eager to acquire 5G ether to showcase their expertise to global clients and participate in big transformative deals in telecom sector.

“Tech companies want their own spectrum in order to be able to develop different use cases. First, these companies will demonstrate their capabilities and then engage in 5G-related digital transformation businesses worldwide. This is crucial as India has yet to roll out 5G. For Indian IT companies, the domestic market may not be of immediate interest compared to telecom operators or other technology companies,” said Jain of Pareekh Consulting.

Other analysts have said that 5G will open up a multitude of opportunities for all IT service companies around the world. In India, smart manufacturing will accelerate thanks to the government push for Make in India.

“There are many opportunities in the IoT and Industrial IoT space created by the deployment of 5G in India. We’ve already seen global technology companies like IBM and Qualcomm seeing some traction, and these companies are well positioned to take advantage of the opportunities in this space. Among Indian companies, TCS, Tata Communications, Tech Mahindra and Infosys, among others, can also benefit,” said Mrinal Rai, senior analyst at global consulting firm ISG.

No conflict of interest

As the battle between telecom operators and tech companies over spectrum allocation continues, most experts believe the relationship between these two groups of companies is symbiotic in nature. Because many of these tech companies work as service providers for Indian telecommunications companies. For example, companies like TCS, Tech Mahindra and IBM work with Airtel in various fields. Likewise, Google and Facebook are beneficiaries of the Reliance Jio platforms.

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

From this perspective, 5G has the potential to transform the industrial landscape in India through accelerated digital adoption. Therefore, the government should strike a balance on various aspects, including pricing, for close cooperation between telecom companies and technology companies. Any unhealthy competition delaying the deployment of 5G could prove costly given India’s current uncertain economic environment.

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