5G rollout unviable if captive private networks allowed, telcos tell govt

In a move which could jeopardise the country’s upcoming 5G spectrum auction, the Cellular Operators Association of India (COAI) on Wednesday sent a letter to Minister of Communications, Ashwini Vaishnaw, saying there will be “no business case for rollout of 5G networks” if captive private 5G networks are permitted.

In a blunt letter to the minister COAI – the apex body of telecom operators with Bharti Airtel, Reliance Jio, and Vodafone Idea Ltd as its key members – has made it clear that if independent entities set up private captive networks with direct 5G spectrum allotment by DoT, the business case of telecom operators will be “severely degraded”. They have made it plain in the letter that “this will diminish the revenue so much that there will be no viable business case left for the telecom service providers (TSPs) and there will not remain any need for 5G network rollout by them.”

COAI has explained to the minister that wherever 5G has been rolled out there has hardly been any consequent revenue increment from the retail segment. The revenue and efficiency enhancement can happen only in the enterprise segment.

The move is significant as a bevy of Indian companies through Broadband India Forum have been pushing the government to allow captive private networks like in other parts of the world for enterprises. They have argued that it will be a win-win situation for both TSPs as well as companies as they move towards a new industrial revolution. They have argued that since these networks will only be for captive usage (like machine to machine, robots), they will still need the services of TSPs for external connectivity and therefore there will be no loss of business. But telcos have pointed out that that based on global trends 40 per cent of the revenues from 5G come from enterprise segment. Therefore, if captive private networks are allowed there will be no reason for them to set up 5G networks, especially as they have been asking for spectrum at administrative price.

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