Tariff wars stall India’s 5G rollout

5G rollout

India’s cash strapped telecoms sector will continue to suffer, as operators scramble to acquire already expensive spectrum bands which will heavily impact the country’s 5G rollout, a report by the Competition Commission of India (CCI) warned.

The telecoms industry’s struggle is mainly due to a tariff war that has been taking place since 2016, as well as a nationwide farmers’ protests that has damaged telco equipment on the ground.

Although it is one of the leading countries in startup presence, India still does not have a specific date for the adoption of 5G.

“We will pioneer the 5G revolution in India in the second half of 2021,” Reliance Jio, the country’s most profitable telco, said, while others such as Bharti Enterprises have highlighted that proper integration and rollout of the fifth generation of mobile networks will need to 2 to 3 years.

Other players such as Airtel and Vodafone idea consider that India’s telecom’s ecosystem is underdeveloped coupled with unaffordable spectrum rates.

Uneven adoption of 5G

According to CCI, the availability and amount of spectrum up for auction will be pivotal in the telecoms industry’s ability to provide quality 5G services, since scarcity of the spectrum will result in heightened costs, rendering operations inefficient.

“The current financial health of the sector could result in an uneven speed of adoption of 5G by operators. The more profitable ones are likely to be faster off the block. In case this scenario unfolds, it will have implications for the level of competition in the long run,” the anti-trust body highlighted.

The report by CCI further explained that the importance of creating a competitive market for 5G by ensuring allocation of spectrum at reasonable costs, leading to a more balanced revenue stream.

If not, then the poor financial state of the Indian telecoms industry will lead to an uneven approach toward 5G rollout.

The telecom department will conduct a spectrum auction in March placing 2,251MHz of spectrum at a reserve price of Rs3.92 trillion up for sale.

Spectrum in the 700MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz bands have been put on the block, while the 3,300-3,600 bands, which were suggested by the telecom regulator for 5G, are not included in the upcoming sale.

However, due to the poor financial health of the sector, large portions of the airwaves may remain unsold due to their high prices, echoing a similar situation of the October 2016 auction, where the 700MHz and 900MHz bands did not find any buyers.