Let the market forces decide 5G spectrum pricing: COAI

As the government and the industry is gearing up for the upcoming 5G spectrum auction and a smooth roll out of services, differences are still being ironed out. From high spectrum prices to GST returns and a level playing field for all, remains key demand of the telecos before they may launch 5G services in the country. Lt. Gen Dr S.P. Kochhar, Director General of telecom industry body Cellular Operators Association of India (COAI) shares some of the important aspects of the upcoming technology that has potential to transform industries and boost India’s GDP in coming years. Edited excerpts:

BT: Given that liquidity crunch and financial distress of telecos had been a major concern before a 5G spectrum auction, where does the industry stand now?

SPK: To ensure a smooth roll out 5G services, the government has already taken a few steps that are welcome. For instance, they are making sure the liquidity that needs to be available with the operators so that they can wholeheartedly participate in the spectrum auction, whenever that takes place. The liquidity crunch had been an issue that had given rigour to the industry for the last 4-6 years.

BT: Since the liquidity outlook has now improved, are the spectrum prices less of an issue now for the telecos?

SPK: High spectrum prices has been a cause of concern and it remains so. Despite the liquidity, spectrum prices are not rational. It will be difficult for the operators to participate in a manner that they would like to. The reason being, 5G use cases would emerge as soon as it is launched. It will take a few years as it is basically meant for machine-to-machine communications. Of course, it will offer better experience for retail customers but the maximum scope lies in the industry side of the business, especially in the enterprise sector and for ‘Industry 4.0’.

BT: What are the other issues that the industry is trying to sort out with the policy makers before 5G auctions?

SPK: With the new leadership team at the DoT (Department of Telecom), the government is very empathetic and is ready to listen to all our concerns. One of the issues that is being discussed now is, we have demanded that the rules should be same for players, who are offering same set of services. If the telecos have to operate under the license regime, buy spectrum during auctions, pay taxes and fees at a particular level then that should apply to others, who want to offer similar services to consumers like the OTT (over-the-top).

About the spectrum prices, we are demanding to let the market forces take over, instead of artificial calculations. Otherwise, given the high spectrum prices - there may be only a 30-40 per cent sell out. Rather, the aim should be to auction 100 per cent of the spectrum that has been allocated for the purpose.

BT: Why are the issues a major concern before 5G and was not so much in earlier generations of telecom services?

SPK: The use case for 5G technology is going to be very different than what it used to be for previous generations - upto 4G technology. Earlier, the telecos used to roll out the services and the business used to pick up. But in case of 5G, because of the flexibility that is offers, the prospects are different. First the businesses have to update their back-end as per the requirements and only then the demand for 5G technology would surge.

So, our concern here is, spectrum prices, reduction of levies, ease of doing business. Also, there is a huge amount of money lying at government coffers that needs to be returned to the telecos in terms of returns against goods and services (GST), service tax returns. We are pressing hard for that as it would improve the liquidity positions of telecos. The government is engaging with us and they have been supportive.

BT: What could be the impact of 5G technology on the country’s economy?

SPK: Citing the economic survey, I can say that the biggest impact on the country’s economy would come from the telecom sector (after 5G is rolled out) as it would be used by the industry. This, apart from the massive boost in revenue contribution that would be made by telecos and related parties. After the pandemic, it has become evident that without the appropriate telecom services the economy may slowdown substantially. But with 5G and, consequently, industry 4.0 coming together it will have a major effect on the gross domestic product (GDP).

BT: Since 5G would result in higher automation, won’t it also reduce the number of jobs?

SPK: Yes, there might be a few job roles that will become redundant. But it also opens up a great opportunity for new types of jobs. The manipulation of the networks and to use them, we would need a new type of workers, who are highly skilled. Here we are not even talking about blue collar jobs but, probably, no collar job roles, who will do both blue collar and white collar works.

For example, there is a massive opportunity in the areas like data visualisation and cyber security. Also, for those who will be working on the floors the physical area that they control will grow exponentially, while response time would come down due to automation. This would require re-skilling.

BT: Which are the sectors that COAI is expecting to benefit more from 5G?

SPK: As our Prime Minister said, India is going to be a digital superpower. Dependence on digital ecosystem would only grow from here. Sectors like agriculture, education and healthcare are going to benefit hugely. After watching the trends, we have already opened up membership to COAI for industrial units, who have anything to do with telecom, and educational institutions.