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5G is leading to higher data speeds in India, but how long will the average user enjoy these speeds for free?

As per reports, 5G promises to deliver data speeds 100 times faster than 4G. But at what cost? Insights from telecom companies’ earnings calls on the switch.

On December 1, Communications Minister Ashwini Vaishnaw tweeted that the rapid deployment of 5G services in India has led to India’s rank in internet speeds rising by 15 spots— making it the country with the 28th highest mobile internet speed in the world. 

The move to 5G has been highlighted by telecom companies in their earnings calls as well. Last month, Airtel reported that it had 55 million unique customers on its 5G plus network and Reliance Jio said that it had seen the migration of 70 million subscribers from 4G to 5G networks. Interestingly, both these companies also spoke about the fact that they have not currently monetized their 5G services and as such, those services are not leading to any additional revenue. While Airtel did mention that it doesn’t believe in higher 5G tariffs, the fact that it talked about monetizing 5G tells us that the company does plan to bring in additional revenue from 5G services in one way or another.

Why it matters:

While Ashwini Vaishnaw’s post tells us that India is now providing greater internet speeds with 5G deployment, the question is: if these services are eventually going to come with additional costs, would the average internet user even be able to enjoy them? Speaking about the same, Akshay Moondra, the chief executive officer at Vi had said that while people are currently not paying for 5G usage when they eventually have to, the data consumption charges for activities like watching a YouTube video on 5G would be much higher than what people currently pay for data consumption. With impending higher charges, would users even be willing to switch from 4G to 5G?

Company expenditure on 5G deployment:

In its earnings call, Jio highlighted its capital expenditures of ₹38,815 crore was primarily towards the 5G rollout. Similarly, one of the focus areas of Airtel’s capital expenditures of ₹7,787 was also the 5G rollout. These figures tell us that both Airtel and Jio have financial interests to ensure that their customers move to 5G services. As such, the Telecom Regulatory Authority of India (TRAI) must ensure that telcos don’t end up underselling their 4G plans in the interest of getting customers to migrate to 5G.

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Data connection speed in 5G networks:

One of the key reasons to switch from 4G to 5G is speed. According to a report by CNBC News-18,  5G promises to deliver data speeds 100 times faster than 4G. ” I think the challenge on 5G is that the experience that the real use case on 5G today is only speed. So on your small device that you carry in your pockets, you may get 400-500 MBPS speeds. But the fact is for the application that you use on that device which is typically messaging or video or some e-mail. You really do not need more than 4 to 7 mbps speed. So users are actually are oblivious whether they have 5G or 4G,” the Managing Director of Airtel, Gopal Vittal said during Airtel’s earnings call, highlighting that for mobile users, this speed doesn’t make much of a difference. Further, it is important to note that telecom companies cannot assure customers that they will always get the same data speeds for mobile connections.

Internet speeds on mobile connections depend on factors like interference and the number of users in a region. This means that if you are in a building with thick walls, chances are you will enjoy slower internet speeds. Similarly, if you are a Jio user and have gone to an area where a lot of other people are accessing the internet via Jio mobile connections, your data speeds would be slower. So since users have no guarantees that they will have better speed in a 5G connection, they wouldn’t be inclined to pay more for 5G services.

Current use cases for 5G: 

“With the exception of some private 5G networks and some B2B [business to business] use cases which have modest revenue streams associated with it, fundamental use cases are still not there,” Vittal had said. He also said that while 5G networks are now being deployed, the applications that fully utilize the features offered by 5G networks (high speeds, low latency and massive capacity) have not been developed yet. “So the broad point I am going to make is you need more applications to be written on 5G networks,” he explained.

According to TRAI, 5G networks can “provide the backbone for IoT [internet of things] and AI [artificial intelligence] applications that require high bandwidth and low latency.” For instance, it could enable precision farming using IoT devices that can collect and analyze data on soil, weather, crops, and livestock. It could also enable connected and autonomous vehicles that can communicate with each other and with the infrastructure to optimize traffic flow, reduce accidents, and enhance mobility. But based on what Vittal says, not enough of these applications of 5G currently exist, neither in India nor elsewhere in the world.

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