Key Differentiators and 5G Journey so far in India
In one of my previous articles (India: 5G deployment, 2023) [1], we discussed in detail about 5G deployment and Monetization plans and status in India. Now with the end of Q2FY24 saw the completion of one year of 5G rollout in India. Both top operators of the country namely Jio and Airtel offer 5G as an added service while Vodafone Idea (VI) is yet to start its 5G journey. India has witnessed the fastest rollout of 5G; both Airtel and Jio have covered all major cities/towns within a year and are continuing to expand their 5G footprint.
Even though 5G is not primary revenue generator so far, 5G’s share is expected to grow steadily in the near future.
In this article, I am sharing my thoughts regarding the market response on it so far, different paths adopted by these giants and a sneak-peek on the future-outlook of the next generation network from India’s market perspective.
1) Market Response thus far
On the subscriber market front, JIO is leading the chart and continuously adding new subscribers while Airtel is holding its subscribers market share. On the other hand, VI is continuously losing its ground primarily because of the lack of the 5G services [ (2, ET prime)].
On the ARPU (Average Revenue Per User) front, Airtel has done better. In Q1FY24, Airtel reached its first milestone of INR200. As per estimates by Emkay Global, Airtel’s ARPU in Q2FY24 will rise by 2.1% to INR204. For Jio, ARPU is likely to be flat (up 0.8% sequentially) at INR182 [[ (2, ET prime)].].
Of course, there are multiple factors, including 2G subscribers from Airtel that are slowly getting converted to 4G/5G and apparently Airtel is also able to attract high-value postpaid customers from Vodafone Idea particularly (which is lacking 5G services currently). Jio, on the other hand, has seen flattened growth in ARPU with discounted tariff [ (2, ET prime) ].
The approach from both to woo the market seems quite different. In the next section, I will be briefly analyzing the key differentiators for the next generation networks.
2) Key Next Gen Differentiators
a) Choice of Architecture
Both Jio and Airtel have taken two different approaches with respect to the network architecture; Jio has gone ahead with the Stand-Alone architecture for the 5G deployment and it is the world’s biggest 5G SA network at this point of time. Airtel on the other hand deployed Non-Stand-Alone architecture. NSA Architecture can be considered an intermediatory step towards SA Architecture. For the current 5G use cases which are data centric, choice of architecture does not really make a difference. However, initial investment required for NSA deployment is relatively lower. For the future use cases based on latency as well as for B2B offerings, operator having SA architecture ready would be better placed.
b) Fiber Roll-out
Fiber rollout plays a central role to deliver 5G experience. Reasons for this include fiber’s immunity to electromagnetic interference and its ability to handle the higher speeds required for 5G with reduced attenuation. We can say that fiber rollout is a necessity for 5G experience; but it is too costly.
India has seen a tremendous growth in the fiber roll out post 5G deployment commencement. According to data from DIPA [(3, DIPA)], the total optical fiber length deployed as of June 30, 2023 stands as 3,726,577 kilometers; a significant increase from 2,812,627 kilometers recorded at the end of September 2022; yet it still falls short of Indian government’s target to fiberize 70% of its towers, by 2024-25.
In addition, the Government of India’s initiative of uplifting 250,000 panchayats across India with fibre-optic-cable-based high-speed internet connectivity to create an enhanced digital experience and to prevail e-governance services – linking everyone directly into every layer of progress.
Telco Operators have formed separate fiber businesses to increase the use of fiber and save the cost. In terms of fiber rollout, Jio has an edge over Airtel.
c) Availability of Sub GHz Spectrum
Low-band spectrum offers blanket coverage. A low-band spectrum in a 5G world allows CSPs to provide comprehensive coverage, makes it easier for the wireless signal to penetrate through windows and walls. In the last spectrum auction (for a total of ~ $11 billion), Jio specifically focused on acquiring Sub GHz spectrum along with mid band spectrum. Bharti Airtel on the other hand spent $5.4 billion with a primary focus on acquiring mid band spectrum. Currently, Jio has an edge in terms of availability of the low band spectrum.
The differentiation because of this shall be more prominent with traffic ramping up and 5G deployment reaching rural part of the country. Airtel has saved money (in last spectrum auction) for future and can boost its spectrum portfolio in case needed, however, with a risk of revised price and availability of the spectrum at that time.
d) Open RAN as an option
Open Radio Access Network (Open RAN or O-RAN) based deployment has been insignificant in the current wave of the 5G deployment in India so far even though it (a software centric, disaggregated system based on open interfaces) has caught good attention and has created positive vibes in the mobile telecommunications industry. By enabling more flexible and innovative network solutions, it is becoming the agreed way forward and a game-changer for mobile network operators. This Open interface-based solution leverages on AI & data science and provides flexibility to the CSP’s to build their own network by brining components (SW/HW) from different vendors thus helping to on board their own specific customizations/features much faster. Some useful details regarding O-RAN are available in my previous blog, mentioned in reference [ (4, previous blog) ]
O-RAN ecosystem is getting matured rapidly but it has its own challenges for large scale deployment, some of which are mentioned below -
· Management of the multi-vendor solution
· Interoperability of components and integration time
· Orchestration of multi-vendor components
· Solution/issues accountability
· Different upgradation cycle of different components
· Complicated maintenance, supply chain management
For both Jio and Airtel, Open RAN based deployment had not been significant so far. However, in my view, the adoption rate would pick up with time as the current challenges for large scale deployment of O-RAN reduce. In the next phase, when CSPs would be looking for monetization beyond data centric and macro cells deployment use cases, disaggregated and software centric architecture from Open RAN will have better chance to see large scale deployment in India.
e) Inherited AI/ML
Artificial Intelligence and Machine Learning have touched most of the industry verticals; wireless networks carrying huge amount of data is no exception to that. Frankly, we do not see any bottle-neck in the adoption of these techniques in the modern networks going forward, unless there are investments or alternative choices that are already made by the CSPs.
AI/ML can have significant impact in the 5G/6G wireless networks broadly on the below aspects -
Network optimization: Predicting traffic patterns and adjusting the network parameters & resources accordingly to provide better service can help in OpEx reduction. Carrier shutdown, RF channel shutdown, advanced sleep mode, scheduler optimizations can be carried out effectively, by predicting energy saving opportunities without hampering overall network experience.
Network analytics: AI/ML can be used to analyse large amounts of data in real time, helping in generating insights that can be used in network optimisation, security analysis and personalisation of services for end users and/or selected cells.
Network Management: AI/ML can be used very effectively to reduce the operational cost for Network Management by helping to detect and prevent cyber-attacks on the 5G network. By analyzing network traffic and identifying anomalies, AI-powered security systems can prevent attacks before they occur.
In simpler words, all this results into OpEx reduction, subscriber experience enhancement and brings in more business opportunities into other verticals at a relatively lower CapEx. Adoption of AI/ML is a journey and both of the leading Indian operators are part of this journey. Some interesting details regarding impact of AI/ML in next generation Software development is discussed in one of my previous blogs [ (5, Development) ].
f) Edge Computing
Edge Computing also known as Mobile Edge Computing (MEC) brings processing and storage resources for applications closer to where data is generated or consumed. In other words, it helps in keeping the compute capacity near to the application/user/device. The advantage it brings is the reduction in the latency. It can be very useful for the latency sensitive use cases. Stand Alone (SA) deployment architecture and micro-services-based architecture enables effective usage of the edge computing. Jio looks better positioned to adapt Edge computing use cases at large scale.
3) Summary and Future Outlook
It has been a very interesting approach and journey overall, by both Jio and Airtel though the approach is significantly different. Jio is still able to increase its subscriber base with flatter ARPU growth, while Airtel is able to hold the existing subscriber base with better ARPU. For next generation networks currently, Airtel has been a more selective investor; Jio is positioned better in terms of capabilities (architecture, spectrum etc.) required for the next generation network. It would be interesting to watch going forward, when 5G becomes the major contributor to the CSPs revenue that shall be led by rural/semi urban deployment, latency sensitive next generation use cases along with the B2B generated demand. Airtel would also need to invest to remain competitive when 5G and its next generation services grow at scale, but how costly it would be to change the gears that time shall be crucial to maintain its ARPU growth and subscriber base.
With this healthy competition among the Indian operators, customers can continue to enjoy advanced network experience at a very competitive price. It is seen as a great boost to the start-up ecosystem, e-governance, education and services.
4) References:
[2] https://economictimes.indiatimes.com/prime/media-and-communications/telcos-q2-preview-airtel-to-record-healthy-growth-jios-outlook-modest-vis-struggle-to-continue/primearticleshow/104563930.cms
[3] https://www.trai.gov.in/release-publication/reports/telecom-subscriptions-reports