Telecommunications Industry

Technological Environment
Decision Time:
By the time the pandemic hit, the telecom industry had been managing over a decade of
disruptions, driving deteriorating economics (Exhibit 1). There has been customer-back
disruption, in which digital-native companies like Uber and Netflix have set a new standard for
seamless online experiences, forcing incumbents to redefine their interaction models. There has
been business-model disruption, with technologies like AI, big data, and the Internet of Things
redefining service-delivery and value-capture models. There has been new-entrant disruption,
with increased competition among traditional players as well as non-traditional players, which
have shifted value toward technology-focused parts of the value chain (for example, software-
defined networking in a wide area network [SD-WAN], software as a service [SaaS], and over
the top [OTT]).
Future of Telecom:
The telecom business is growing very quickly. Thanks to new technologies, there have been a lot
of big changes that make customers happier. People expect that 2023 will bring more and
different chances. The industry will get better and more responsive as customer needs change,
the digital supply chain improves, and more and more smart devices are made. Also, telecom
companies will work harder and smarter to keep up with the fast-paced and complicated global
economy. They will have to figure out how to get along in a world where customers are picky
and want new updates all the time to make communication easier than ever. Let’s get started with
the future.
Industry restructuring to get the support and trust of customers again. There needs to be a dual
transformation and a restructuring of the industry to stop the network from becoming a
commodity. The telecom industry will have to change the way it does business at its core. They
will have to come up with a solution that works for everyone to get the most out of the changes
to the network. They will have to understand why they are being made to make the system more
resilient and secure. Networks need to be customized and made more secure. At the same time,
they have to reduce latency, jitter, interference, and the number of errors in order to offer trust
network services. Some changes must be made. There should be four parts to the trust factor.
There are four of these: privacy and security, trust, control, and support for engagement.
For privacy and safety, the telecom industry should focus on identity management and
cryptography techniques used by the military. These will make sure that transactions are done
correctly, and that communication and information transfer are at their best. For trust, networks
will have to focus on attestations and certifications that are known and have been proven. They
have to put these into a shared ledger. A trustworthy environment can be made by keeping
records that can't be changed or lost. Supporting new and advanced technologies will be a top
priority in order to get results that are driven by success, bring down costs, and make customers
happy.
For better control, the telecom industry might focus on self-sovereign identities that have been
verified and on being more open. Analytical maintenance AI analytics will be very important in
the future of telecommunications. It will be used more in the telecommunications business. It
will help top companies offer more advanced services by letting them use machine learning
techniques and complex algorithms. All of these will help predict the future based on what has
happened in the past. Also, the telecom industry will be more focused on data-driven insights in
the future. These insights will keep track of how the equipment is doing, and based on the data
patterns, predict when it might break down. Also, it can help get things fixed. These new
technologies could make customers happier by helping them solve their problems faster and
better in real time. RPA, which stands for Robotic Process Automation, is a type of technology
that will help the telecom industry handle rule-based back-office tasks and large amounts of
repetitive work more easily and quickly.
In the future of telecom, RPA technology will handle tasks that take a lot of time and work. It can
make a lot of work easier, like managing employees, entering data, filling orders, and billing. 5G
will work with more than just 4G. The network providers are working on 5G because they think
it is the future of the telecommunications industry. Ford, Google, and Uber are just a few of the
big companies working on 5G and trying to shape it. In the near future, there is already a first try
at 5G. Once it's put in place, customers can expect more speed and efficiency. Mergers in the
telecom industry are not new. For companies to merge or join together, the industry could be in
for a lot more in the future. There could be a lot of interest from telecom companies to merge for
the better. Customers will get better service through consolidation. It will make new things
possible.
Virtual assistant, virtual assistants are used a lot by telecom companies to keep track of
customers and answer their questions about setup, installation, maintenance, and troubleshooting.
This trend will keep growing in the industry in the coming years. Also, companies will start to
use AI to help customers help themselves by following AI instructions. Customers will be able to
set up devices, fix problems, and troubleshoot problems.
Use of connected devices, the growth of connected devices is another thing that will change in
the telecom industry. The way the business world deals with the Internet of Things will have to
change. The Internet of Things could connect trillions of new things in the future. Because of
this, there will be a big increase in the amount of data.
Mobility, mobile connectivity is becoming more popular. It is becoming more popular than
connecting through a phone line. The telecom industry will continue to grow because of its
popularity. Even though landline connections will still be available, mobile connections will
always be more popular.
5G Analysis:
Let's rewind to the 80s. Meet Ted. He owns a small beverage company that sells smoothies and
juices. Ted purchased his first phone, a bulky handset that was in style at that time. His phone
provided voice calls with the help of first-generation technology, 1G. For his business back then,
1G was more than sufficient.
In a decade's time, Ted's business flourished due to the quality of his products and services. Ted
wanted his customers to be loyal to his brand and hence made customer satisfaction a priority.
For this, Ted decided to have a dedicated customer support team to resolve any customer issues
faster. So, he and his team upgraded to a better phone that not only provided higher speed but
also enabled services like text messaging and multimedia messaging services. This was referred
to as 2G.
After two decades of selling smoothies and juices, Ted had now become a leader in this category.
So, he decided to diversify and expand his business to other categories such as soft drinks,
coffee, yoghurts, croissants, macros, etc. That meant he now had more products to manufacture
and more customers to serve. Ted needed his business to keep up with the competition and grow
further without compromising on quality.
He was introduced to smartphones that had good data transmission speed. This technology was
called 3G. With 3G in the market, Ted's business benefited a lot more than before as he was able
to reach out to new customers, making them aware of his brand and new products and solving
any issues even better.
In the late 2000s, with the internet booming, online business became a necessity. Ted started
selling beverages, coffee, yoghurts, and a range of other products online. At this point, his
company also started brand advertising, and he generated a lot more business data than ever
before. He became aware of the successor to 3G, 4G.
This next generation of wireless technology boasted better multimedia services, higher speed,
and more security. Ted was happy with his new 4G services as he could sell more products
swiftly. But he thought 4G was sufficient for his business and the maximum the domain of
wireless technology could ever evolve to.
However, with the enormous amount of data that his company generated and automation at its
peak, Ted had to store data in the cloud and transform his manufacturing processes. He was in
need of more than just 4G to stay connected in his business.
With the huge number of investments in his business and with the world turning digital, Ted
wanted a faster and more reliable network connection for his firm that could use his business
data and sync the machine tools and people to raise production and deliver a better customer
experience. He did his research and wondered how he could achieve this and how to better
facilitate his business online. Just then, he came across the term 5G.
Ted learned that 5G could operate as much as 10 times faster than 4G, thereby reaching a peak
speed of 20 gigabytes per second. He realized that 5G could really transform his business by
using robotics and AI to pick and place raw and processed foods. Robots enabled with 5G could
also help him cut, slice, dispense, sort, and package his products, and this is exactly what Ted
was looking for.
He was intrigued by the term 5G and went on to understand what the hype was all about and how
different it was from its predecessors. Ted first learned that any information that he sends or
receives in a network is carried through the air with the help of radio frequencies. 5G operates
similarly; however, it uses higher radio frequencies to carry more information faster.
The beauty of 5G that he discovered was that 5G utilizes multiple input and output antennas to
avoid physical objects like buildings and trees coming in the way of communication. Further, he
went on to understand that 5G consists of two main components: the radio access network and
the core network. The radio access network includes small cells, macro cells, towers, and home
systems connecting users like Ted and devices to the core network. Macro cells use multiple
input and output antennas that enable one to send and receive large volumes of data
simultaneously, and small cells complement these macro cells. Meanwhile, the core network of
5G manages all the internet and data connections. The core network is designed to integrate with
the internet much more efficiently. The core manages the advanced features of 5G like network
function virtualization and network slicing. Ted learned that network slicing is a wise way of
cutting the network into several slices for a specific business or industry. For example,
emergency services can work on a network slice independently from virtual reality or a business.
All these nitty-gritty benefits of 5G assured Ted that 5G was exactly what his firm needed at the
moment to carry out an interactive and hassle-free business online. Thus, he incorporated 5G
infrastructure into his company business. 5G provides several applications and opportunities
across different sectors. 5G will enable connecting more IoT devices and with less latency than
4G. With the advancement of 5G, remote care and remote surgery will be an incredible sight to
witness. 5G also can revolutionize public safety. The gaming market will also further expand
with the advancement in 5G. These were a few of the applications of 5G across sectors. 5G
deployment is preventing companies from going out of business. Going by the current reports,
Samsung and Qualcomm have achieved yet another 5G download speed milestone, now reaching
8.08 gigabytes per second. Companies like Apple and Xiaomi are readily rolling out 5G phones.
According to Statista, in 2022, 5G subscriptions are expected to pass 1 billion. This shows how
5G will play a key role in the years to come.
India:
India is the world’s second-largest telecommunications market. The total subscriber base,
wireless subscriptions as well as wired broadband subscriptions have grown consistently Tele-
density stood at 84.56%, as of December 2022, total broadband subscriptions grew to 832.2
million until December 2022 and the total subscriber base stood at 1170.38 million in December
2022.
The gross revenue of the telecom sector stood at Rs. 76,408 crore (US$ 9.3 billion) in the first
quarter of FY23.
The total wireless data usage in India grew at a rate of 6.65% from 37,626 PB in September 2021
to 40,126 PB in September 2022. The contribution of 2G, 3G and 4G data usage to the total
volume of wireless data usage was at 0.16%, 1.02% and 98.81%.
The total number of internet subscribers reached 850.95 million in June- September 2022. The
wireless segment accounted for 95.4% of the total telephone subscriptions In June 2022.
Over the next five years, a rise in mobile-phone penetration and a decline in data costs will add
500 million new internet users in India, creating opportunities for new businesses.
By 2025, India will need ~22 million skilled workers in 5G-centric technologies such as the
Internet of Things (IoT), Artificial Intelligence (AI), robotics and cloud computing.

Reliance Jio held the highest share of subscribers, at around 36.6 %, in the wireless network
market across India as of September 2022. The company had over 403 million subscribers during
the same time period. The number of mobile subscribers across India amounted to over a billion
in 2022.
Fast-tracked changes in the sector continue to be growth drivers for the industry. In 2020, a
100% FDI was allowed in Bharti Airtel. The investment cap was also increased to 100%,
previously at 74. The ‘Digital India’ program was also introduced in 2015, under which all
sectors including healthcare, retail and others were planned to be digitalized.
After 40 rounds over seven straight days, market leader Jio acquired 24,740 MHz of 5G airwaves
— which can offer mobile internet speeds 10 times faster than 4G — worth a whopping Rs
88,078 crore, contributing nearly 59% to the central fund. The government mopped up a record
over Rs 1.5 lakh crore from India’s first auction of 5G spectrum.
Jio’s buys included frequencies in the super-efficient but costly 700 MHz band as well as those
in the 1800 MHz band in UP(East). It won 10 MHz of the band in the circle after a bitter fight
with Airtel, paying Rs 1,646 crore and taking the price nearly 81% higher than its base rate.
The auction of the spectrum that supports 5G services in India started with about 72,000 MHz
under 9 bands up for sale with a validity period of 20 years.
Airwaves are radio frequencies within the electromagnetic spectrum that can carry information
wirelessly for a range of services including telecommunications. The government manages and
allocates airwaves to companies or sectors for their use.
Spectrum can be divided into bands ranging from low frequency to high frequency, which
determines their usage and is useful in allocation. A low-frequency wave is one that gets repeated
a fewer number of times within a second, whereas a high-frequency wave is repeated more
number of times within a second. High-frequency waves carry more data and are faster than
lower-frequency waves but can be blocked or obstructed easily. Lower-frequency waves can
provide wider coverage.
A low-frequency wave is one that gets repeated a fewer number of times within a second,
whereas a high-frequency wave is repeated more number of times within a second. High-
frequency waves carry more data and are faster than lower-frequency waves but can be blocked
or obstructed easily. Lower-frequency waves can provide wider coverage.
For telecom purposes, spectrum in the 400 MHz to 4 GHz range is the most optimum, according
to the GSM Association, an organisation that represents the interests of mobile network
operators. Operators can provide 2G, 3G, 4G, and 5G services using one frequency band if they
have enough spectrum.
For mobile technology in India, 2G services use the 900 MHz and 1800 MHz bands, 3G uses
900 MHz and 2100 MHz, 4G uses 850 MHz, 1800 MHz, 2300 MHz, and 2500 MHz, and 5G
uses 3.5MHz and 700 MHz bands. Operators also use other bands available with them in some
capacity for the provision of these networks.
The 900 MHz band, which has been in use for mobile communications for over 20 years, has a
superior commercial ecosystem with better-developed technology standards and is suitable for
offering GSM-based voice calls as well as 4G broadband services. After 900 MHz, the band
suitable for GSM is 1800 MHz, which is also the core band used globally for LTE (long-term
evolution), a 4G mobile communications standard.
5G spectrum bands can be clubbed into low, mid and high spectrum buckets. Low band
spectrum, which is less than 1 GHz (600 MHz,700 MHz, 800 MHz, 900 MHz), offers blanket
coverage suitable to serve thousands of customers over long distances with fewer towers. These
bands are ideal for wide and in-building coverage and when bundled with high-spectrum bands
can be used for commercial mobile and broadcasting services.
The mid-band spectrum ranges from 1 GHz to 6 GHz (1800 MHz, 2100 MHz, and 2300 MHz)
and provides coverage as well as the capacity to carry more data while travelling significant
distances.
The high bands range from 24 GHz to 40 GHz and are also known as the millimetre wave
spectrum, which is ideal for speedy networks over short ranges. However, this range is subject to
interference from dense objects.
Auction Analysis:
The 700 MHz band is an important low-frequency 5G band that needs fewer towers. However, as
per industry experts, a minimum chunk of 15 MHz of this frequency may be needed for its best
use and that would cost Rs 60,000 crore.
Two bands – 700 MHz and 600 MHz – have the same reserve price and will account for 50 per
cent of the value of the entire spectrum to be auctioned at the reserve price. These are new bands
and telcos stand to benefit more by topping up their existing low spectrum bands of 800 MHz
and 900 MHz. These will strengthen their 4G services and can eventually be re-farmed for 5G
use.
Change:
Of the nine bands on offer, the 600 MHz, 700 MHz, 3.3 GHz, and 26 GHz bands had never been
allocated.
At that time, a couple of new caveats were thrown into the mix - the removal of spectrum usage
charges (SUC) and the unprecedented allocation of spectrum to enterprises for the deployment of
private networks.
SUC was a percentage of adjusted gross revenue that operators paid the department of telecom.
According to DoT's calculations, winning 40 MHz of spectrum in the mid-band (3300 MHz) and
400 MHz in the mm-wave band (26 GHz) would likely have resulted in an 86 per cent decrease
in SUC for operators.
Auction:
The bidding strategy of the telcos was driven by demand and cost. However, the spectrum was
clubbed into 4G and 5G critical bands to better understand the differences.
The strategy for 4G bands seemed somewhat straightforward. Operators focused on optimizing
their existing holdings, with 800 MHz, 900 MHz, and 1800 MHz bands likely getting the most
traction.
Reliance Jio Infocomm stood to gain the most in 800 MHz because it had the highest existing
spectrum in this band and it made sense for it to focus on creating a strong position there and
maintain maximum market share.
Bharti Airtel and Vi looked to the 900 MHz band for the same reason, while all three private
operators bid for some spectrum in the 1800 MHz band.
In the remaining bands majorly used for 4G, there was a possibility of bidding, particularly by
Bharti and Vi, which held a majority of the existing positions in these bands. However, since the
outlay in these bands would also be significant, they might have acquired more of the 3.3 GHz
spectrum.
The 600 MHz and 700 MHz bands were low-frequency bands that could play a critical role in
supplementing the mid-band portfolio, providing better indoor penetration and a larger footprint.
However, the chances of telcos bidding for them were slim because they were priced relatively
quite high, especially the 600 MHz band, which globally cost about one-third of the 700 MHz
band. Operators might have given both bands a miss on the expectation that they would be made
available at a reduced price in a future auction.
The major 5G bands consisted of the remaining two bands i.e. the 3.3 GHz, also called the C-
band, and 26 GHz, also called the mm-wave. The mm-wave was the cheapest spectrum available
yet, and it made sense for telcos to acquire the maximum units possible under this in a bid to
reduce their overall SUC charges.
The bidding strategy for the C-band, the major 5G band, remained a bit foggy because it was
considered quite expensive, especially in light of the decision to allocate it to enterprises for
private networks, which might result in subdued revenue potential for telcos.
On the other hand, there were some benefits that might have offset these concerns such as zero
SUC and relaxed payment terms.
There were 330 units or MHz available for allocation under this band, with a cap of 130 units per
operator. Reliance and Bharti were likely the two main contenders for this band.