Why are 5G private networks failing to take off in India?

Even as India claims to have recorded the fastest 5G rollout anywhere in the world, there has been limited uptake of 5G private networks in the country. 

Globally, the cellular private networks market, driven by both 4G and 5G networks, is likely to grow from $7 billion in 2023 to about $96 billion in 2030, according to ABI Research. 

However, Indian enterprises seem to have adopted the “wait and watch” strategy where 5G private networks are concerned. At the same time, there have been a few deployments of 5G private networks in India over the last year, including at Mahindra & Mahindra’s Chakan manufacturing plant, BOSCH’s facility in Bengaluru, and L&T Technology Services. 

Growing security concerns and a need for greater network control and transparency coupled with ultra-low latency, high bandwidth, and massive device connectivity are the key reasons for an organization to go for 5G private networks. 

Spectrum and high capex

Indian enterprises face several challenges in leveraging 5G private networks for greater operational efficiency and security. 

A key reason for the low uptake of 5G-enabled private networks is the lack of clarity on how the spectrum would be finally allocated to the enterprises. 

While enterprises are keen that the spectrum should be allocated administratively, the communications service providers want it to be auctioned. The ongoing conflict between the telecom service providers and the enterprises is leading to uncertainty impacting the deployment. 

Initial guidelines by the Department of Telecommunications (DoT) mandated that enterprises would procure spectrum directly from the government or lease it from the telcos. Several Indian businesses have applied for the spectrum, including Wipro, Infosys, L&T, Tata Power, Tejas Networks, Capgemini, and Tata Communications.

Multiple options for spectrum access

In response to a protest from the telcos, the Department of Telecommunications (DoT) decided to offer several options to enterprises to deploy 5G wireless private networks.

An enterprise interested in deploying a 5G private network can get it through network slicing from service providers’ networks, lease it from telcos, or use the services of service providers to deploy and manage private networks. DoT had rejected the Telecom Regulatory Authority of India’s recommendations to allocate spectrum administratively to the enterprises. 

“Spectrum allocation uncertainty stymied 5G private network adoption in India,” said Prabhu Ram, head of industry intelligence group at Cybermedia Research. “Enterprises are reluctant to invest in private networks without transparent spectrum allocation guidelines and cost structures. The government must swiftly address these concerns to unlock the transformative potential of 5G private networks.”

There is typically a strong, positive correlation between the number of private mobile network references and countries with dedicated spectrum, according to a report by GSA Research. “The US currently has the most customers at 163, and Germany (89), China (51), the UK (45) and Japan (35) round out the top five.” India is placed in 16th position as per the GSA report.  

“There is a definite interest from the enterprises in 5G private networks provided they get the spectrum directly from the government instead of leasing it from the service provider,” said TV Ramachandran, president at Broadband India Forum (BIF). “Procuring spectrum directly from the government and then working with the vendor or system integrator is more cost-effective for the enterprise. This way, they will have greater control over the network as well,”.

“The government should allocate spectrum administratively to the enterprises to help the country climb the value chain in manufacturing, which is the need of the hour if the government wants to turn the vision of Make in India into a reality,” he added. BIF is an independent think tank that works for the development of the broadband ecosystem in the country.

The government started the Make in India initiative to boost domestic manufacturing in the country and build capabilities in Industry 4.0 and the Industrial Internet of Things (IIoT).

Slow return on investment

Some argue that 5G private networks have not made any headway in India because of high capital expenditure and extremely slow return on investment.

“Private 5G is not picking up because it doesn’t make strong business sense at the moment. There is a steep capital investment required, and businesses will not be able to recover that through increasing prices as the end customer won’t get a substantially different offering,” said Faisal Kawoosa, Chief Analyst at TechArc. 

There is also a lack of prominent use cases to motivate enterprises to move away from WiFi to 5G-powered private networks.

Limited advocacy on the matter means that there is little interest from the enterprise side to resolve the spectrum problem, Kawoosa said. In addition, deploying 5G private networks might require a complete overhaul of the existing systems.

“Digital transformation of business sectors is happening at its own pace and deploying private 5G would mean a complete overhaul in many instances. I think no one is prepared for that, neither enterprises nor their end customers,” Kawoosa said.