Why 5G is failing to gain momentum in India

Last year, there was a sense of euphoria as the Indian telecom minister celebrated the country executing what he called the fastest ever 5G deployment. However, this has yet to translate into the sound of cash registers ringing as telcos struggle to monetize their investments in 5G. 

India's top two telcos, Reliance Jio and Bharti Airtel, had deployed 435,720 5G basestations as of the end of March 2024. Like their counterparts in other countries, Indian telcos are pursuing the elusive 5G monetization without much success. The operators have spent $15 billion to acquire 5G spectrum and then followed this by spending considerable sums to build a 5G network that now provides coverage in most parts of the country. While Airtel has launched 5G using non-standalone (NSA) architecture, Jio is using 5G standalone (SA) which it refers to as "true 5G." 

What significantly impacts 5G monetization in India is that the telcos are yet to launch dedicated tariffs, and instead offer 5G as part of existing deals. Jio and Airtel are likely to launch 5G tariffs after the general election, which is currently underway.  

The mystery of 5G private networks

Initially, there was an expectation that 5G would help telcos grow their revenue from the enterprise segment. This was not entirely unrealistic, considering potential use cases such as private 5G networks and network slicing. However, 5G private networks have so far been a non-starter in India. 

"In India, enterprises are reluctant to deploy 5G private networks as most of them still rely on traditional connectivity solutions – Wi-Fi and wired-based solutions – and they are finding less merit in switching to a captive network. Despite Adani Group's spectrum acquisition and Airtel's partnerships, most businesses prefer traditional connectivity due to cost concerns," says Garth Owen, associate director at Counterpoint Research. 

"The cost of operating private networks compared to Wi-Fi, coupled with device limitations and slower rollout of 5G SA networks, hampers widespread adoption," adds Owen. Globally, out of 200 telcos that have deployed 5G, only 55 are using 5G SA, according to Counterpoint, preventing telcos from using crucial 5G features like network slicing. 

Apart from these, a lack of clarity on how the spectrum for 5G private networks will be allocated is affecting the uptake of private 5G networks in India. While telcos demand that it be auctioned, enterprises are seeking administrative allocation of the same. 

The retail story 

Earlier this year, Airtel CEO Gopal Vittal mentioned in an earnings call that 5G has led to an increase in data consumption but this may not be enough. As per a Key Performance Indicator (KPI) report released by the Telecom Regulatory Authority of India (TRAI), there has been an increase in average data consumption as well as ARPU since 5G was launched in October 2022. 

At the end of 2022, average wireless ARPU was INR141.40 ($1.69), with average data consumption per subscriber per month reaching 17.11GB. TRAI data shows that at the end of 2023, ARPU had increased to INR152.55 ($1.83) and average data consumption per subscriber per month had grown to 19.47GB. It is unclear if 5G is the only reason for this increase.

Telcos are struggling to convey why their subscribers should migrate to 5G. So far, neither of the two operators offering 5G services has launched a significant advertising campaign to promote them. 

Another reason for the limited uptake of 5G, even though it is available at the same rates as 4G, is the high cost of 5G smartphones. "By 2025, a significant 5G smartphone user base is expected, driven by affordability and enhanced services, fueling 5G monetization opportunities," says Owen. Only 15-16% of the smartphone users in India own a 5G handset and according to Vittal this is likely to increase to 25% in the coming year. 

Another promising 5G use case in India is fixed wireless access (FWA), especially considering the country's low fixed connectivity. Both Airtel and Reliance Jio launched FWA products last year. 

The road ahead

The deployment of 5G is helping the telcos address the growing data consumption. If 5G is to succeed in India, new innovative use cases and cheaper 5G devices will be needed. "In India's developing economy, 5G's journey involves addressing cost barriers, expanding network reach, and creating compelling use cases beyond traditional connectivity, promising significant growth opportunities for telcos and the ecosystem at large," said Owen. 

"Additionally, the growing consumption of streaming multimedia, gaming and social media, along with the introduction of 'unlimited 5G' and bundled 5G+fiber+services FMC [fixed mobile convergence] plans, will further drive the adoption of 5G services among power users willing to pay a premium for enhanced connectivity experiences," added Owen.