Prime Minister Narendra Modi officially launched 5G services in the country today at the 6th Indian Mobile Congress. In India, 5G services will begin in select cities, with Reliance Jio and Bharti Airtel becoming the first telcos to offer their services.

India Inc. hopes for it 5G or fifth generation mobile network services will cover the entire country over the next few years and will bring entirely new economic, industrial and societal benefits. Ordinary consumers, on the other hand, see it mostly as the next generation of high-speed internet.

While 5G does mean faster and better internet, with users now having access to 20Gbps, the biggest advantage of using a 5G network is its low latency. 5G has latency below 5 milliseconds compared to 60-98ms in 4G. That’s one thing will revolutionize the application of AI, ML and IoT services.

4G penetration in India has been rapid. In 2016, only 9 percent of mobile phone users had and were using 4G services. In 2021, this figure has risen to 68 percent. India Inc. as well as the government are hoping that 5G will show similar growth.

While the government, telecom sector and smartphone manufacturers are quite optimistic about 5G rollout in India, especially given the aggressive 5G penetration targets, there are several hurdles ahead.

The biggest challenge in 5G penetration in India lies with telecom companies. While the outlook is positive as both of India’s major telecom service providers, Reliance Jio and Bharti Airtel, hope to have 5G penetration in India by the end of 2023, the investment the telecom industry needs to make to build proper 5G networks is huge .

One of the main reasons for this is the fact that 5G networks will rely on fiber optic cables. Although fiber optic cables have been around for years, the penetration of fiber optic cables in India has not been what most analysts and industry insiders had hoped for. Existing radio towers must be connected via fiber optic cables to deliver the latency and speed that 5G means.

5G launch in India_ GoI aims to penetrate India in 2 years, but there are some hurdles ahead

There is also the fact that telecom companies operate on very low margins. The average price of 1GB of mobile data in India in 2021 has reached $0.68 or approximately Rs.11. Although it is very cheap compared to the rest of the world, the average revenue of the telecommunications sector per user is very low. Also, Indian telcos pay some of the highest costs and fees for the spectrum they buy.

It is imperative that Indian telcos get on board with 5G services, which businesses and corporations will need for purposes other than simple data and calls. If 5G is to achieve the same penetration rate in India as 4G, this time companies and corporations must step in.

The cost of data
Both Reliance Jio and Bharti Airtel promise customers that they will come up with some of the cheapest 5G plans in India. Bharti Airtel, which today launched its 5G services in select cities, said that for now their data plans will remain the same, but they will come with new plans in a few days.

India’s internet revolution has come about thanks to free, or rather cheap, data. Reliance Jio has brought this revolution. Jio has played a crucial role in reducing data prices. But given the cost of building and maintaining networks across the country, even they had to raise their prices, albeit slightly. In a price-sensitive market like India, it will be interesting to see how much customers are willing to pay what they see as a premium for faster and better services.

Auxiliary devices
While mobile phone users in Tier I and Tier II cities are regularly upgrading their devices and opting for 5G smartphones, users in Tier III cities are not upgrading their phones as quickly. However, this is not the problem. The problem is that most device manufacturers continue to make 4G-only versions of their smartphones. Only 9 percent of smartphones in circulation in India are 5G ready, and that too on paper, even though 30 percent of phone shipments in India are 5G-enabled. This means that most of the devices that support 5G are exported.

5G launch in India_ GoI aims to penetrate India in 2 years, but some hurdles lie ahead (1)

Moreover, a large number of 5G-ready smartphones in India already in circulation do not have the necessary 5G bands to avail 5G services in India. There are a number of premium smartphones in India that have only two to three 5G bands on their devices, and none of those three bands can connect to 5G mobile networks.

People’s participation
Finally, there is the issue of human participation in 5G adoption. India’s 4G revolution has largely been driven by virtually free data. If Indian telcos come up with very expensive data rates, 5G adoption will be slow.

More importantly, a recent Ericsson report said only 100 million Indian users are interested in 5G and are willing and able to pay up to a 45 percent premium for 5G services and devices. According to IDC research, the average price of a 5G-enabled smartphone in India does not exceed 30,000 rupees ($350 to be exact). However, the average phone sold in India costs 17,000 rupees ($220).

The only way people will participate in 5G penetration in India is if 5G devices soon become much cheaper and available in the Rs 10,000-12,000 price bracket.