The government recently authorized direct spectrum allocations to independent companies for the establishment of captive 5G networks, which is likely to push large companies and technology companies to take the plunge.
Large companies with direct access to 5G waves will be less dependent on telecom operators to build/manage their captive networks. Business services are estimated to generate up to 40% of future 5G revenue for telecom operators, a prospect that telecom operators will be desperate to protect, with 5G revenue expected to be primarily generated by B2B. , and not so much by retail subscribers.
“Larger enterprises establishing isolated networks by obtaining 5G spectrum directly from the telecom department will accelerate the captive private network ecosystem and use cases, which will help telcos develop a new market for telecom companies. medium size,” ICICI Securities said in a note seen by ET.
Pulkit Pandey, associate principal analyst at Gartner, told ET that carriers will now have to balance their strategies to convince midsize companies that don’t have their own spectrum that they’re still their best bet for delivering private 5G networks.
He expects telecom operators to devote their energies to securing the business of SMBs who are already focused on specific use cases around smart healthcare, smart factories, connected cars, Industry 4.0 and agricultural surveillance by drone.
Industry executives said telcos will still retain a first-mover advantage in the 5G captive network game, as direct airwave awards to independent companies will take at least a year or two, as the DoT will carry out a study of the request, then will seek the opinion of the telecommunications regulator. opinions on the conditions of these missions.
“This should give telecom operators ample time to develop and market their 5G enterprise solutions to small and medium-sized businesses and create alternative revenue streams in the private captive market,” added a senior telecom operator official. telecommunications.
At press time, Airtel, Jio and Vi did not comment on these alternative revenue streams for businesses.
Ahead of the sale of 5G spectrum next month, Airtel, Jio and Vi tested a slew of 5G industrial use cases, low-latency applications for businesses in manufacturing, energy, healthcare, automotive, oil and gas and logistics. From 5G-powered drones equipped with cameras to perform inventory management in smart factories, to broadband-connected smart ambulances for hospital emergency operations, even sensors tracking the performance of transformers in electric utilities to cloud-based 5G telephony/voice solutions for small and medium enterprises (SMBs).
Analysts now expect telcos to offer these enterprise solutions at competitive rates to small and medium businesses looking to leverage private captive networks to unlock operational efficiency.
Experts also expect collaborations to also take center stage between telecom operators, technology players, system integrators and hardware players, as no category of companies is equipped to implement the range of design, construction, management of 5G captive networks and spectrum deployment.
These likely relate to product development, evolving software solutions, use cases, platforms and applications needed to build captive smart factories. This, given that a tech company will not immediately have the skills in 5G network management, while a telco would have to rely on IT players/system integrators for software coding solutions and software vendors. hardware for deploying 5G sensors, typically required in smart factories.
They added that since telecommunications operators have expertise in spectrum management, small and medium enterprises, without immediate knowledge of the domain, may prefer to rent the airwaves from operators and rely on them to build and manage their captive networks, instead of instead of going it alone. Auction rules allow companies to request spectrum allocations directly from the government or lease it from telecom operators.