Context: The fifth generation mobile network, or 5G, is the next level of mobile network that will shape the Fourth Industrial Revolution, or Industrial 4.0, quality of service delivery, innovation, etc. by facilitating smarter and developing societies. 

• The Fourth Industrial Revolution is a way of describing the blurring of boundaries between the physical, digital, and biological worlds. It's a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.
• Commercial 5G networks began to be deployed in 2020 and are expected to reach 12% of world mobile connections (1.1 billion).
• It will generate revenues up to U.S.$1.3 trillion by 2025 for operators. 
• India’s telecom sector, which has revolutionised the digital space and facilitated services-led growth and quality of life, has been estimated to be one of the top performers globally for several years.

About 5G technology 5G or fifth generation is the latest upgrade in the long-term evolution (LTE) mobile broadband networks.  5G mainly works in 3 bands, namely low, mid and high frequency spectrum. While the low band spectrum has shown great promise in terms of coverage and speed of internet and data exchange, the maximum speed is limited to 100 Mbps (Megabits per second).  The mid-band spectrum offers higher speeds compared to the low band, but has limitations in terms of coverage area and penetration of signals.  This band may be used by industries and specialised factory units for building captive networks that can be moulded into the needs of that particular industry. The high-band spectrum offers the highest speed of all the three bands, but has extremely limited coverage and signal penetration strength.  Internet speeds in the high-band spectrum of 5G has been tested to be as high as 20 Gbps (giga bits per second), while, in most cases, the maximum internet data speed in 4G has been recorded at 1 Gbps.

Significance of 5G

• Broadly speaking, the uses of 5G in India may encompass 
  • enhanced outdoor and indoor broadband, 
  • the Internet of things, 
  • smart cities, 
  • smart agriculture, 
  • energy monitoring, 
  • remote monitoring, 
  • smart grids, 
  • telehealth, 
  • industrial automation, 
  • remote patient monitoring and industrial automation 

There is great potential for India to move to an advanced digital revolution.

Challenges

• Issue of Adjusted gross revenue (AGR) 
  • The AGR is divided into spectrum usage charges and licensing fees, pegged between 3-5 percent and 8 percent respectively.
  • As per DoT, the charges are calculated based on all revenues earned by a telco – including non-telecom related sources such as deposit interests and asset sales.
  • Telcos, on their part, insist that AGR should comprise only the revenues generated from telecom services. In any country, the licence fee is not more than 3%. 
  • The apex court had upheld DoT’s definition of AGR, and said that all telcos must pay their dues.
  • None of the telcos, however, paid the said dues by the stipulated deadline, in hopes of a bailout package by the DoT.
  • This order added to the stress of the telecom industry which was already reeling under a debt of over ₹4 lakh crore and was seeking a relief package from the government.
• The number of telecom operators has come down to a handful from around 15 a few years back. 
• The huge investment required for 5G :The trial run of 5G in developed countries such as Japan and the United States reveals that the investment is very high, ranging from $6 million per small city to $60 million per large or densely populated city.

Govt initiatives to bring telecom reforms

• A four-year moratorium on all spectrum and AGR dues
  • The redefinition of adjusted gross revenue (AGR), prospectively, not retrospectively.
  • AGR calculations would exclude all non-telecom revenue from now and penalties had been completely scrapped.
• Equity option for paying dues: 
  • The change in definition that will reduce the burden on telcos, applies only prospectively, so those past dues remain payable.
  • Interest on those dues will now be compounded annually instead of monthly.
  • Companies have the option of doing this through equity. And the government has retained the option of converting remaining dues at the end of the moratorium period too, to equity.
• A fixed calendar for spectrum auctions with an extended tenure of 30 years for future spectrum allocations, and a mechanism to surrender and share spectrum. 
  • The enhancement of the life of spectrum by 10 years, 
  • The removal of a financial constraint to spectrum sharing, 
• Foreign direct investment (FDI) in the sector has also been allowed up to 100% under the automatic route, from the existing limit of 49%. 

Way forward

• Identifying end users and population to be covered, analysis of the existing network and operators, identification of cities for the 5G roll out, working out an investment model, and minimisation of the digital risk and pricing based on the externalities and usage of various sectors. 
• Cost benefit analysis by independent experts which will create a level-playing field through market mechanisms such as facilitating, simulating, auctioning, ensuring competition, functioning markets, etc.
  • An independent economic assessment, city wise, beginning with the metro cities, to assess the commercial viability for 5G deployment in India. 
  • Till this happens we may continue enhancing the existing quality of 4G networks. 
• Following best practices: Singapore had planned four 5G networks — two comprehensive 5G networks and two others with smaller and limited coverage, the reason being the high cost in deployment of fibre cables and the scarcity of 5G airwaves.
  • Global trial runs show that the key areas for 5G deployment are harmonisation of 5G spectrum bands, pricing and sharing of the spectrum. 
• Preparing a foolproof spectrum road map with a predictable renewal process which will compensate for the huge investment required for deployment and ensure coverage. 
• A level-playing field should be created for all telecom companies with more focus on companies which have the experience of ensuring telecom networks to remote areas and the potential to provide affordable coverage. 
• Sharing of available spectrum to maximise its efficient use especially in rural areas, and spectrum allocation procedures that favour investment, need to be considered.
• Stimulate fibre investment, attract investment through public private partnerships (PPPs) and facilitate investment funds on a nominal interest basis. 
• Steps such as a moratorium on dues, redefining adjusted gross revenue, and reducing spectrum charges will help all telecom companies. 
• Resolving tax issues: The Government also needs to address information asymmetry and negative externalities through laws and regulations/taxes and subsidies. 
  • Removing the tax burden for deploying fibre networks reduces associated costs, thereby promoting investment as was done by the Singapore government, could help in the smooth deployment of fibre in India.
• Providing right of access to government infrastructure such as traffic lights, lamp posts, etc. where wireless operators can deploy electronic small cell apparatus. 
  • Reasonable fees may be charged by State and local governments to operators for affordable deployment of 5G equipment. 
• The tariff regime still needs a reboot for players to sustain operations. A sustainable tariff regime is needed to ensure the industry gets a fair return. This will in turn allow it to continue investing in new technologies and innovation to bring world-class services to customers.

As India has already witnessed digital revolution even in its remotest areas due to cost-effective 4G technology, the use of 5G can play a vital role in enhancing this sector and also facilitating India’s goal to emerge as a manufacturing and innovation hub. The negative implication of 5G is furthering the ‘digital divide’. Therefore, Government policies should also focus on affordable coverage through synchronisation of bandwidth.

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