5G FWA Can be the Winner for Indian Broadband Market With Satellite Compliments

In October 2021, major telecommunication operator Bharti Airtel, in partnership with Ericsson, conducted a trial of 5G network in rural India. The trial was done in outskirts of Delhi using 3.5GHz mid-band, which was awarded to Airtel for 5G trial purpose and existing FDD spectrum band. The trial achieved 200 Mbps throughput using a 5G fixed wireless access (FWA) device placed at a distance of ten km from the test site. It also achieved a record speed of 100 Mbps using a 5G smartphone beyond ten km from the site. Bharti Airtel’s 5G trial is timely with the 5G spectrum auction scheduled for early 2022 by Indian Telecom Regulatory Authority of India (TRAI).

India is a huge mobile market with over 1.1 billion subscriptions. More than two-thirds of total mobile users are accessing 4G network; however, the rest of the subscriptions rely on 2G and 3G networks. Reliance Jio Infocomm, Bharti Airtel, and Vodafone hold the top three market shares of Indian mobile market, followed by Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL). According to TRAI, 55% of total mobile subscriptions are in urban areas and the rest are in rural areas. This indicates that there is a significant rural population in India. It is notable that rural wireless tele-density is only 60% with less than 1% in wireline tele-density. Therefore, a considerable portion of the rural population in the country is not connected to either mobile or fixed network.

Nationwide fixed broadband penetration is even more limited compared to mobile service, since less than 7% of households are connected to fixed broadband service; most of them are low speed Digital Subscriber Line (DSL) broadband customers. It shows that there is a huge opportunity for broadband service in India, but investment by government and operators is needed to speed up better broadband for homes in both rural and urban areas. The recent 5G trial by Bharti Airtel and Ericsson is likely to enable connection for the unserved and underserved population in India.

As a large proportion of population is heavily relying on mobile network to access internet, India certainly needs a technology which can quickly and efficiently deliver high speed broadband to its homes and businesses. Although FWA services have been supplying broadband to homes and businesses in many emerging markets, FWA services did not take off widely in India. The reason is mostly due to constraints, such as low average revenue per user (ARPU) and a high number of prepaid users across India. India’s mobile ARPU is only around US$2 per month, among the lowest of different markets around the world. Similarly, fixed broadband ARPU stands only around US$17 per month. Furthermore, prepaid users account for more than 95% of total mobile user base. High prepaid users indicates that majority of the users are unwilling to tie to long term contract and pay for high-cost devices. Such characteristics of Indian market result very low FWA adoption rate, even though a large proportion of households are lack of broadband connectivity.

Despite challenges, the need for high-speed reliable broadband connectivity across India catches the interest of broadband service providers. Satellite broadband is another platform service providers are aiming to offer in India. Satellite operator SpaceX has recently expressed its intention to provide its low-Earth orbit (LEO) satellite broadband service Starlink to 200,000 subscribers in India. Starlink is now working towards regulatory approval to be able to start the operation in late 2022. However, it is likely to be challenging to acquire substantial number of consumer broadband users. A steep upfront cost for Starlink receiver (US$500 at present) and a monthly fee of US$100 for 100Mbps broadband package is likely to be beyond the reach of most of the consumers in India. Starlink can surely target government and business broadband users which have a higher spending power compared to consumer segment. For the consumer market, reduction of receiver cost and package fees will be needed.

Similar to Starlink’s attempt to enter the Indian market, 5G deployments in India will not be without challenges either. First, 5G spectrum allocation needs to be done for operators to start network deployments. The next challenge is low fiber-optic infrastructure coverage for 5G network roll outs. India will need a heavy investment to lay fiber infrastructure for 5G deployments; however, low tariffs can be hurdles for operators to do so. Despite the challenges, 5G deployments can be done in select areas where there is enough demand for sustainable Return on Investment (ROI). Considering the low broadband penetration rate of India, even in high density urban areas, 5G roll outs can benefit the consumers and businesses by providing high speed FWA broadband. To achieve this, regulators will need to assure 5G spectrum is allocated without delay and at a reasonable price. Government-led investments would also be required to help operators with high capital expenditure (CAPEX) burden. Service providers will also need to form the right strategy to offer better connectivity and customer experience, but most importantly, at an affordable price for end users. Ability to partner with software and hardware vendors to develop low-cost customer premise equipment (CPE) can also help. If collaborations are done right, 5G FWA ecosystem is likely to develop fast and capture a large portion of the market whereas satellite broadband is likely to be focusing on the rural market where terrestrial network operators are unlikely to heavily invest.