The recent proposal by the Telecom Regulatory Authority of India (TRAI) to grant direct access to 5G spectrum to companies aims to accelerate the deployment of private 5G networks, a sector that has seen minimal activity in India to date. This initiative aligns with the interests of corporations such as Infosys, Tata Communications, and Larsen & Toubro, who have been advocating for the ability to establish their own 5G networks independently of telecom operators. The proposal, if approved, would enable enterprises to deploy private 5G networks at a lower cost than leasing spectrum or using services provided by telecom operators. Last week, TRAI recommended a distinct authorization framework under Section 3 of the Telecommunications Act, 2023, which allows captive non-public network (CNPN) providers to set up private networks for businesses. Section 3 of the Act permits the administrative allocation of spectrum for various sectors, including defense, disaster management, and critical industries such as mining and oil exploration.
TRAI’s Proposal on Private 5G Networks
However, the Department of Telecommunications (DoT) has not yet formally implemented Sections 3 and 4 of the Telecom Act, which cover spectrum allocation and authorization. The TRAI recommendation could significantly boost enterprise 5G deployments in India, which currently lag behind countries like the United States and China in the number of private 5G networks. Data from the Global Mobile Suppliers Association (GSMA) shows that India has only 10 private 5G networks, compared to over 170 in the United States and more than 50 between China and Germany combined.
Industry analysts believe that the implementation of TRAI’s recommendations could be transformative, with estimates suggesting a demand for over 10,000 private 5G projects from domestic design-led players. This move would lessen the dependency on licensed service providers and create opportunities for numerous companies. Despite the optimism from non-telco companies, Indian telecom operators such as Bharti Airtel, Reliance Jio, and Vodafone Idea oppose the administrative allocation of spectrum, arguing that it would create an uneven playing field. These companies are currently required to pay hefty sums for spectrum acquired through competitive bidding processes. Enterprise services constitute about 20% of their revenue, and the proliferation of private 5G networks could impact this significant income source.
Opposition from Telecom Operators and Approval Challenges
The proposal comes after a 2022 Cabinet decision that approved the direct allocation of spectrum to enterprises. While the DoT explored interest from companies like Infosys, Capgemini, GMR, Larsen & Toubro, Tata Communications, and Tata Power in setting up private networks, progress has remained sluggish. If adopted, TRAI’s proposal could revolutionize the enterprise 5G landscape in India by fostering a competitive environment, reducing costs, and enhancing the autonomy of enterprises to manage their network needs independently.
The consequences for telecom operators, however, could involve a reevaluation of their business models and revenue strategies, given the potential loss of a lucrative segment of their income. It is a delicate balance, as India’s telecom industry is already steeped in financial strain due to previous competitive spectrum bidding wars and high operational costs. The push-and-pull between the interests of traditional telecom operators and large enterprise players underscores the complexity of implementing such dramatic regulatory changes.
Future Implications and Potential for Growth
The Telecom Regulatory Authority of India (TRAI) recently proposed granting direct 5G spectrum access to companies to boost private 5G network deployment, an area still largely untapped in India. This plan benefits corporations like Infosys, Tata Communications, and Larsen & Toubro, who have been pushing to set up their own 5G networks without relying on telecom operators. If passed, the proposal would allow enterprises to establish private 5G networks more economically than leasing spectrum or using telecom operator services. Recently, TRAI recommended a unique authorization framework under Section 3 of the Telecommunications Act, 2023. This section permits captive non-public network (CNPN) providers to create exclusive networks for businesses. Section 3 also allows the administrative allocation of spectrum for sectors like defense, disaster management, and key industries, including mining and oil exploration. The initiative aligns with efforts to modernize infrastructure and enhance operational efficiency in India’s critical sectors.