A year after the introduction of 5G services, Reliance Jio and Bharti Airtel, collectively amassing around 125 million subscribers, are grappling with the challenge of recouping their substantial investments. The absence of compelling use cases that warrant premium pricing has hindered the monetization of 5G. Many users, equipped with 5G smartphones, find that 4G adequately meets their daily data consumption needs, rendering the transition to 5G unnecessary. The anticipated capital expenditure (capex) for deploying 5G networks by the two operators in FY24 is estimated to be approximately Rs 90,000 crore. Despite this, the lack of a transformative application has limited 5G services to 4G pricing structures.
Experts highlight the absence of a business-viable use case for 5G, noting that the primary advantage it currently offers is speed. However, 4G speeds are considered more than sufficient to deliver a high-quality user experience. Bharti Airtel CEO Gopal Vittal underscores the challenge by emphasizing the need for applications that leverage the full potential of 5G technology, a gap observed not only in India but globally. Mathew Oommen, President of Reliance Jio, indicates that the eventual monetization of 5G will likely occur through industry vertical services and enterprise solutions.
The opportunity for monetization in private networks catering to enterprises, achieved through network slicing or spectrum leasing, remains relatively slow. While advanced applications like augmented reality, virtual reality, and immersive gaming necessitate higher speeds, such use cases alone are insufficient for ensuring business viability. Recognizing the delayed returns in the absence of a meaningful 5G use case, Airtel has adopted a cautious approach, slowing down capex for 5G network deployment. Currently, common applications such as messaging, video streaming, and casual gaming do not demand speeds beyond what 4G networks can provide.
Industry executives emphasize the need for a quality-of-service (QoS) offering, featuring enhanced upload and download speeds, and larger data bundles coupled with content-rich apps, when telcos eventually decide to charge retail consumers for 5G. While telcos analyze 5G network usage trends, the potential for charging consumers for 5G services may be linked to QoS offerings rather than standalone data plans. A recent Ericsson ConsumerLab report reveals that 15% of Indian consumers express interest in adding application bundles, such as video on demand, gaming, and music, to their 5G plans, even at a higher cost, indicating a willingness to pay a 14% premium for such services.
In the absence of prominent 5G use cases, the focus has shifted to 5G fixed wireless access (FWA) as a solution that telcos can leverage to start recovering some of their investments. The FWA solution, capable of delivering fiber-like speeds at homes or offices, has recently been introduced by telcos as AirFiber.
