June30 , 2022

Reliance Jio | Bharti Airtel

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Jio, and (Vi) may refocus their planned 5G enterprise business to focus on medium-sized corporates for new revenue streams with expected competition from large corporates and tech majors who could enter the fray for captive private networks using the next gen technology, say analysts.

The government has recently allowed direct spectrum allotments to independent companies for setting up captive 5G networks, which is likely to drive large enterprises and tech companies to take the plunge.

Big enterprises with direct access to 5G airwaves will rely less on telcos to build/manage their captive networks. Enterprise services were estimated to garner as much as 40% of future 5G revenues for telcos, an outlook that telcos will desperately look to protect with revenue from 5G expected to be mainly driven by B2B, not so much by retail subscribers.

“Large enterprises establishing isolated networks by obtaining 5G spectrum directly from the telecom department will accelerate the ecosystem and use cases for captive private networks, which will help telcos develop a new market for medium-sized enterprises,” said in a note seen by ET.

Pulkit Pandey, Gartner’s associate principal analyst, told ET that operators will now have to balance out their strategies to convince mid-sized enterprises that don’t have their own spectrum that they remain their best bet to deliver private 5G networks.

He expects telcos to devote their energies to secure business from SMEs who are already focusing on specific use cases around smart healthcare, smart factories, connected cars, industry 4.0 and drone-based agricultural monitoring.

Industry executives said telcos would still retain a first-mover advantage in the captive 5G networks game as direct airwave allotments to independent enterprises will take at least a year-or-two to happen since DoT will do a demand study and then seek the telecom regulator’s views on the terms of such assignments.

“This should give telcos enough time to develop and market their 5G enterprise solutions to small and mid-sized corporates and create alternate revenue streams in the private captives market,” a top telco executive added.

At press time, Airtel, Jio and Vi did not comment on these alternative enterprise revenue streams.

Ahead of next month’s 5G spectrum sale, Airtel, Jio and Vi have been testing a host of 5G industrial use cases, low latency apps targeted at enterprises in the manufacturing, energy, healthcare, automobile, oil & gas and logistics verticals. From 5G-powered drones fitted with cameras to do inventory management inside smart factories, to smart ambulances plugged on broadband for hospital emergency operations, even sensors tracking real-time transformer performance in power utilities to cloud-based 5G telephony/voice solutions targeted at small & medium businesses (SMBs).

Analysts now expect telcos to offer these enterprise-grade solutions at competitive rates to medium-sized and smaller companies wanting to leverage private captive networks to unlock operational efficiencies.

Experts also expect collaborations to also take centre stage between telcos, tech players, systems integrators and hardware players as no single category of enterprises is equipped to implement the gamut of designing, building, managing captive 5G networks and deploying spectrum.

These are likely around product development, evolving software solutions, use cases, platforms and applications required to build captive smart factories. This, since a tech company won’t immediately have 5G network management skills, while a telco would need to rely on IT players/systems integrators for software coding solutions and hardware vendors for deploying 5G sensors, typically, required in smart factories.

They added that since telcos have expertise in handling spectrum, the medium and small-sized firms, without the immediate domain knowledge, may prefer to lease airwaves from operators and rely on them to build and manage their captive networks, instead of going it alone. The auction rules allow enterprises to either directly seek spectrum allocations from the government or lease it from telcos.



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