Q) In India, there have been talks that 3G might not sustain for a longer period; Bharti Airtel has already said that they will shut down their 3G network. What are your views?
Technologies will over time be replaced; meaning that 2G moves from 3G to 4G to 5G and this was expected from the beginning. In our own predictions, we regularly published the Ericson Mobility report. It shows that 2G is globally on the rapid decline, 3G depends on which market we look at, but overall 4G LTE is growing significantly. In fact, we are expecting 5 Billion LTE subscriptions in 5 years of time. It is a big shift from 2G, 3G to 4G around the world. Our prediction for 5G is that we will have 530 Million 5G subscriptions by already 2020.
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That is a small part of the 9.5 Billion subscriptions but its growing very fast. There is no surprise that the new technology will replace the older ones. Capacity, user experience, bit rates, latency, cost of running the network, these things point to migration. We are fortunate to building 4G network for our customers. They have their platform towards an upgrade to 5G. That means it will be a smooth migration from 4G to 5G. However, I do not see India different from other markets, transforming from 2G to 3G to 4G to 5G.
It’s basically a significant shift over to LTE to 4G LTE over these coming 5 years also in India. We said that 85% would be 3G/4G combined by 2020.
Q) How do you see Indian telecom operators preparing for newer technologies as compared to global telcos regions like Europe, USA, and Asian countries like China, Japan, and Korea?
For various reasons, we have had constraints in terms of spectrum, in terms of all being able to deploy. Now we see phenomenal uptake, both in terms of data. As you heard that we are expecting that it will quadruple in terms of usage over the coming 5 years, reaching maybe 11 Gigabytes of smartphones per month. That is at par basically as compared to other markers.
India is having a very steep uptake when it comes to smartphone and mobile in the coming years. It is fair to say that transition from a voice-dominated market to a mobile market has and will continue to change in the landscape. Now, we see a very healthy uptake on smartphones with more than 300 million subscribers. That is something par from other markets.
Q) When do you think, India would be ready to commercially deploy 5G technology?
2020. I think the government has been clear that this is the target and we already as an industry, Ericson certainly, our products are already 5G ready so we are future proof. By 2020, we will also have devices, we will have second generations of chipsets that go into smartphones and tablets and these augmented virtual realities. 2020 is a good timeframe to have maturity in all the product and technology.
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Q) India has historically been lagging when comes to adopting telecom technologies. Do you see India deploying 5G along with other developed markets?
One of the reasons why 5G maturing is because technology is maturing. Standard and products are coming online. In addition, we see spectrum becoming a very liberal around the world. You cannot deploy the 5G, 5G requires wider bandwidth. It requires in some cases neat and high bands like the 3.5-gigahertz band and 26 and 28-gigahertz band.
There we can see Indian government taking steps in making spectrum available. If that becomes available, then, it will offer an opportunity to also deploy 5G earlier, like 2020. We think that everything that comes under digital India agenda goes well with 5G and the Internet of Things, and the core and cloud systems. The cloud system will allow you to run any kind of application, and all of this will be on 5G.
At Ericsson, we are preparing the network for the future today. Then there is an opportunity to use it for manufacturing, for utility, for transport, agriculture, public safety and so forth. We are hopeful that India can be the driving force in terms of using 5G as a platform. One way to look at this is 5G is like fiber experience in your pocket. It is also a platform for these industries that are booming and growing in India. If they can use 5G to digitalize their own processes maybe becoming more efficient, we see all industries we have shown. The reason we see all this phenomenal potential, more than 40% extra revenue for service providers in 2026, it is because if you count backward the value that is brought to enterprises on this industry, that is a reasonable share of that, so not only the consumer, but enterprise and industries. I am not the one to say exactly what will happen in India, but what I can see from trends and interest from industries around the world to adopt 5G as a platform, India should be in a good position to leverage that. Back to your point, if it was just another smartphone technology, I would agree with you, why would India go 2020, but it is also about another industry.
Q) Do you see verticals adopting the 5G technology prior to the retail consumers in India?
The maturity of technology into the smartphones will happen first because the whole ecosystem is geared towards this. By 2019-2020, there will be smartphones that have 4G and 5G. It would stress that enterprises would adopt it before consumers. However, I think that some of these industry examples do not need to have full India coverage to be deployed. It could be deployed in some cities, smaller regions and campuses where we have enterprise customers. It can be very good to your 4G LTE offering. So, 4G LTE is basic and then you add 5G in those areas where business needs. It could be a manufacturing plant, transportation system for some sector, all of those things to do not have to be rolled out in India immediately. Therefore, if you buy the earlier, you can start earlier because 4G and 5G will come together even more than the earlier generations. If you go into the technical details, the standard is actually written such that the earlier systems need 4G to be able to set up the 5G. 4G is the foundation down to technical level. Therefore, even before you are setting up the browsing session or VR session, you need to use 4G first and then you connect to 5G.
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Q) You say that the mid-band and high-band are the main spectrum bands identified for 5G, here in India. Are these bands in line with the global markets?
That is an important factor. Thanks for bringing it up. The range that we call mid-band is around 3.5, which is what India is considering as well. When we talk about the high band, it is either around 26 or 24.5, 27.5, or around 28. These are bands to my knowledge are considered.
The ground is prepared in India. It does not have to be a massive rollout. It can start for some industries or enterprises. That is why it is possible to be earlier or on time, around 2020. This is what the government has said. Then, of course, the mass market will happen later. Also, the LTE 4G system will live in parallel in force able future. That is why I mentioned 2022; you will have 5 billion LTE subscriptions out of 9.5 billion. Therefore, majority of all mobile subscriptions around the world would be 4G LTE by 2022.
Q)When do you think 5G standards would be finalized?
Almost. It will be finalized early next year. Currently, trials are happening on the pre-standard.
Q) In India, when do you see these standard trials happening?
From a technology point of view, we will be ready to do standard compliance and testing etc during next year. The reason we will be so quick to start despite the standard being frozen only early next year is that we have been the one leading the standardization; and we are working with all the partners in the ecosystem to make sure that we are future-proof, as I mentioned.
Q) In India, you already have a tie-up with IIT Delhi. Besides, telcos and IIT Delhi, which are the other stakeholders in the private sector that you think can come on board and develop some use cases?
We will not know which use cases are the first or the most important unless we have gone through the cycle of innovation or tested it live like what we are doing with IIT. Therefore, it is a little early to say which sectors will have the highest promise. Our engagement range from agriculture to transportation to utilities to manufacturing. Therefore, we have inbound interest in these industries but we are not the one to push any of these industries.
Q) How do you look at competition among telcos in India?
My prediction is that the India market is moving away from being voice centric to data centric. Therefore, that traffic growth and demand on networks to keep up would create a fierce battle like the other developing markets. That is a good opportunity for a company like Ericsson. We build the best equipment to serve those data demands. Cost efficiency and technology wise.
Q) How much capex would be required for telcos to build 5G in India?
I think instead of giving you a number, one way to look at it is that we need to provide equipment to serve the network growth and traffic requirements. I believe we do that in a more efficient way than the competition. However, when we moving into some of these new use cases, which may require dedicate equipment and new functionality to serve an enterprise, it would require you to have that investment with respect to those markets. In India, telcos can get more than 40% top line revenue additional revenue if they address these markets. This will require additional investment in infrastructure.