In-depth: 5G Monetisation in India Remains Elusive with Jio, Airtel Eyeing FWA as Potential Silver Lining

Top telecom players Reliance Jio and Bharti Airtel have already introduced 5G FWA services to their customers to complement their fiber-to-the-home (FTTH) offerings, a trend also seen in developed markets including the US.

NEW DELHI: Two years after the 5G commercial launch, the Indian telecom industry is still awaiting a breakthrough to effectively monetise 5G networks.

Fixed Wireless Access (FWA) has emerged as a key application, helping to connect homes, enterprises, and small and medium businesses (SMBs). In India specifically, the significance of 5G FWA assumes importance as there is low fiber broadband penetration.

Top telecom players Reliance Jio and Bharti Airtel have already introduced 5G FWA services to their customers to complement their fiber-to-the-home (FTTH) offerings, a trend also seen in developed markets including the US.

However, FWA has just started taking off and the broader challenge of monetising 5G remains largely unaddressed in India and globally. This stands in contrast to the 4G era, where telecom operators successfully capitalised on increased data consumption driven by the rise of audio and video content.

“FWA definitely is the number one opportunity with a potential addressable market of more than 100 million underserved households over the next five years. Even at 50% penetration of these households by 5G FWA by 2027 will account for $6 billion in revenues per year opportunity,” said Neil Shah, Vice President of Counterpoint Research.

Telcos’ FWA strategy

Jio is targeting to connect 100 million households with a combination of its 5G-driven fixed broadband and FTTH services, while Airtel too ambitiously wants to scale up its 5G FWA AirFiber offering that is already available in 1,300 cities nationwide. Both are targeting a mix of consumer and enterprise customers.

Reliance Industries (RIL) in its latest annual report stated that small and medium businesses remain a large addressable market where Jio benefits from a deeper network presence with JioFiber and JioAirFiber. “Education institutes, retail stores, and professional services are key SMB cohorts where Jio has significant traction,” the oil-to-telecom conglomerate said.

Content bundling on JioAirFiber is already driving nearly 30% higher per capita data usage vis-a-vis Fiber.

To address the FWA opportunity, Airtel is seeking to streamline its go-to-market approach, the company’s managing director and CEO Gopal Vittal said recently.

“We now have a single pricing across fixed wireless access and fiber. Our sales teams and stores are tuned to selling just WiFi, irrespective of technology and we have expanded our delivery teams to cater to the expanded geographic availability,” said Vittal, adding that FWA will only complement and expand the addressable market sise.

Some other innovative 5G-backed use cases include connected ambulances (emergency healthcare), community clinic (mass healthcare/treatment), remote ultrasound robot demo (remote healthcare), remote education driven by augmented reality and virtual reality, among others.

'5G use cases largely remain theoretical'

Between 2021 and 2024, Jio, Airtel, and Vodafone Idea (Vi) have undertaken two separate rounds of headline hikes in tariffs to recoup investments made in 4G and 5G, and to increase their respective average revenue per user (ARPU).

“Many transformative applications of 5G are still in the pilot stages or remain theoretical, creating a gap between expectations and reality,” said Sylwia Kechiche, Senior Director of Industry Analysis at Opensignal, adding that this has led to consumer skepticism and dulled enthusiasm for the technology.

“Despite the rapid adoption of 5G networks, monetisation remains a challenge… the industry continues to search for the ‘killer app’ that will help operators recoup their 5G investments,” Kechiche said.

Jio and Airtel cumulatively have over 100 million unique 5G users today.

“The price sensitivity of the Indian market means that widespread adoption of 5G would depend on affordable plans and devices. For increasing adoption at the device end, it is recommended that the pricing of 5G phones is done somewhat similar to 2G phones, enabling them to migrate to 5G,” said SP Kochhar, Director-General of the Cellular Operators Association of India (COAI).

Challenges

The Centre netted Rs 1.5 lakh crore from the country’s first 5G spectrum sale that saw participation from Jio, Airtel, Vi, and Adani Data Networks. In the second auction of 5G airwaves, the muted bidding action led to a sale of Rs 96,238 crore.

COAI has been reiterating that the industry needs 1200MHs of spectrum moreover the current holdings of 800MHs – a scarcity that can be met by allocating the 6GHs mid-band for mobile services.

The cost of acquiring 5G spectrum has added to the financial burden of Indian telecom carriers that are already financially straining due to competitive pricing, regulatory fees and previous investments in 4G. This situation restricts telcos’ ability to invest sustainably in 5G technology to address an anticipated surge in data traffic, experts say.

“The cost of spectrum in India has been relatively high, which may deter operators from aggressive deployment, especially for niche or emerging use cases that may not have immediate profitability,” Kochhar said.

Opensignal estimates that only 44% of mobile towers are connected with fiber – far from the National Broadband Mission’s goal of 70% fiberised towers by 2025. Wirelessly backhauling towers, especially with E-band, is impractical given the scale of rollouts, the research firm points out.

According to Opensignal, India has 4.52 lakh 5G base stations (as of July 2024) – translating into 31 5G base stations per 100,000 inhabitants. By comparison, in South Korea, this proportion is 593, and across the European Union, 103, indicating that the 5G network has yet to be built up in several regions of India.

Meanwhile, the fees for right-of-way (RoW) permissions are not standardised which leads to unpredictable costs for carriers, and “complicates financial planning, resulting in an uneven 5G deployment”, according to the telco industry association.

Indian telcos are uncertain if there is any immediate return on investment (RoI) from 5G services, as consumers are habitual to affordable data plans, say analysts, pointing out that this limits operators’ ability to charge premium for 5G services, limiting potential revenue. 4G & 5G mobile services tariffs have been kept the same by Jio and Airtel.

For ordinary consumers, the transition from 4G to 5G is a “natural upgrade” rather than a “distinct value proposition”, explained Prasad Karambelkar, Practice Head of Wireless Product Engineering and Services at Tata Elxsi. ”As a result, the adoption readiness among common users remains relatively low, even in developed markets, and this trend is likely to persist in India,” Karambelkar said.

He added that certain enterprises are finding greater value in 5G compared to 4G or Wi-Fi, which is evident from numerous trials.

However, the adoption of private 5G is not taking off either, primarily due to ambiguity around spectrum allotment in India. It is to be noted that an entity seeking to set-up a private network can lease airwaves from the Department of Telecommunications (DoT) or carriers.

According to an industry executive, who did not wish to be named, Indian telcos are unconvinced as to why airwaves should be directly given to captive users and technology companies. “Adani, Infosys, and others had asked for private 5G spectrum. There is a debate going on whether other than telecom operators can the 5G spectrum be given to private players,” he said.

Way Forward

5G-Advanced, set to be commercially available globally sometime later this year, will be foundational for more demanding applications and use cases, and bring immersive user experiences based on extended reality (XR). It will also introduce artificial intelligence and machine learning (AI/ML) enhancements across network components – Core, Radio Access Network (RAN), and the network management layer.

“5G-Advanced is the next evolutionary step as it can bring in new wireless technology innovations strengthening the 5G system foundation. However, one needs to evaluate the use cases and possible RoI,” said Purushothaman KG, Partner and Head, Digital Solutions & National Telecommunications Leader, KPMG in India.

The monetisation in the 5.5G-era could come from monetising uplink traffic as uploading videos and video conferencing becomes mainstream, while quality of service (QoS)-based pricing will be key to effective layered strategies with a probable uplift in the average revenue per user (ARPU), as per Counterpoint.

“5G-Adanced technology with AI will help significantly with efficient spectrum utilisation not only for TDD but sub-3GHs especially FDD bands. Indian operators could be inclined to roll out 5G-A in early 2027, especially greenfield operators like Jio. Airtel could benefit more from 5G-A and move to 5G SA in the coming years,” Shah said.

According to the market research agency, Vi and government-owned Bharat Sanchar Nigam Limited (BSNL) should leapfrog to the 5.5G-ready equipment to maintain their competitiveness in the industry and they should consider refarming 2G spectrum for the newer 4G and 5G services.

While the debate on 5G monetisation will linger, fixed broadband is being seen as a clear winner, enabling service providers to build upon revenue-generating use cases such as bundling over-the-top (OTT) content, advertising, and smart homes.