[vc_row][vc_column][vc_column_text css=”.vc_custom_1666954318144{margin-bottom: 10px !important;border-bottom-width: 10px !important;padding-bottom: 10px !important;}”]
5G and the increasing need for Fiberization.
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666954472319{padding-right: 10px !important;padding-bottom: 10px !important;padding-left: 10px !important;}”]5G is the latest fifth-generation cellular technology and the successor to 4G services. It is one of the fastest, most robust technologies the world has ever witnessed with enormous transformative capabilities. 5G technology in optimal conditions can reach speeds up to 30 Gbps (Gigabytes per second), 100 times faster than 4G technology. This leap in speed combined with the low latency 5G provides is expected to redefine industries across the globe.
India officially launched its commercial 5G services on October 01, 2022. Customers of Jio and Airtel can, now, access 5G services in select locations. The cumulative economic impact of 5G is expected to reach $450 bn by 2035. Adequate investments, coordination among the various stakeholders, and proper rollout of 5G services will be crucial in attaining India’s goal of a $5 trillion economy by 2025. In this article, we will analyze the rising demand for optical fibre cables (OFC).[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666954700952{padding-right: 10px !important;padding-left: 10px !important;}”]
5G in India.
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666954132328{padding-right: 10px !important;padding-bottom: 10px !important;padding-left: 10px !important;}”]According to Counterpoint Research, by the end of 2022, 5G phones will account for 38% of the total handset shipments to India. This figure is expected to increase further to 52% by 2023. With the increasing speed and enormous capacity of 5G, the average data consumption is expected to grow exponentially. According to Opensignal, 5G smartphone users on average consumed between 2.7 – 1.7 times more data than 4G users. The average data consumption in India is expected to grow from 12 Gb/month per user in 2019 to 25 GB/month per user in 2025, a CAGR of 8.0%.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”71877″ img_size=”full” alignment=”center” css=”.vc_custom_1666954169363{padding-top: 10px !important;padding-bottom: 10px !important;}”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666954579176{padding-right: 10px !important;padding-bottom: 10px !important;padding-left: 10px !important;}”]The economic benefit of 5G is enormous. According to Techarc, 5G will increase the Indian telecom industry’s revenue by Rs. 1 trillion every 3 years. The telecom industry is expected to reach Rs. 10 trillion by the end of 2023. To capture the economic benefits of 5G, flesh out its 5G service offerings and achieve the optimal speed, telecoms need to invest in the following network domains:
- Spectrum.
- Radio Access Network (RAN) Infrastructure.
- Transmission, and
- Core Networks.
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”71880″ img_size=”full” alignment=”center” css=”.vc_custom_1666954589791{padding-top: 10px !important;padding-bottom: 10px !important;}”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666954601255{padding-right: 10px !important;padding-bottom: 10px !important;padding-left: 10px !important;}”]Over the last two years, telecom companies have invested heavily and modernized their RAN infrastructure and core networks. In the spectrum domain, the Department of Telecommunications (DoT) recently conducted the biggest spectrum auction, to date, to facilitate the 5G rollout in India, with telecom companies purchasing spectrum worth Rs. 1.5 trillion. Transmission, while crucial for 5G services, remains the only network domain wherein telecom companies haven’t adequately invested in.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666955024233{margin-top: 10px !important;border-top-width: 10px !important;padding-top: 10px !important;padding-right: 10px !important;padding-left: 10px !important;}”]
Rising demand for OFC.
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Backhaul Fiberization.
The majority of the tower site, currently, has a capacity of around 300 Mbps, which while sufficient for 2G/3G/4G services, is inadequate for 5G services. The capacity per tower site would need to be increased to 1-5 Gbps to deliver the optimal 5G performance. There is an imminent need in India to fiberize all the cell sites from the current fibre penetration level of around 33% to at least 70%, which will enable a true 5G experience for all users in terms of speed and low-latency applications.
As a result, telecom companies will be required to fiberize their backhaul. Backhaul, simply put, is the connection between the access network (base stations like towers, small cells, etc.) and the core network (where the data is). Backhaul Fiberization involves connecting the access and core networks with optical fibre cable (OFC). To achieve all that 5G offers, a denser, fibre-rich network infrastructure is needed to deliver the key performance indicators: lower latency, longer battery life, higher data rates, ultra-high reliability and more connected devices.
Besides, with an increase in rural penetration, the scarcity of spectrum is likely to increase further and consequently, the demand of OFC for base transceiver station (BTS) access will be on the rise. Furthermore, the shorter range of the 5G spectrum would require telecom companies to invest heavily in smaller cell sites, especially in urban environments. These smaller cell sites would, in turn, needs to be fiberized to enable access to 5G bandwidth.
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Fiber to the X (FTTx).
Amidst the rising demand for a seamless connection, FTTx has emerged as the favourable delivery mode FTTx is a collective term used to describe various types of broadband network architectures, such as Fiber to the: home (FTTH), building (FTTB), premises (FTTP), etc. 5G will be the first technology to facilitate machine-to-machine communication, the foundation of the Internet of Things (IoT). Combined with IoT, cloud, big data, AI, and edge computing, 5G could be a critical enabler of the fourth industrial revolution.
Industrial 4.0 with various IoT and enterprise end use-cases, immersive AR/VR, smart home, etc. require low latency and higher data rates and capacity. To capture the enormous enterprise value of 5G, companies need to invest heavily in their FTTx network architecture. Moreover, the shift towards work-from-home and hybrid work culture will significantly drive up the demand for FTTH. The global demand for OFC will go up from $9.2 billion (502 million fkm) in 2021 to over $12 billion (610 million fkm) by 2024, a CAGR of 10%.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666954932344{padding-top: 10px !important;padding-right: 10px !important;padding-left: 10px !important;}”]
Government Initiatives.
The Indian government has launched numerous schemes and programs to boost digital inclusivity. BharatNet is the world’s largest rural broadband connectivity program, using optical fibre. Under the BharatNet project, around 1,55,550 Gram Panchayats have been made service ready till June 2022. The timeline of the project has been extended till 2025 to extend broadband connectivity to all the inhabited villages in the country. This is envisaged to increase the total optical fibre cable (OFC) laid to 50 lakh km from 34.62 lakh km in June 2022.
Domestic OFC companies with international exposure could also benefit from the various digital infrastructure initiatives of foreign governments. The US government aims to invest $65 bn in broadband as a part of the Infrastructure Bill. Meanwhile, Project Gigabit in the UK has an outlay of £5 bn for 85% broadband connectivity by 2025.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666954996984{margin-top: 10px !important;border-top-width: 10px !important;padding-top: 10px !important;padding-right: 10px !important;padding-left: 10px !important;}”]
Conclusion:
The success of 5G deployments in India relies heavily on the backhaul fiberization of network infrastructure by telecom companies. Although wireless backhaul provides an intermediate, stopgap solution, wired backhaul, using optical fibre cable, presents the most cost-efficient solution of all. The right of way (RoW) hindrance continues to be a major impediment in the deployment of wired backhaul in India and consequently, the 5G services in India. According to experts, a significant portion of the fiberization CAPEX is spent on RoW permissions, which can amount up to Rs. 1 crore per km in dense urban areas.
The Department of Telecommunications (DoT), to aid the faster rollout of 5G services in India, has recently amended the Indian Telegraph Right of Way (Row) Rules, 2016. According to the new amendments, telecom companies will be able to use street infrastructure to deploy telecom equipment at a nominal cost of Rs. 150/annum in rural areas and Rs. 300/annum in urban areas. However, many states are yet to implement the new RoW rules. When implemented, the new RoW rules will ease RoW-related permission procedures for the establishment and upgradation of digital communication network infrastructure across the country.
In the next, subsequent article, we will analyze the different companies that will benefit from the rising demand for optical fibre cables (OFC) and how investors can benefit from it.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_zigzag][/vc_column][/vc_row][vc_row][vc_column][vc_column_text css=”.vc_custom_1666955127328{padding-right: 10px !important;padding-left: 10px !important;}”]Disclosure:
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