The merits and demerits of the telcos' 5G strategy however is clearly dependent on the financial muscle of players, reports Surajeet Das Gupta.

Telecom gear makers say will take six to eight months for the top 10 cities to have some reasonable coverage of 5G network services.

Foundries in Taiwan account for more than 75 per cent of the chips that mobile devices made in India need, according to estimates by the Indian Cellular and Electronics Association (ICEA), which represents global and domestic manufacturers. The number is slightly lower, 60 per cent, if one considers all chips -- those of consumer electronics, PCs, laptops, autos, etc. This ties in with the fact that foundries in Taiwan, led by TSMC, account for over 70 per cent of the world's microchip supply, according to estimates by Gartner.

How dominant are Chinese firms in India's sub-Rs 10,000 mobile device market? The question has become relevant as the government has been thinking of reserving this price segment for domestic players who have not been able to battle the Chinese onslaught. However, telecom firms and others are concerned that such a move could stymie the effort to build affordable 5G phones in the sub-Rs 10,000 category.

'By the end of 2022, we expect the installed base of 5G smartphones in India to reach 80-85 million.'

The government is busy strategising ways to revive the domestic mobile device industry as Chinese firms have grabbed a large chunk of the handset market. The idea is to minimise competition from Chinese mobile players in the entry level or sub-Rs 10,000 category, according to a senior government official familiar with the plans. While discussions on the strategy are on, there's a growing consensus within the government that the lower end of the market should be reserved only for the domestic players, the official said.

It came as a surprise to all stakeholders - competing telecom companies (telcos), most analysts and even the government's internal projections on revenues from the 5G auctions. Reliance Jio disrupted all calculations by paying a stiff Rs 40,000 crore to buy 10 MHz of spectrum in the 700-MHz band, globally considered a key band for efficient 5G service coverage, along with the default 3.5 GHz band and the ultra-high speed and low-latency millimetre band of 26 GHz band. So what made Jio pay almost 45 per cent of its total spend in this auction for the 700 MHz band - much more than what it rustled up even for the 3.5 GHz band?

A disagreement between mobile operators and device manufacturers over e-SIMs has reached the government with the Cellular Operators Association of India (COAI) asking the DoT to order handset manufacturers to introduce eSIMs, in addition to the physical SIM slot, in all smartphones costing over Rs 10,000. The reason is the unprecedented global shortage of semiconductors which has severely impacted the supply of SIM cards across the globe and pushed up the price by four to five times. The shortage is not likely to improve before 2024.

Reliance Jio's decision to acquire 700 MHz in combination with the possible use of an advanced standalone (SA) 5G network could give it an edge over its rivals, according to most analysts. The dissenters argue that the stiff price tag touching Rs 40,000 crore to grab 10 MHz of spectrum in 700 to provide coverage for its SA 5G network which offers ultra-low latency (unlike non-standalone or NSA), has a long way to go in India in terms of finding use cases that can be monetised. Globally, 700 MHz is a pivotal band which provides huge coverage, indoor penetration (especially useful in India where walls are thick) and is already considered by the European Union to be the 'pioneer band' for 5G, with 3.5 GHz and 26 GHz, both of which were auctioned in India recently.

With Chinese companies Huawei and ZTE excluded from participating in the 5G roll out, their absence leaves a vacuum in the market which will have to be filled by three vendors: Ericsson, Nokia and Samsung.

US hedge fund Tiger Global and Japanese investment giant SoftBank have trimmed their investments in Indian start-ups by over a third - from $3.8 billion in the second half of 2021 to a mere $1.08 billion in H1 2022, according to data from Venture Intelligence. While SoftBank's investments in India dropped from $1.9 billion in H2 2021 by more than a fifth to only $0.33 billion in H1 2022, that of Tiger Global fell from $1.92 to $0.74 billion in the same period. Private equity (PE) fund trackers point out that this year most of the deals that Tiger Global has invested in are in the early stage (up to series D), and only a few are in the series E and above.

Apple's three vendors in the country have hit the milestone of creating 30,000 new direct jobs since the production-linked incentive (PLI) scheme for mobile devices kicked off in April 2021. Based on the government's estimate that one direct job in the electronics industry helps to generate three indirect ones, Apple's vendors, Foxconn Hon Hai, Wistron and Pegatron, are close to creating 100,000 direct and indirect jobs. The direct jobs that the vendors have created account for a fourth of Apple's commitment to generate 60 per cent of the new direct jobs out of the 200,000 jobs targeted by the government under the PLI scheme within five years.

Seven of Bollywood's big stars (Akshay Kumar, Ranveer Singh, Ajay Devgn, Varun Dhawan, Saif Ali Khan, John Abraham and Shahid Kapoor), who had 10 movies released with a collective budget of Rs 1,100 crore since December, could rustle up only around a third of that money at the box office.

Telcos participating in the upcoming auctions at the end of July say they expect only a fourth of the value of spectrum on offer to be sold. The government has put Rs 4.3 trillion of spectrum up for sale at the base price across seven bands including for 5G. An executive of a leading telco said he estimates that mobile operators collectively would buy spectrum of only around Rs 1.1 trillion.

Will open radio access network technology (O-RAN) disrupt the way 5G networks roll out in the country? After all, it promises to offer a substantially lower capital cost, enables the choice of an array of vendors, and provides more network flexibility - all very important for telcos who expect to invest over Rs 60,000 crore to roll out a pan-India 5G network and that's without spectrum costs. But more importantly, it counters the stranglehold of global telecom gear makers such as Ericsson, Nokia, and Samsung over telcos to whom they sell propriety technology and bundled hardware and software.

Elon Musk's decision to drop the idea of acquiring Twitter over purported under-reporting of fake accounts due to the use of bots has opened a can of worms on what is a growing and crucial problem - advertisers who put in money based on these falsified numbers (which is the mainstay revenue of these platforms) are making losses; they are paying for bots in the guise of viewers. mFilterIt - a global digital and advertising (ad) fraud detection and protection company in India - says search engines like Google have the lowest average ad fraud rate of 10-12 per cent, based on the inference arrived at while working with clients that use these platforms. This means 10-12 per cent of the ad viewership is generated by machines.

With the Adanis submitting an earnest money deposit (EMD) of just Rs 100 crore on Monday for the upcoming 5G spectrum auction, the apprehension among the rivals that the group is nursing ambitions of being an all-India mobile player has been allayed at least for now. Based on its EMD, analysts say it can buy spectrum worth just Rs 900 crore, whose use will be limited to enterprises and captive networks -- that too is likely only in a few circles where it has its infrastructure like ports, airports, and power stations. While getting all-India millimetre band spectrum of 400 MHz (which costs Rs 2,800 crore) is ruled out, it might choose circles like Gujarat and Mumbai to start with.

In the late 1990s, Japanese electronics brand Aiwa tied up with a maverick entrepreneur, Kabir Mulchandani, to sell its consumer electronic products. Founder of Baron International, Mulchandani, all of 26 at that time, had already disrupted the television market through a tie-up with another Japanese player, Akai. With a strategy that relied on heavy discounts, exchange offers and freebies, Akai was selling in huge volumes.

Akash Ambani's first big job as he takes over as chairman of Reliance Jio, the group's telecom arm, is a no-brainer - he has to get his company through the long-awaited 5G auctions that are a few weeks away. But his bigger job, analysts said, will be to lead the transformation of the telecom company into a tech giant, a process that is underway as it seeks to list in the US. Insiders said there has been plenty of debate within the company's top executives on the auction strategy.

'Kartik is an outsider, so he takes nothing for granted. That's why he will do well.'