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Tech Trauma For China As India Likely To Bar Huawei, ZTE From 5G Trials

NEW DELHI: This may not be germane to the main story but relevant nonetheless. Reliance Industries overtook Exxon to emerge the world’s second most valuable energy company after its market capitalisation soared to $189 billion. In contrast, Exxon has seen its share come down to $186 billion. Saudi Aramco sits at the top of this heap with a market capitalization of $1.76 trillion!

To repeat, the above is not germane to what follows, which is basically about 5G. But here too the game changer is a Reliance company, Jio, which by throwing its hat into the 5G ring and claiming its own in-house technology, has suddenly widened the options for India.

Jio’s chances look all the brighter after the Department of Telecom (DoT) reportedly recommended that Chinese telecom equipment makers be barred from taking part in the 5G trials, likely next year. Officials were quoted by some of the business papers as saying that the recommendation from the DoT is the kiss of death for ZTE and Huawei, both of which intended to participate in the 5G trials.

Incidentally, Huawei is the acknowledged world leader in 5G, and ZTE equipment is used widely in India, notably by state-owned BSNL responsible for providing secure communications in border areas. One would presume that a state-run carrier would be more circumspect about relying on a Chinese vendor for telecom equipment, but for some reason the security implications either escaped the powers that be or were simply ignored.

The DoT panel reportedly argued that allowing the two Chinese companies to supply equipment could end up providing remote access to Indian data. That apart, it was felt that given the national security implications of involving Chinese firms, it was better they were excluded. This is in line with restricting the participation of Chinese companies in government tenders.

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Bharti Airtel, which is heavily dependent on Huawei equipment, said it would comply with government directives. “We will abide by the laws of the land if any government notification emerges,” media reports quoted CEO Gopal Vittal as saying. The recommendation is unlikely to affect Jio which, according to Reliance Chairman Mukesh Ambani, has no Chinese equipment.

The next item on the telecom agenda could be the price of spectrum. Currently, charges for spectrum in India are perhaps the world’s highest at Rs 492 crore per MHZ. But relief may be at hand. A report in the pink papers said government could lower the price of 5G spectrum to compensate telcos for the higher equipment price they would have to pay, now that the Chinese have been shown the door.

Equipment from European vendors like Ericsson and Nokia, or South Korea’s Samsung, could be priced 15-20 per cent higher, the reports said, which would ultimately impact retail and industrial customers. The reports quoted officials as saying that the government was aware of the cost implications but offered no hint as to what the reduced rate could be. There’s no word from the DoT on that score.

But the Digital Communications Commission has reportedly accepted the Telecom Regulatory Authority’s recommendation for 4G base price. The official was quoted as saying, “this leaves a window of opportunity for the government to lower the 5G prices so there is better competition during the auction.”

The auction of 4G spectrum is likely in October while 5G may happen only next year. While 4G bands can be used to provide 5G services, India has set aside only 3,300-3,600 MHz bands for the next generation service.