💸 New Revenue Stream for Telcos Coming Soon?
Private networks may have reduced telcos' chances of earning more money from 5G installation. But a new policy could give them another chance to earn more money.
"Waste not, want not."
We're sure this motto was drilled into your head at home and at school every time you tried to throw away food.
But this motto is even more useful in the business world.
Trading/Leasing excesses has become a whole new revenue stream for businesses.
And the government is now considering allowing telecom companies to do this.
Confused? ReadOn!
🧐 New Spectrum Rules Coming In?
The government is considering introducing dynamic spectrum sharing and is planning to launch a consultation paper on it.
Huh?
Let's start at the very beginning.
The internet that you are using to read this article right now comes to you through airwaves (or through underwater cables).
And companies need to buy the rights (yes, they need to buy air) to use these airwaves to broadcast their network to you.
These airwaves are officially called spectrum.
Right now, telecom companies are gearing up for a whole new round of air-buying, sorry spectrum auction, to get super-fast 5G network to you, so you can binge Netflix without buffering.
Now, companies can’t just broadcast signals randomly.
They need to be broadcasted at different frequencies to reach users.
So, companies have to buy spectrum of different frequencies. The higher the frequency, the better the network.
But it is not just the frequency that companies have to worry about when it comes to spectrum.
They also have to decide what areas they want to broadcast their network to and what frequency will be broadcasted in this area.
And since spectrum is crazy expensive they can't just buy rights to airwaves for all the areas.
Now, this may seem impossible to us, but we customers don't use this spectrum all the time.
There are times when the airwaves that these companies have purchased are not utilised.
For companies who have paid crores and crores of rupees for this spectrum, this underutilisation is a huge waste.
But the government is now trying to introduce a new policy through which companies can fully utilise this spectrum.
🌀 Dynamic Spectrum Sharing
Before we give you an idea about dynamic spectrum sharing, let us understand how spectrum sharing already works in India.
Companies can't always afford to buy enough spectrum to support all users in all areas.
So, what they do is tie up with other companies to use their unused spectrum.
Now, the problem with this sharing model is that companies can only share spectrum if they are both licensed to operate in the same area and they are using spectrum of the same wavelength or frequency.
This sounds easy but is as difficult as getting a match on Tinder.
So, this reduces chances of companies getting to utilise their idle spectrum.
But with dynamic spectrum sharing, companies can lease out their spectrum in real time.
For instance, if nobody is using Vodafone spectrum in a particular area but Jio is seeing a massive increase in traffic at that time, Vodafone can just lease out its spectrum to provide a better experience to customers.
And this system works even if the two have different frequencies.
Vodafone Idea gets extra cash for practically doing nothing, while Jio can offer better service to customers.
Win-win, right?
This would be a major boost for telcos, whose business could be impacted by the rollout of private 5G networks.
What are those?
Well, the Indian government is allowing major companies to set up their own private 5G networks which they can use for office and other work.
So, these companies won't have to source network from telecom companies anymore.
This will drastically reduce their revenue.
Allowing them to share spectrum will cushion this blow a little by giving them yet another revenue stream.
But this future is still a distant reality.
The government is only considering launching a consultation paper for now.
Wondering why we haven't okayed this already?
Because regulation and compliance is a huge headache.
But at least now we're taking a step towards fixing and formalising this.
⚡ In a line: The government is trying to introduce dynamic spectrum sharing to give a new revenue stream to telcos ahead of the 5G auctions.
💡 Quick question: Do you think the new rules will benefit the telcos are create more headache because of compliance issues.
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