Allocating 5G private network spectrum is conducive to promoting market competition

Recently, the delayed 5G spectrum auction in India has caused a stir again. The Indian telecom regulator said it intends to reserve some spectrum resources for enterprises to deploy 5G industry-specific networks on their own. This proposal was strongly resisted by Indian operators, who threatened not to participate in the 5G spectrum auction and demanded that the regulator cancel the plan.

This is not the first time that operators have resisted the allocation of 5G private network spectrum. In 2019, when German regulators sought opinions on 5G spectrum allocation, the three major German operators expressed strong opposition to the 5G private network spectrum allocation plan. GSMA, an industry organization for global mobile operators, has also repeatedly stated that the practice of reserving spectrum for local or vertical industry applications in 5G priority bands (such as 3.5GHz, 26GHz or 28GHz) may jeopardize public 5G services and may cause a waste of spectrum resources.

The operator camp believes that the allocation of 5G private network spectrum may not only limit the long-term development space of 5G public networks, but also hinder 5G industry applications from leveraging the scale effect of public networks to reduce deployment and usage costs. It is also easy to cause adjacent frequency interference and reduce spectrum utilization efficiency.

However, despite strong opposition from operators, Germany, France, the United Kingdom, the Netherlands, Sweden, Finland in Europe, Japan, South Korea in the Asia-Pacific region, and Taiwan, Macau, and Hong Kong in China have already or will soon allocate dedicated spectrum for 5G industry-specific networks. Although the United States has not allocated dedicated frequency bands, its CBRS frequency band adopts a hierarchical sharing licensing mechanism, which also allows enterprise users to flexibly deploy their own networks.

The clear needs of industry users are the primary driving force for the allocation of 5G private network spectrum. For example, when Germany started the 5G spectrum allocation process, major companies and industry associations expressed an urgent need for private network spectrum. Since the regulator opened applications for private network spectrum in November 2019, as of March this year, 201 companies or organizations have applied for and obtained licenses to use 5G private network spectrum. Japanese regulators opened applications for 5G private network spectrum in batches at the end of 2019 and the end of 2020. As of the end of March this year, 106 companies or organizations have been approved for spectrum licenses. Among them are a large number of advanced manufacturing companies or information service companies that we are familiar with. It can be seen that the characteristics of 5G private network deployment, rapid and flexible, and manageable and controllable operation are indeed very attractive to industry users and will help promote and popularize 5G industry applications.

At the same time, 5G private network spectrum allocation can also be used as a means to promote market competition. When formulating the 5G private network spectrum plan, the Korean regulator clearly stated that it hopes to take the opportunity to introduce new market players and enhance the level of competition in the 5G industry application market, thereby promoting the development of 5G industry applications. After South Korea opened up 5G private network spectrum applications at the end of last year, local Internet giant Naver Cloud announced its entry into this market. It is clear that the regulator's policies have begun to bear fruit.

The allocation of 5G private network spectrum does put mobile operators under pressure from competition and substitution in the industry market, but this does not mean that mobile operators have completely lost their competitiveness in this market.

After the German operators failed to oppose the allocation of private network spectrum, they quickly adjusted their strategies and began to provide network deployment and operation and maintenance services to corporate users who obtained private network spectrum. At present, large enterprises such as BMW, Mercedes-Benz, Porsche, and BASF have chosen mobile operators as their partners for private network deployment. NTT East has also launched its own 5G private network service in Japan, and provides a "zero down payment" model to lower the usage threshold for corporate users. The deployment and operation experience, comprehensive service capabilities and network infrastructure of mobile operators have become their competitive fulcrums in the private network service market. At the same time, industry private networks have also created new opportunities for operators to expand globally. Verizon in the United States and NTT in Japan have begun to use 5G private networks to expand their global enterprise service markets, and have currently obtained 5G private network service contracts for the Port of Southampton in the United Kingdom and Cologne/Bonn Airport in Germany respectively.

It can be seen that in the 5G private network market with obvious "long tail characteristics" and diverse user needs, operators are still expected to achieve good results by relying on their own advantages, and even have the opportunity to expand their business globally and expand the scale of services.

Radio spectrum is a scarce national resource of great strategic significance and an important carrier for promoting the development of informatization. It has become a social consensus to promote the digital transformation of thousands of industries with 5G network capabilities. As for India and other regulatory agencies that have not yet decided whether to allocate private network spectrum, I believe that as long as they do not forget their original intention of promoting the development of social informatization, they will definitely find a reasonable win-win solution for all parties and turn the controversy over private network spectrum into an opportunity to promote the development of 5G industry applications.