How private 5G, satellite internet services can cost dearly to companies

A few players are already piloting internet services and there are signs that consumer devices with LEO connectivity are on the horizon.

New Delhi: As players like Elon Musk‘s SpaceX, Hughes Communications India (along with ISRO) and Amazon ramp up efforts to provide affordable internet services via low-earth orbit (LEO) satellites, the business model and pricing will be a challenge for scaling up networks, according to a new report.

A few players are already piloting internet services and there are signs that consumer devices with LEO connectivity are on the horizon.

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“However, due to high capital expenditures and user costs, the business model and pricing will be a challenge for scaling up networks as LEO connectivity cannot fully serve as a substitute for terrestrial networks for all use cases that rely on cost-efficiency, energy consumption, or overall performance,” according to ‘McKinsey Technology Trends Outlook 2022’.

Satellite internet provider Hughes Communications India last week announced the commercial launch of India’s first high-throughput satellite (HTS) broadband service powered by ISRO.

The service aims to deliver high-speed broadband across the country, including in the most remote areas beyond the reach of terrestrial networks, thus connecting enterprise and government networks.

As SpaceX abandoned its affordable internet project Starlink in India, Amazon has also ramped up its efforts to launch its fast and cheaper internet service called ‘Project Kuiper’ in the country.

On private 5G captive networks, the report said that such networks are a proven technology, with many players already reaping their benefits.

Other technologies, such as internet of things (IoT) and automated guided vehicles, perform much better when using high-quality networks enabled by private 5G

“However, shifting from 4G LTE to private 5G may not be cost-effective for all players; this would depend on a player’s technological aspirations and planned use cases,” the report stressed.

The government has announced to undertake demand studies for the direct assignment of spectrum to enterprises with net worth more than Rs 100 crore which are willing to set up private captive 5G networks.

Enterprises, which are willing to set up Captive Non-Public Network (CNPN) by obtaining spectrum directly from DoT, are invited to participate in this exercise, according to the Department of Telecommunication (DoT).

The guidelines provide that the enterprises seeking to establish CNPN may obtain spectrum on lease from Telecom Service Providers or directly from DoT.