Private 5G network opens up new revenue streams for IT companies

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As the concept of private networks becomes a reality after the 5G spectrum auction, the country’s leading information technology companies such as TCS, Infosys, Wipro and HCL Tech see a great opportunity in this space as it offers them a whole new revenue stream.

Put simply, what telecom network providers like Ericsson and Nokia are currently doing for service providers like Bharti Airtel or Vodafone Idea, these IT companies can now do for companies in segments like automotive, FMCG, healthcare chains and others.

“With 5G in manufacturing, the principles of Industry 4.0 can indeed become a reality, yes you would need the applications, yes you would need the private network so you can connect both internally and meaningfully to the ecosystem you are building . So we’re looking at all these possibilities,” said N Ganapathy Subramaniam, TCS’ chief operating officer, at the company’s post-earnings briefing on Monday.

Industry analysts said that since IT companies are primarily systems integrators, they cannot be allocated spectrum to build retail networks, but companies in other segments can award contracts to build such networks for them after acquiring millimeter-band spectrum.

For the time being, companies will not be allocated frequencies directly by the government, but will have to lease them from the telecommunications providers. However, they are free to place orders with IT companies later.

Also read: 5G in India: Samsung to enable 5G in devices by mid-November through software update, iPhones to get it in December

Under private networks, businesses can set up their own Wi-Fi data network instead of hiring the services of a telecom provider as is the norm today. Such networks would help healthcare chains connect their various centers with high-speed data over which they can perform remote operations and similar functions that require low latency. Similarly, an automobile manufacturer can connect its centers across the country and move to fully and much faster digital operations.

After bagging such contracts from companies, the IT companies concerned will manage them for the set period of time and generally such contracts are renewed at set intervals.

“Many applications for 5G exist in the world of digital manufacturing, the ability to leverage data speeds and data volumes in the manufacturing world,” Wipro Chief Executive Officer Thierry Delaporte said Wednesday. “We’re investing in those areas, we’re constantly evaluating potential acquisitions…it (5G) is one of our hottest markets right now,” he added.

“We’re seeing tremendous traction in this (5G) business as we look ahead, so it’s one of the growth drivers,” Infosys chief executive officer Salil Parekh said Thursday at the company’s post-earnings conference.

“We’re definitely making very good progress in telecoms with almost 27% year-on-year growth…we also have some unique products that we’ve modernized and upgraded that will all play in this sector, so we remain bullish on the sector” , said C. Vijayakumar, chief executive officer and managing director of HCL Tech, on Wednesday.

The private network concept is emerging as one of the most promising use cases of 5G globally. A Qualcomm white paper has indicated that such networks guarantee coverage in remote locations where commercial network coverage is limited. Second, they lead to more network control, such as B. the application of configurations that are not supported on a public network, and companies can keep sensitive operational data on-premises. Third, 5G private networks can meet a better performance profile.

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