Friday, June 2, 2023

5G: what is the annual investment needed to find the technology

Telecommunications companies, to build the infrastructure required by 5G technology, must increase their annual investment by 40%, economist Marcos Orteu assured in front of companies in the information and communication technologies (ICT) sector are gathered in the Buenos Aires city of Costa dell’Este.

“5G changes telecommunications, connectivity in general in a broad way, not just for mobile operators but for all operators,” Orteu said, adding that for this technology “we need to densify networks, both fixed and mobile,” the which “implies annual investment increases by 40%”.

Interviewed by Télam, the contacts in the national ICT table of two of the three mobile operators, Telecom and Movistar, indicated that investments could be increased but “we need to know what we are going to invest in”, referring to the position of the private sector in the 5G tender, favoring the investment plan compared to the price of the spectrum.

“It’s not just whether you are able – to increase the investment – the question is what you will invest in and how that investment will turn into a transmission of improvements in living conditions,” said Telefónica director of Institutional Relations, Alejandro slab.

His Telecom colleague, Hernan Verdaguer, stressed that “it’s not just an Argentine issue, it’s a global problem, that clearly with 5G there is no monetization, there is no increase in Arpus”, which is the average income monthly per customer .

Orteu indicated in his presentation that “there is no business model” for 5G, and argued that even in countries where the technology is already deployed, “it’s not clear whether ICT companies are the ones to benefit.”

Globally, the technology implies “investments in millions, public-private coordination – since the density of the network can lead to the extreme of having to place an antenna per block- coordination with other players in the sector for infrastructure sharing and geopolitical tension”, alluding to the China-US competition.

As for Argentina, he underlined that beyond this picture of the situation, “little remains of the diffusion of 4G, but it is still missing”, and that “-residential- consumers are happy with 4G” so that the business plans of carriers should focus on industrial 5G.

For “industrial 5G and the improvement of factories, a lot is missing”, he said, and it is in this segment where, when other actors who integrate services intervene, “it is not clear” that ICTs are the ones that benefit, Orteu underlined.

The discussion table on 5G in Argentina remains open between the mobile communications operators (Claro, Telecom and Movistar) and the officials of the National Communications Authority, the companies indicated. This landscape of uncertainty surrounding the 5G business is also part of the discussion delaying the definition of the spectrum auction for this technology.

According to Orteu, he adds that in Argentina the spectrum available for 5G “is cheap and expensive”, referring to figures that have been circulating in the media, and which focus on the issue of revenue. He gave as an example that in New Zealand the 5G spectrum was free for operators and that in Spain the frequencies were offered “at very low prices” last year.

Companies in Argentina promote a “Brazilian” tender, which set a low price for spectrum in view of companies presenting significant investment plans, as well as the entry of new players into the market.

Orteu remarked that the decision on how to apply in Argentina “will affect the deployment over the next few years”.

As of earlier this year, industry sources believed the state intended to raise $1.4 billion for the 5G tender, and now they’ve revealed that aspiration has dropped in half. However, companies participating in the roundtable told Télam that $750 million for spectrum is still a lot for companies receiving revenue in pesos and with declining ARPU.

Two of the three companies, Movistar and Claro, are also bidding for 5G spectrum in other countries in the region, such as Uruguay, where they questioned the spectrum price set by the authorities.

The ICT sector in Argentina directly employs 73,000 people and has more than 1,700 operators.

World Nation News Desk
World Nation News Desk
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