Airtel's dramatic strategy shift: Build local 5G gear local ecosystem via own R&D and US, Japanese partners

NEW DELHI: Bharti Airtel is developing 5G network technologies in India through own R&D and in collaboration with local, US and Japanese firms, underlining a dramatic shift in the mobile phone operator’s strategy, which will see it develop its own intellectual property (IP), as against depending on third-party equipment vendors.

A top executive told ET that Airtel is not just developing technology for 5G, home broadband, Internet of Things (IoT) and other wireline products in India, but is also aiming to locally produce the equipment through contract manufacturers like US's Flex and India's Tejas Networks.

“We want to work with technology partners to co-develop India specific hardware and software products. Easy to deploy in India and also export to similar markets. The IPR of design of these products will be with Airtel, which we can offer to other telcos,” the executive said.

A complete local 5G ecosystem and own capability to develop telecom gear will allow Airtel to have a better control over the supply chain and reduce overall network deployment costs by looking beyond traditional vendors that charge premium for their products and technology, analysts said.

Airtel is currently in the process of signing commercial pacts with its partners for its 5G ecosystem, the executive said.

This comes at a time when bitter rival Reliance Jio has said it is developing its own end-to-end 5G technology, and has highlighted its ‘Make in India’ credentials. While Jio has said it wants to first deploy and scale up in India, and then take its technology to other telcos in the markets of Africa, West Asia and Eastern Europe, the Airtel executive said the telco also plans to initially take its 5G and other network technologies to markets like Africa, Bangladesh and Sri Lanka through its own and partner operations, and plans to offer to other telcos going forward.

The company though believes India can wait until 2022 for 5G, by which time the ecosystem, including handsets and India-specific use cases, will be more developed. The government is planning to hold spectrum auctions sometime in 2021.

Under its Make in India strategy, Airtel is planning to bring a large ecosystem of partners including US’s Mavenir, Xilinx and Altiostar (part owned by Japan’s Rakuten), Japan’s NEC and Taiwan’s Sercom that will help the telco develop equipment using OpenRAN technology. In addition, its existing traditional partner Ericsson and Nokia have agreed to provide only locally-made 5G gear to the telco.

OpenRAN as a concept enables hardware and software to be dis-aggregated, unlike conventional radio gears, allowing technology products from different suppliers to co-exist with the various software providers, and reduce costs for telcos. OpenRAN allows more customization of the network architecture and capabilities creating opportunities for new business lines and improving customer experience, analysts said.

"With the advent of OpenRAN and open technologies, this clearly shows the way forward for leading telcos across the globe. One one hand, it will deliver cost saving, greater control over future technical architecture, supply chain effectiveness, it will also help further make in India vision of the country," Rohan Dhamija, a partner at Analysys Mason said.

"...this also shows the emergence of new American and Japanese players that have driven the OpenRAN ecosystem to provide a stiff competition to traditional vendors like Nokia and Ericsson," Dhamija added.

“India has largely been dependent on the Chinese supply chain because they make the cheapest gear but because of the Open technologies, it is now also possible to disintegrate telecom hardware and software and make it via partners or on your own... we want to ensure that the final end point of manufacturing is India and gear that we develop here is global technology so that it can be exported to the world,” the official said.

Airtel is currently in talks with US-based Flex to make 5G gear and home-bred Tejas Networks for wireline products. It is asking its partners like Nokia, Ciena and Cisco to locally produce crucial core and transport equipment. “One of them has agreed to locally manufacture IP and optical products,” the executive said.

“We have already de-risked the geopolitical issues... now, we are really interested in India’s role in the telecom ecosystem… it is time for the country and Airtel to participate at the global level. That’s what Chinese companies did and owned the tech agenda… everybody needs to do it,” the executive said.

The Sunil Mittal-led telco recently produced its own 4G small cells by collaborating with Altiostar and Sercom. After seeing the success, the company has now diverted its focus on just 5G gear, including radio, small cells, routers and massive Mimo.

“We have set up two R&D labs in Bangalore and Manesar for 5G and other future tech… The investment in these labs is already running into hundreds of crores and the company will scale this up,” the executive said. Airtel currently has around 100 of its own engineers working at these labs, along with a few hundred local engineers of Altiostar and Mavenir.

Despite investing and focusing heavily on OpenRAN and other open technologies for developing 5G gear, Airtel will continue its relationship with traditional European vendors Nokia and Ericsson.

Globally, all big telcos like Verizon, Vodafone Group and Telefonica are on board to drive innovation around OpenRAN through various forums, which means it is not a geography-specific trend.

“They [European vendors] will eventually adopt open technologies like OpenRAN. They are fence-sitters right now due to competition and existing commercial base, but the change is imminent. OpenRAN will become mainstream,” the executive said.