Tata has bought stake in Tejas Network. Tejas is Bangalore-based equipment manufacturer. Tejas has R&D expertise. There is a promising $100 billion-plus global market for 5G networks and broadband equipment. This market attracts the domestic players such as Reliance, Sterlite, Tech Mahindra and HFCL, apart from Tata. Then there are international telecom gear companies such as Ericsson, Nokia, Huawei, ZTE and Samsung.
In earlier telecom networks, there was 70 per cent hardware costs and 30 per cent software costs. New networks rely more on software. It is easy to scale up and automate. It is less about hardware. Thus 70 per cent cost of the 5G network would be software and system integration. The rest of the cost, say 30 per cent is for hardware.
O-RAN is based on open standards. It is not based on proprietary platforms. It enables operators to source components from different vendors. There is competitive pricing and that results in cost saving, say 30-40 per cent. However, these different components are integrated. System integrators thus benefit from this market.
Tata can leverage the software skills of TCS. This will be supplemented by hardware consisting of radios, base stations controllers. Here Tajas plays a vital role. Tejas would also be eligible for production-linked incentive scheme.
Tata has tied up with Bharti, a telecom operator. Here Tata will get an opportunity to test its hardware equipment and network offerings. This tie-up of Tata and Bharti will use O-RAN to roll out networks. The same then can be marketed for the world. TCS will provide software support and system integration. If the testing is successful in India, the same model can be extended anywhere else.
Airtel has tied up with Altiostar to build small cells and cloud player Red Hat. It has also tied up with Mavenir which has developed a core. Both Tata and Bharti can leverage this.
Reliance has developed its own 5G capability and would like to tap the global market. Tata and Bharti tie up can compete with Reliance in the world market. This is all about O-RAN. But the existing gear makers have already built over 164 5G networks. These are fully operational. They are far ahead of the curve, and would assimilate the advantages of O-RAN. They will build hybrid models. It is thus a tough market to crack.