Whalesbook
Monetizing 5G Through Network Slicing
The Indian telecom industry is shifting focus from just data usage to offering premium experiences. Reliance Jio and Bharti Airtel are urging regulators to accept 5G network slicing, a technology that divides a single physical network into multiple virtual ones. The companies state this is essential for advanced services and not a way to discriminate against users.
This strategy involves creating dedicated virtual lanes for critical applications and high-paying customers. It moves away from the simple, flat-rate data plans that have dominated the Indian market since 2016.
Different Strategies, Same Goal
While both Jio and Airtel want regulatory approval, they use different technical approaches. Jio, using a new Standalone (SA) 5G network, is focusing on specialized slices for businesses needing IoT, gaming, and reliable communications. Airtel, on the other hand, recently launched 'Priority Postpaid,' targeting consumers with guaranteed service quality on its existing Non-Standalone (NSA) network. This highlights their distinct business plans: Jio aims for broad market reach with its SA technology, while Airtel targets profitable postpaid customers to raise its Average Revenue Per User (ARPU). Airtel currently leads with the highest ARPU in India, around INR 257 as of May 2026.
Concerns Over Network Slicing
However, consumer groups and critics worry that network slicing could harm regular users. They fear that dedicating capacity to premium services might slow down the internet for most people, especially since India's network density and available spectrum per user are lower than in many other countries.
There are also potential legal risks regarding net neutrality. If regulators view these slicing products as favoring certain content providers or applications, the telecom companies could face penalties or be forced to change their offerings.
Furthermore, market analysts are watching closely. With Reliance Industries' P/E ratio around 22.7 and Bharti Airtel's around 34.0, any regulatory delays that slow down the introduction of these potentially high-margin services could lead investors to question these valuations.
The Path Forward
The Department of Telecommunications (DoT) and the Telecom Regulatory Authority of India (TRAI) must now create rules that protect net neutrality while allowing for network innovation. If successful, network slicing could enable advanced applications in India, such as remote surgery and industrial automation. However, the industry's future growth will depend on operators balancing these specialized services with a good standard internet experience for all users, avoiding a two-tiered system.