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Mobile Subscribers Yearwise comparision

Market outlook and future trends

November 16, 2010

With the completion of the 3G and broadband wireless access (BWA) spectrum auctions, the sector is gearing up to replicate the success of mobile telephony in broadband. The potential of BWA technologies is evident from the fact that the auctions fetched the government over seven times the reserve price per block. tele.net recently organised a conference, “BWA in India”, to provide a platform to discuss the potential and challenges associated with these services. The following section on Market Outlook and Future Trends brings forward the views of  Prashant Singhal, Partner, and Gaurav Sharma, Associate Director, Ernst &Young….

The country’s macroeconomic growth provides significant opportunity for broadband growth as Indians spend more and more on communication services. The pace of growth has also been more or less steady at 7 per cent for 2007-08 and 6 per cent for 2008-09. For 2009-10, the estimated GDP growth has been pegged at 7 per cent and for 2011-12, at 9 per cent. 

The Indian economy has been growing at 6 per cent, year-on-year, over the past five years. This consumption-led growth is likely to continue due to the demographic profile, which will ensure demand stability. Besides, a 10 per cent increase in broadband penetration has been known to lead to a 1.3 per cent increase in GDP. 

India today is poised for major growth in wireless broadband. About 60 per cent of the population is likely to have an income of over Rs 100,000 annually by 2015. Moreover, it is the right population mix for broadband with the median age being close to 26.

Data services are becoming a lifestyle need for the Indian consumer; therefore, data access through broadband is likely to find a healthy uptake. However, there is a marked lack of wired infrastructure with only 45 million fixed line telephone subscribers in a country of 1.1 billion people.  This means that the latent demand for data will have to be tapped through the wireless media. The rapid decline in tariffs has led to lower revenues per month. There is, therefore, a need to create more value for users and this is where data  will emerge as a key value driver.

Mobile devices already enjoy the highest reach compared to all other mass media. Now, they are also gaining popularity for accessing data. Research firm Ernst & Young (E&Y) projects the sales of smartphones to cross 155 million by 2015 from 1.4 million in 2010. However, lower and more affordable prices of 3G phones and computing devices are required to drive data penetration.

Trends

In line with global trends, mobile data will fuel the next phase of growth that will be serviced through a range of wireless technologies. According to E&Y estimates, India represents a wireless broadband data market of nearly 188 million subscribers and $12 billion in revenues by 2015. The latent demand for broadband can already be seen in the growth in value-added service (VAS) revenues in the past few years. Non-voice contribution to the overall revenue is expected to spike from the current level of 10 per cent to more than 25 per cent by 2015. Data will account for over 80 per cent of revenue growth by 2015.

New products and revenue streams are likely to emerge as the proliferation of wireless technologies across segments increases. In the coming years, the reach of mobile phones across India, combined with the spread of wireless broadband, will push applications like mobile banking, which is being seen as a lucrative opportunity.

Mobile marketing, education and healthcare are also slated to be major revenue streams for telecom operators as these sectors represent a large opportunity for wireless broadband applications. Further, high speed wireless networks will enable the market for quad-play. Another area that represents an attractive market opportunity is enterprise wireless connectivity and related solutions such as data access in offices.

Technologies

Broadband wireless technology standards are available on 3G, Wi-Max and long term evolution (LTE).

3G: 3G is the technology standard offering variants in both GSM and CDMA paths. It is adopted by most developed and emerging markets. With download speeds of 1.1-14.4 Mbps, it is an evolved ecosystem in most markets.

Wi-Max: Wi-Max is a wireless technology with two versions – fixed Wi-Max, which allows backhaul link for wireless base stations and mobile Wi-Max, which allows mobile broadband. Currently, the Wi-Max network is committed to nearly 103 countries. Broadband wireless access (BWA) on Wi-Max deployments is already operational in Korea, the US, Russia, Japan and Malaysia.

LTE: LTE is the next standard after HSPA+ in the GSM path, making it the logical step for GSM/UMTS operators. It has a theoretical speed of 100 Mbps, making it the likely last mobile technology before 4G. LTE has an evolved chipset and device ecosystem. It is backed by major telecom operators        and network equipment manufacturers (such as Qualcomm, AT&T and Vodafone) in the US and Europe.

Projections

In all, E&Y expects that in five years the smartphone market will more than double, data revenues will account for nearly 30 per cent of the operators’ total revenues and the subscriber base will touch 800-850 million, of which 180 million will use broadband wireless services.

If these projections pan out, the money spent on BWA spectrum will be more than recovered and India will be set to grow on the broadband path.

 
 

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