A key highlight of the sector in the past few years has been its evolution into “digital communications” by adopting a fully digital approach, encompassing a much larger ecosystem of technology services and solutions. As the proliferation of 4G continues, the sector has its eyes keenly set on 5G, with spectrum auctions expected to take place by mid-2022. While trials are still under way, the sector is already building the necessary infrastructure, technology and business use cases as required for its deployment. The setting up of indigenous 5G test beds in a multi-institute collaborative project is a positive step towards enhancing the national capability in telecom technology, developing indigenous intellectual property (IP) and giving a fillip to Indian telecom manufacturers. Moreover, service providers have started putting in massive efforts towards developing India-specific solutions for future 5G network deployment. Indigenous technology development and innovation have also advanced.
The government’s focus on developing a robust digital infrastructure to cater to the burgeoning data demand and appetite has been especially appreciable. The introduction of the PM Wi-Fi Access Network Interface (PM-WANI) Scheme was a historic step towards the large-scale deployment of Wi-Fi hotspots across the country. This will create business and employment opportunities for small local- or village-level entrepreneurs, and a wide scope for local manufacturing of telecom products and components, thereby boosting “atmanirbharta”. Further, the recent TEC Specifications for Interface Requirements for Fixed Satellite Services have demolished the erstwhile artificial restrictions, and modernised the situation by permitting the use of highly advanced satcom technologies, namely, high throughput satellites (HTS), all orbital categories of satellites, new spectrum bands (Ka, Q and other bands), modern antennas, no cap on data speeds, etc. This will enable cost-effective offerings from the sector soon. The Digital Communications Commission’s (DCC) recent approval of the use of satcom for cellular and Wi-Fi backhaul is another progressive and vital step forward for India. Approval of the public-private-partnership route for the third phase of BharatNet is also an appropriate decision from the cabinet. It could help the project gain more traction and impact at this critical stage.
Pandemic speeds up digital transformation
Though unfortunate, the pandemic has actually sped up digital transformation of India in an unprecedented manner. Numerous digital applications and e-commerce platforms, which have become an integral part of our daily affairs, have played a decisive role in enabling remote communications, operations, access to critical information and services, as well as maintaining normalcy in our lives to the best possible extent.
The Covid-19 pandemic changed the way people conduct their day-to-day activities, including the introduction of the work-from-home norm and virtual education. Further, many people stayed indoors due to lockdown restrictions, which is believed to have resulted in greater usage of video streaming applications, online games, etc. Given the expansion of the 4G user base and the faster speed of 4G, both demand and consumption of data connectivity and services have been growing rapidly.
With the spirit of collaboration between the government and the industry at an all-time high, we believe that now is the time to review the current technology solutions for taking ubiquitous and high quality broadband connectivity (both in terms of capacity and coverage) to the new work locations, that is, homes. The focus on fibre-to-the-x (FTTx) and in-building solutions; leveraging the available E and V bands for fibre like data transmission; widespread public Wi-Fi outreach; and use of satcom for remote and rural areas would be the decisive factors in this regard.
The industry ARPU, which had been in the range of Rs 74-Rs 79 in the first three quarters of financial year 2020, increased to Rs 91 in the quarter ended March 2020 (at a sequential growth rate of 16.3 per cent), primarily backed by price hikes (up to 40 per cent) undertaken by the telcos for prepaid users from the month of December 2019 onwards. For the next two quarters, the ARPU continued at Rs 90 and crossed the Rs 100 mark in the quarter ended December 2020. The ARPU is estimated to have declined to about Rs 96 in the quarter ended March 2021 due to the application of the Bill and Keep regime (January 1, 2021 onwards) replacing the interconnect usage charge (IUC) regime. Subsequently, the ARPU for financial year 2021is estimated to have averaged at Rs 96, an increase of 20.6 per cent on a year-on-year basis. The growth in ARPU, however, needs to be sustained for the betterment of industry, and the telcos aim to increase their respective ARPU levels to at least Rs 200 per subscriber per month. Thus, a 2x hike in ARPU appears imminent during financial year 2022.
Areas of improvement
Some areas of improvement that may be addressed to uphold the telecom sector’s growth trajectory are:
• Augmentation of the digital connectivity infrastructure to meet the challenges of WfH, besides giving a thrust to adoption of emerging technologies.
• Data speeds for mobile connectivity in India are well below the international norms. India is experiencing download speeds of 12.16 Mbps in the case of mobile broadband and around 38.19 Mbps in the case of fixed broadband. The average download speed is way below the global average speed of 24 Mbps.
• With WFH becoming the new normal, there will be a shift from mobile broadband to fixed broadband. Hence, solutions that cater to this shift in traffic patterns and provide high quality services on a sustainable basis will become increasingly important in the future.
• A four-pronged strategy is required to handle the shift in traffic in the short term. First, FTTx implementation needs to go up and fibre-to-the-home needs to be introduced in every locality of India, augmented with suitable provision for in-building solutions to enhance the quality of services. Second, increasing the number of Wi-Fi hotspots can offer a much-needed break to TSPs, allowing them to offload cellular data on to Wi-Fi networks. This move will significantly reduce congestion in their existing burdened networks. Opening up the 6 GHz band for unlicensed use for Wi-Fi in line with global best practices would help usher in new and more potent technologies such as Wi-Fi6 and 6E to add to the efficacy of PM-WANI, besides several other benefits. Third, a liberal licensing, policy and regulatory framework, which permits the use of modern satellite technologies in a technology-neutral manner along with adequate competition, operating under free and open market conditions, is the need of the hour to enhance readily available capacity for providing both data connectivity and backhaul services. Fourth, TRAI had recommended that both E and V bands be opened up in the country for the acceleration of broadband penetration and has urged the DoT to expedite the process of offering these bands in line with other technologically developed countries. The use of these millimetre wave bands in neighbouring countries has worked wonderfully over long distances and can work for India as well. The V band (57-64 GHz) may be allocated under a licence-exempt framework for optimal utilisation by all stakeholders, in line with TRAI’s recommendations and as per global best practices; and the extended V band (64-71 GHz), with an equal quantum of 7 GHz spectrum, could be allocated to TSPs for backhaul, providing a win-win situation for all.
The potential and prospects for the broadband sector remain massive. Although we have more than 820 million internet connections with about 780 million of them being broadband, in actuality, the unique broadband subscribers are estimated to be around 500 million, mostly in urban areas. So, the scope of growth remains almost twice that of the present status.
With the expected tsunami of data usage affecting both access and backhaul networks, increase in fibre deployment will be paramount in the times to come. Against a target of 7.5 million km of fibre required to be deployed, we have only 2.68 million km deployed till date. Evidently, there is a huge opportunity ahead of us to achieve the NDCP and NBM benchmarks.
The commercial deployment of macro 5G networks is perhaps likely to take place only in 2022-23 at the earliest. In the meantime, the use of private 5G networks may be permitted, as in many leading global economies. Administering dedicated spectrum for private networks will help accelerate innovation and digital transformation of enterprises to Industry 4.0.
Both Wi-Fi and satellite communications are slated to play an important role in helping 5G reach its full potential. Besides, digitalisation is increasingly leading service providers to adopt new and emerging technologies such as virtualisation, software-defined networking/network functions virtualisation, internet of things, artificial intelligence and blockchain. These are likely to play a significant role in automating networks.