The emergence of 5G has accelerated digitalisation opportunities in India by unlocking monumental economic and technological benefits. In this context, a robust optical fibre cable (OFC) infrastructure will play a key role in supporting 5G network expansion.
India’s 5G growth story
Since the launch of 5G, India has achieved a record-breaking pace of deployment, making it the fastest such endeavour in the world. This rapid advancement has spurred significant growth in the telecom sector, with data consumption soaring as 5G adoption accelerates among both consumers and enterprises. The number of 5G SIM connections is projected to grow at a CAGR of 514 per cent, increasing from 435,000 in 2022 to 618 million by 2027. Simultaneously, mobile data traffic is expected to grow at a CAGR of 18 per cent, rising from 153 exabytes (EB) in 2022 to 440 EB in 2027.
India’s swift digital transformation has solidified its position as a global leader in digital service adoption, supported by a robust digital infrastructure.
OFC market
The global OFC market is experiencing robust growth to meet the increasing demand for high speed data transmission and deployment of 5G networks. This market is expected to grow at a CAGR of 11 per cent. The Asia-Pacific region is leading as the largest market, while North America is witnessing the fastest growth. Several key factors are fuelling this growth, including the increasing volume of data traffic, the growing penetration of 5G technology, ambitious policy targets, strong government support, merger and acquisition deals, and a heightened focus on sustainability.
In India, the OFC market is on the cusp of significant growth as the country continues to invest in building world-class digital infrastructure. By September 2023, a total of 3.88 million km of OFC had been laid, with the pace increasing sixfold since the launch of 5G services. The BharatNet project has reached 207,000 gram panchayats, and operators are expected to spend $1.5-2 billion on fibre roll-out in the next two to three years. Additionally, the fiberisation of towers has reached 38.4 per cent, moving closer to the 70 per cent target.
Several unique factors are driving the growth of OFC in India, including intense competition and a large customer base, helping keep tariffs low. Smartphone adoption is also on the rise, with further growth expected. As per the data, smartphone penetration in India, as a percentage of the population, is projected to increase from 48 per cent in 2022 to 67 per cent by 2027. Furthermore, supportive government policies and regulations, such as the National Broadband Mission; the Indian Telegraph Right of Way (Amendment) Rules, 2022; Gati Shakti Sanchar and the PM GatiShakti National Master Plan (NMP) platform, play a crucial role in accelerating digital access for all.
Investment landscape
Notably, India’s fixed broadband penetration significantly lags behind the top four economies. For India to achieve its goal of becoming a $7 trillion economy by 2030, it is essential to bolster the digital infrastructure ecosystem. To this end, the Indian digital infrastructure sector needs investments totalling about $23 billion by 2025.
These strategic investments can increase fixed broadband penetration from 13 per cent to 70 per cent by 2030, connecting roughly 215 million new households. Moreover, by 2030, over 90 per cent of fixed broadband connections are expected to be fibre-to-the-home.
The most substantial investment opportunities lie in fibre deployment and microwave technology. That said, strategic investments and rapid implementation are necessary across the various infrastructure components that form the digital backbone. This includes the target of increasing fibre backhaul from 30 per cent in 2022 to 70 per cent by 2025, as well as investing in backhauling small cells and fibre-to-the-x deployments.
Market challenges
The OFC market in India is facing several challenges, with major obstacles being Right-of-Way (RoW) issues and suboptimal maintenance. RoW challenges include differing procedures across states, inconsistent charges between cities and states, and the need for multiple permissions from various authorities. These inconsistencies create significant hurdles in the deployment and maintenance of OFC infrastructure, impeding the market’s growth and efficiency.
The way forward
It has been projected that there will be 330 million subscribers driving the 5G revolution by 2030, with new smartphone subscriptions being added every second. Additionally, data traffic per smartphone per month is expected to increase 2.7 times, reflecting the growing demand for digital connectivity and services. Therefore, the goal is to create a digitally transformed India by 2030. s
Based on a presentation by Swapnil Srivastava, Global Telecoms and TMT Analyst Leader, EY
