Demand for robust mobile and data connectivity during the Covid-19 pandemic has led to technologies such as fixed wireless access (FWA) emerging as cost-efficient broadband alternatives, driving digitalisation. The latest edition of Nokia’s MBiT Index evaluated 3G, 4G and overall data traffic growth trends at the pan-Indian and circle category levels, as well as data consumption per user for 4G and 3G in 2020. It highlighted the current ecosystem for 4G and VoLTE devices in India, as well as users’ data usage patterns in terms of the type of content being consumed and its key drivers. The report also outlined the impact of Covid-19 on broadband performance, particularly fixed broadband (FBB), which is changing overall consumption patterns. It highlighted how emerging technologies are li-kely to revolutionise overall broadband connectivity, supplemented by government initiatives and the growing opportunities for consumers, communication service providers and enterprises.

Key highlights and trends

Data traffic

With a traffic growth of over 60x in the past five years, India stood tall amongst the mature markets in 2020. Overall data traffic increased by 36 per cent in 2020 on account of continued 4G consumption. The average monthly data traffic per user increased by 20.4 per cent year on year in 2020. The majority of this data traffic was driven by a movement from 3G to 4G due to continuous network upgradations and closure of 3G services. 4G constituted 98.7 per cent of the total data traffic consumed across the country. Increased online education, remote working for professionals and higher over-the-top (OTT) content viewership also contributed to the data traffic growth.

Category A and B circles constituted 76 per cent of the pan-Indian traffic. Categories A, B and C also saw higher growth rates in 2020 than the metros due to the operator focus on 4G in these circles.

Data usage and consumption

Overall, the average mobile data usage per month registered a compound annual growth rate (CAGR) of 76 per cent from 2015 to 2020. The average monthly data usage per user increased almost 17 times over the last five years. The combined average mobile data usage per month for 3G and 4G stood at 13.5 GB as of December 2020, while 4G data usage reached 13.7 GB. New users from rural areas contributed to this rise in monthly data usage; rural consumption accounted for over 45 per cent of the overall mobile data usage. The usage is expected to grow exponentially with 5G. India’s current fixed broadband penetration stands at a dismal 7.5 per cent of households, with an average fixed data per user per month of 178 GB. There is room for growth in data as well as penetration across the mobile and fixed domains.

Data users

With 100 million new additions, the total number of 4G subscribers surpassed 700 million, consuming around 99 per cent of the overall mobile data traffic in 2020. 4G data users increased by 17 per cent year on year, with 4G penetration in the country reaching 61 per cent. In contrast, 3G subscribers exhibited a steep decline of 56 per cent in 2020 due to the shutdown of 3G services by major operators.

Device trends

The 4G device base reflected a continuous growth of 20 per cent in 2020. 4G-capable devices grew 1.2 times, with 77 per cent penetration, in 2020. The metros reported the highest 4G-capable device penetration at 83 per cent. Despite Covid-19 restrictions, over 150 million smartphones were shipped in India during 2020. The country registered its highest ever shipment of 53 million-plus units in the third quarter of 2020-21.

Support for VoLTE handsets grew to 93 per cent of unique 4G devices. With an average of about five hours of time spent on smartphones daily, India is one of the highest consumers of data per day, surpassing China. Short videos have emerged as the fastest growing content category, driven by the shorter attention spans of millennials and GenZ consumers. With the advent of 5G over the next few years, India will see significant growth in short videos, fuelled by richer, consumer-curated content and enhanced peer-to-peer communication.

The year 2021 is likely to witness double-digit growth for the smartphone industry as people embrace hybrid work models, binge on web series and adopt e-learning. Moreover, the launch of low-cost 4G smartphones will provide the necessary headroom for growth, as a significant portion of 2G/3G subscribers upgrade to 4G smartphones.

Fixed broadband

The Indian broadband market is largely dominated by mobile usage owing to affordable smartphones, low data prices and ease in service provisioning, similar to other developing countries. Covid-19 has ushered in a new era of broadband, particularly FBB. Amid the pandemic, digital services such as e-commerce, online education and entertainment, and e-payments witnessed a sizeable increase in consumption across the country. The e-commerce segment recorded an order volume growth of 17 per cent in June 2020 over February 2020. The initial phase of the lockdown witnessed a 30 per cent increase in data traffic as more people started to work from home. Demand for FBB in Tier 2 and Tier 3 cities increased significantly, with customers demanding higher speeds and more data. Further, a 30 per cent increase was witnessed in the time spent on education apps alongside a 265 per cent increase in OTT traffic between February and April 2020.

India currently has just 22 million FBB subscribers, which presents a significant opportunity for growth. Going forward, FBB revenues are expected to increase at a CAGR of 8.6 per cent during the period 2020-25, mainly driven by the adoption of higher-value broadband plans, digitalisation, inflated OTT usage, e-learning and virtual working. Some of the key trends currently driving fixed network growth are:

  • Work-from-home, which is fuelling broadband demand amidst Covid-19
  • Lucrative bundle packages offering unlimited calling, data and OTT services to cater to the changing consumption patterns
  • Growth in fibre-to-the-home (FTTH) subscriptions, supplemented by government schemes and the entry of private players
  • Proposed exemption of licensing fees from the existing 8 per cent of adjusted gross revenue to Re 1 per year, spurring investments in fixed networks.

Although India has registered sizeable broadband growth in recent years, enhanced FBB accessibility through FWA and fibre-to-everything (FTTx) will offer significant growth opportunities and help generate a new revenue stream for operators. Growth in FTTx is essential to improve the quality of telecom services and support the surging data demand. FTTx connections are projected to increase from less than 15 per cent of total FBB connections in 2019 to almost 48.3 per cent by 2025.

Currently, only 32 per cent of telecom towers are fiberised. The number is predicted to increase to 70 per cent by 2024. The government also plans to connect 600,000 villages with the internet, driving further growth of FTTH subscribers.

Similar to FTTx, mmWAve spectrum-based FWA is also gaining significant traction globally. Around the world, consumer 5G FWA is projected to cross 50 million connections by 2025 and surpass 450 million by 2030. 5G FWA can be seen as a viable alternative to wired broadband, offering more choice, faster speeds and greater reliability. For consumers, it provides an alternative to fast, gigabit-capable broadband where fibre is not available. There is only a small amount of lag for ultra-fast gaming and streaming experiences. It also offers the advantage of easy self-installation. For communications service providers (CSPs), 5G FWA can serve as a backup or enhancement for fixed line services. Mobile-only operators can use 5G FWA to enter the fixed broadband market, as it allows faster time-to-market with the existing radio access network footprint. For enterprises, 5G FWA will allow fast, reliable gigabit-capable connectivity, especially for small and medium businesses. It offers very low latency for mission-critical applications and can serve as an alternative or backup to fixed broadband connectivity for remote campus locations.

The way forward

The pandemic has led to demographic shifts in demand while accelerating digitalisation. This has resulted in a greater adoption of FBB and significantly higher data consumption. Demand for enhanced broadband and fixed access, for more capacity and coverage, will further establish the need for 5G in the future. CSPs will transform into digital service providers by offering digital products and services to consumers and enterprises. Industry 4.0, enabled by private networks with various IoT and enterprise use cases, will spur LTE, 5G growth and data usage. The applications expected to drive data usage include video surveillance, video capture and detection, immersive applications experience (augmented reality/virtual reality), smart homes, factories and public safety.