Despite mounting debt, declining profits and increasing competition, the year 2018 turned out to be phenomenal for the internet and broadband segment. Rapid strides were made in 4G and voice over long term evolution (VoLTE) expansion, thereby driving data consumption. While 4G remained the key growth area, the year witnessed significant activity in the 5G domain as well. The government, telecom operators, researchers and vendors collaborated to prepare for the launch of 5G services in India as per global standards.
Another noteworthy development was the emergence of fibre as the preferred medium for rolling out future-ready networks. All industry stakeholders including the government and telecom operators worked in tandem to drive fibre deployments. Meanwhile, operators like Reliance Jio Infocomm Limited and Bharat Sanchar Nigam Limited (BSNL) announced their plans to foray into the fibre-to-the-home (FTTH) space. This will provide a major fillip to the fixed broadband segment.
Going forward, the recently approved National Digital Communications Policy (NDCP), 2018, which focuses on key elements like fiberisation, 5G and public Wi-Fi services, is expected to help in improving the broadband scenario significantly.
A look at the key trends that dominated the internet and broadband segment during 2018 and the outlook for 2019…
4G and VoLTE gain traction
Telecom operators were on a massive 4G expansion drive. Bharti Airtel launched its 4G services in the Andaman & Nicobar Islands, Arunachal Pradesh and 100 villages of Tamil Nadu. Further, the year witnessed the soft launch of 4G services by state-run operator BSNL in the Idukki district of Kerala. In a bid to make 4G services accessible to all income groups, Jio launched its JioPhone, the first feature phone offering 4G services.
Further, 4G services witnessed significant uptake, driven by increased coverage, affordable data tariffs and increasing smartphone and feature phone penetration. As per the Telecom Regulatory Authority of India, 4G data usage increased by 150 per cent from 4,356,202 TB during the quarter ended September 2017 to 10,914,498 TB during the quarter ended September 2018, accounting for almost 70 per cent of the total data usage during the period.
VoLTE services also gained significant traction during the year. Airtel extended its VoLTE services in 21 circles, excluding Jammu & Kashmir. Vodafone India and Idea Cellular launched their VoLTE services in 18 and 20 circles, respectively.
However, despite high-level 4G penetration, problems such as lack of infrastructure, limited backhaul capacity, poor connectivity and network congestion persisted during the year. Moreover, 4G download and upload speeds of operators fell marginally during the latter part of the year.
In 2019, operators will need to work towards overcoming these challenges and focus on providing ubiquitous 4G coverage to lay a strong foundation for 5G.
Impetus to public Wi-Fi
The exponential increase in data usage and the associated network congestion paved the way for public Wi-Fi solutions for data offloading.
In 2018, the Kerala government announced its plans to establish public Wi-Fi hotspots in 222 fishing villages and deploy 1,000 free public Wi-Fi hotspots across Kerala in a phased manner. Meanwhile, RajCOMP Info Services, a Rajasthan government undertaking, awarded a contract worth Rs 3.34 billion to Indian Telephone Industries Limited to establish 40,000 outdoor Wi-Fi access points in the state. Further, the New Delhi Municipal Corporation and Mahanagar Telephone Nigam Limited launched public Wi-Fi services in some parts of the city with 1 Gbps upload and download speeds.
Among private players, Google partnered with Larsen & Toubro to launch 150 Google Station hotspots in Pune, and with Andhra Pradesh State Fiber Net Limited to roll out the Google Station project in over 12,000 villages. Moreover, Google partnered with Indian Railways to offer free public Wi-Fi services to more than 700 railway stations in the country. It deployed public Wi-Fi hotspots at Dibrugarh railway station in Assam. Facebook has already rolled out 1,000 public Wi-Fi hotspots under its Express Wi-Fi initiative.
Amongst operators, Jio rolled out more than 200,000 Wi-Fi hotspots across India under JioNet, a public Wi-Fi hotspot offering 4G connectivity. It announced its plans to deploy 1.5 million public Wi-Fi zones across the country by the end of 2018-19.
The year also witnessed greater policy push in the public Wi-Fi space. The NDCP, 2018 envisages the deployment of 5 million public Wi-Fi hotspots by 2020 and 10 million by 2022. It also outlines initiatives such as NagarNet to establish 1 million public Wi-Fi hotspots in urban areas, and JanWiFi to establish 2 million Wi-Fi hotspots in rural areas. Further, the government announced the Bharat Wi-Fi initiative, which entails the establishment of 1 million Wi-Fi hotspots across the country by end 2019. The initiative will require collaborative effort from telecom operators, internet service providers and other stakeholders.
Wireline holds promise
While the wireless broadband segment has grown by leaps and bounds, the wireline segment has not seen such growth. At present, wired broadband subscribers account for only 6-7 per cent of the total broadband market in the country. This presents ample growth and revenue generation opportunities for telecom operators. According to ICRA, the wireline broadband network is expected to reach 100 million households by fiscal year 2024, generating Rs 800 billion in revenue as against Rs 145 billion at present.
To tap this opportunity, Jio forayed into the fixed broadband space in 2018 with the preview offer of its FTTH service, Jio GigaFiber. While the operator is yet to commercially launch JioGigaFiber, registrations for the services have already begun. As per Reliance Jio, the services have attracted customer interest in 1,400 cities. The operator is now connecting homes based on the requests received in each area. Meanwhile, Airtel extended its unlimited data feature to more cities shortly after Jio started registrations for JioGigaFiber. As per industry sources, Airtel is planning to invest a significant part of its Rs 240 billion capex guidance during fiscal year 2019 to expand its wired broadband network from 89 cities at present to at least 100. BSNL also recently launched its FTTH service, Bharat Fiber, to maintain its leading position in the wireline market.
While operators have made efforts to scale up their FTTH networks, the market is still at a nascent stage. FTTH accounts for only 0.5 per cent of the total 400 million broadband subscribers. Fibre has passed around 4 million homes out of the total 250 million households. The industry therefore needs to undertake massive fibre roll-outs to provide the much-needed boost to the wired broadband segment and lay a strong foundation for the roll-out of 5G.
The entry of Reliance Jio in the fixed broadband segment in 2018 provided a major push to the cable TV broadband segment. The operator aims to combine its cable TV services with FTTH broadband to serve more than 100 million households across cities with a special focus on Tier 2 and Tier 3 cities. In an effort to support this endeavour, Reliance Industries Limited (RIL), Reliance Jio’s parent company, recently acquired majority stakes in DEN Networks Limited and Hathway Cable and Datacom Limited.
According to popular industry opinion, Jio’s entry into the cable space is likely to start a wave of consolidation in the multiple system operator (MSO) segment. This is because a collaborative approach between operators and MSOs can help generate synergies. Such a partnership leverages the operator’s ability to incur huge investment and the MSO’s lastmile connectivity.
Therefore, cable TV, which passes through 110 million households, offers a huge potential for accelerating broadband penetration to operators. In addition, cable TV broadband can serve as an alternative to fibre and mobile tower connectivity in underserved areas.
Case for E and V bands
The surge in data traffic has led operators to push for the release of E band and V band frequencies. Operators believe that traditional microwave is not sufficient to meet the backhaul capacity requirements especially when data traffic is expected to grow manyfold once 5G is rolled out.
The debate around the allotment of spectrum in the E and V bands continued during 2018. While some industry stakeholders were in favour of delicensing of the two bands, others suggested the auction approach. The argument in favour of the delicensing approach is that since these bands have poor propagation characteristics and low values, the government will not be able to earn much from the auction of spectrum in these bands. Further, since fibre deployment is neither feasible nor cost effective for many short backhaul distances, the E and V bands can be used as backhaul to connect mobile where fibre is not available.
Meanwhile, the Cellular Operators Association of India, the primary promoter of the auction approach, believes that delicensing of spectrum in these bands would lead to interference in the bands and throw open the spectrum for access purposes. This will hurt existing access service providers that have spent around Rs 3.5 trillion in radiowave auctions since 2010.
Given the increasing demand for robust backhaul solutions, the government needs to take a quick call on how it plans to allocate the E and V band frequencies.
Moving towards 5G
The next big leap in the broadband segment is the move towards 5G. The country took many initiatives to lay the foundation for a smooth 5G roll-out. In a key move, Bharti Airtel and Huawei successfully conducted India’s first 5G network trial in the 3.5 GHz band under a test set-up at Huawei’s experience centre. Samsung India is working closely with the Department of Telecommunications (DoT) to conduct large-scale 5G trials in Delhi during the first quarter of 2019.
The India Mobile Congress 2018 also showcased India’s readiness for 5G and positioned the country as a global telecom hub for investments in next-generation technology. During the event, industry stakeholders like Airtel, Nokia, Ericsson, Jio, Huawei, Qualcomm and Samsung demonstrated live 5G use cases like driverless cars and drones.
In order to promote research and development (R&D) in the 5G space, IIT Delhi set up India’s first massive multiple-input multiple-output radio lab. Further, BSNL signed MoUs for 5G with Nokia, ZTE, Ericsson, Coriant and a Korean firm. It is in talks with Japan’s NTT to work towards the launch of 5G.
The government was also actively involved in the 5G domain. The NDCP, 2018 identifies 5G as a key focus area for the future. It highlights the need for spectrum identification, fiberisation of towers, enhancing backhaul capacity and the creation of a 5G roadmap. The government has also constituted a high-level forum on 5G, which recently submitted its recommendations on spectrum, regulation, awareness, use cases and trials for 5G. Moreover, it approved a financial grant of around Rs 2.24 billion for the establishment of an indigenous 5G test bed for Indian companies and academia. It also partnered with Huawei to conduct 5G trials in India. Meanwhile, DoT partnered with Cisco Systems to develop India-specific 5G use cases, which will help address various problems in areas such as education, agriculture and health care.
While the internet and broadband space witnessed significant evolution during 2018, there is still a long way to go before India appears on the global map in terms of broadband penetration. The country needs to step up its game in the fibre space in order to leverage opportunities arising from 5G. In addition, bridging the urban-rural digital divide is crucial for driving broadband penetration.
The year 2019 looks promising for the broadband segment. The commercial launch of JioGigaFiber services, expected in March 2019, will provide a major fillip to the fixed broadband segment. The Wi-Fi space will continue to witness significant activity with the government’s increasing involvement in enhancing last-mile connectivity, especially in rural areas. Further, the timely implementation of the NDCP, 2018 will go a long way in improving broadband connectivity in the country.