The Indian telecom industry has transformed over the past six years. Telecom subscribers, teledensity, data usage and tariffs have grown manyfold during this period, positioning India as one of the most promising digital economies. Further, innovations and rapid expansion in the telecom space have helped create several opportunities across the digital ecosystem.
To analyse the growth of the Indian telecom sector during the period 2014-15 to 2019-20, the Telecom Regulatory Authority of India (TRAI) has released a report, titled “Achievements in Digital Communications 2014-2020”. The report highlights the trends in the telecom space pertaining to broadband uptake, teledensity, tariffs, subscriber base, etc. and how they are shaping India’s digital trajectory.
A look at the key findings of the report…
During the six-year period from 2014-15 to 2019-20, the Indian telecom market made giant strides in terms of telecom service adoption and consumption of internet and broadband services. For instance, the total subscriber base (wireless and wireline) jumped from 922 million in 2014 to about 1,169 million in 2020, a rise of 26.75 per cent. Meanwhile, the total number of broadband subscribers increased almost 13 times, from 57 million to about 726 million. The overall teledensity increased from 74.5 per cent to 86.22 per cent during this period.
India’s growth rate in terms of wireless teledensity surpassed that of many developed economies between 2014 and 2019. The country’s wireless teledensity increased by 24.06 per cent from 72.18 per cent in 2014 to 89.55 per cent in 2019. Meanwhile, developed economies like the US, Canada, France, Germany and Australia witnessed growth rates of 16 per cent, 15 per cent, 9 per cent, 5 per cent and 4 per cent respectively. Further, India’s wireless subscriptions grew by 32.47 per cent, higher than many developed economies like Canada (20 per cent), the US (19 per cent), France (10 per cent), Australia (11 per cent), Germany (8 per cent) and the UK (1 per cent).
The data tsunami
The country’s data usage grew 46 times during this period, with the per subscriber data usage increasing from 3 GB in 2014 to 141 GB in 2020. Further, India outperformed many Organisation for Economic Co-operation and Development (OECD) countries in terms of data usage per subscriber per month. Data usage in India stood at 11.76 GB per subscriber per month, whereas OECD countries like Chile, Iceland and Denmark reported lower levels at 9.9 GB, 11.3 GB and 9.6 GB respectively.
A key factor contributing to the rise in data consumption has been falling data tariffs across the country. During this period, data tariffs have fallen 25 times from Rs 269 per GB to around Rs 11 per GB. In fact, India’s tariffs are now among the lowest in the world. This has been enabled by telcos’ efforts and intense competition among them. These low tariffs have increased the internet teledensity in the country, supported businesses, connected the population, and paved the way for economic growth and development.
Besides falling tariffs, the launch of 4G LTE services has brought about a technological revolution in the telecom industry, fuelling a data boom in the country. Owing to 4G LTE penetration, consumers are getting uninterrupted connectivity with high data speeds, easy access to the internet at a low cost and better voice quality, making features like streaming media and video calling a reality.
The digital landscape of the country also underwent a major transition. The total number of internet subscribers increased from 238.71 million to 776.45 million, witnessing a magnificent growth of 225 per cent. Further, rural internet subscribers increased 228 per cent from 92.18 million to 302.35 million, while urban subscribers increased from 175.21 million to 474.11 million, an increase of 171 per cent. The higher growth in rural internet subscribers demonstrates the progress in digital inclusion and the role of the internet in mainstreaming farmers, artisans, women, self-help groups, fishermen, students, etc., in the digital economy.
The number of telephone (mobile and fixed) subscribers in rural areas rose from 370.08 million to 524.39 million, a growth of 42 per cent. Meanwhile, in urban areas, subscribers increased from 551.96 million to 644.26 million, an increase of almost 17 per cent. Further, the share of rural subscribers in the total telephone subscriber base increased from 40.14 per cent to 44.87 per cent.
Paradigm shift in consumer satisfaction
Another interesting finding highlighted in the report is the “paradigm shift” in consumer satisfaction over the years. This can be attributed to:
- Wider choice due to varied tariff offerings by service providers.
- India’s transformation into a buyers’ market owing to intense competition and provision of mobile number portability (MNP) across India. The cumulative MNP requests increased from 111.94 million in 2014 to 520.8 million in 2020. Since 2014, 408.86 million subscribers have submitted their requests for MNP.
- Financial inclusion under the Unstructured Supplementary Service Data Rate Regulation introduced by TRAI in consultation with the Reserve Bank of India. It empowers consumers to perform bank transactions on a feature phone without accessing the internet.
Trends in revenue
The contribution of the telecom sector to the country’s GDP has been rising over the years. It increased from 6.1 per cent in 2014 to 6.5 per cent in 2019. Further, as per media reports, the sector enabled 30 per cent of GDP during the ongoing Covid-19 pandemic. The sector experienced an increase in gross revenue from Rs 2.33 trillion during 2013-14 to Rs 2.52 trillion during 2019-20, a growth of 8.13 per cent. Moreover, spectrum auctions have generated more than Rs 3.25 trillion in revenue for the government.
TRAI enabling digital revolution
Over the past six years, TRAI has made several recommendations to the government, many of which were accepted, thus enabling the growth of the sector. Some of TRAI’s recommendations across various verticals of the digital communications sector that have had a far-reaching impact are allowing spectrum trading and sharing; removing entry barriers and introducing virtual network operators; removing technical, financial and regulatory barriers in the expansion of the other service provider sector; and regulatory measures for the protection of subscribers against tariff hikes. At the same time, several regulatory principles have been laid down to ensure the protection of consumer interests and the growth of the sector. The primary responsibility of ensuring tariff consistency with the regulatory principles, directions and guidelines now lies with telecom service providers (TSPs). The tariff filing provision allows TRAI to monitor the prevalent tariffs and effectively intervene, wherever required.
These measures have helped improve the ease of doing business in the sector. Further, they have facilitated the adoption of new technologies such as fibre transfer and 4G+ by TSPs to improve the quality of service and meet customer expectations. Moreover, tariff reduction due to price competition has spurred new demand and increased customer reach with the rise in affordability. The larger customer base has also provided benefits of scale to TSPs, and helped them generate more revenue and profits.