With this issue, we celebrate our 24th anniversary.
Over the past 24 years, the Indian telecom sector has undergone a phenomenal transformation, from a small voice-only 2G market to one of the world’s largest data markets. Today, the average user in India consumes over 18 GB of data per month, the highest globally. The country’s total data consumption as of September 2023 stands at 47,629 PB.
5G is set to alter the country’s digital landscape, with its impact cutting across various sectors. Service roll-out throughout 2023 has been very impressive and this is, reportedly, the fastest 5G launch globally. At this pace, it is expected that by 2025, close to 10 per cent of India’s telecom user base will have transitioned to 5G.
The introduction of the new Telecommunications Act in December 2023 is an important milestone for the sector, despite the haste with which it was passed in the parliamentary session, without much consultation. Long overdue, the act replaces some of the archaic acts/laws and paves the way for progressive and modern legislation that aligns with the sector’s changing dynamics. The updated law is more compact and addresses pertinent issues – flexibility in spectrum allocation, mechanisms for improving RoW, establishment of common telecom infrastructure, expansion of the scope of the USO Fund (now Digital Bharat Nidhi) and the introduction of a regulatory sandbox to accommodate emerging technologies as well as provisions for the protection of users from unsolicited advertisements. These are all steps in the right direction.
That said, several grey areas still remain. The substitution of “licensing” with “authorisation” is ambiguous. Further, the act advocates for technology neutrality in spectrum use but not in the delivery of services. It gives the government the power to intercept citizen data, infringing on individuals’ privacy with little or no accountability. Moreover, not much has been done to ensure a competitive market.
Apprehensions of a duopoly loom over the sector, with the fate of towercos closely intertwined with that of Vi’s, and the entire ecosystem bearing the brunt.
At the industry level, tariff rationalisation is crucial for bolstering ARPUs. This will not only help the industry in improving the return on investment, but will also serve the interests of the ailing Vi, ultimately correcting the sector’s distorted competitive landscape. Notably, despite a sustained increase in ARPUs (currently at Rs 140-Rs 200) in the past few years, they are still far from the ideal level of around Rs 300.
As we enter 2024, the extensive roll-out and commercialisation of 5G will remain key focus areas. The industrial use cases for the technology are expected to start gaining traction.
Broadband via satellite will open up new avenues for growth and revenue for the sector. Bharti-owned OneWeb and Jio Satellite Communications have already secured licences, and it will be interesting to watch the unfolding competition in this new market.
In the data centre space, demand will continue to exceed supply in the near term. Given the emphasis on digital transformation across industries, the need for more digital public infrastructure and the focus on data localisation, the data centre growth story seems to be just beginning.
