While India continued its struggle with low broadband penetration during 2016, there was some cause for cheer. On the back of Digital India and various other policy and regulatory initiatives, as well as the mass roll-out of 4G services, the country managed to cross the inflection point. And the coming year promises to witness a significantly improved broadband scenario.
Aggressive 4G roll-outs by the incumbents, coupled with the entry of Reliance Jio Infocomm Limited (RJIL), have given a major fillip to the wireless broadband segment. The momentum is only going to build up as price wars around 4G intensify and the service becomes more affordable. Further, the spectrum auction in October 2016 brought some respite for the spectrum-starved operators. Even though spectrum in the 700 MHz band remained unsold, operators picked up airwaves in other bands (1800 MHz and 2100 MHz), which can be used to offer 4G services.
Fibre deployments also gained traction across the industry. BharatNet finally picked up pace, which bodes well for rural broadband penetration. Bharti Airtel pushed fibre deployments in a big way, particularly through its new V-Fibre launches. Further, the finalisation of the right-of-way (RoW) rules will streamline the processes for fibre installation, addressing one of the biggest bottlenecks in the industry.
tele.net takes a look at the key trends in the broadband segment during 2016, and the outlook for 2017…
Shift to 4G
The Indian 4G space witnessed significant activity during 2016, with operators conducting extensive roll-outs across their licensed circles. The scale of service coverage was further expanded with the entry of RJIL. The price war that followed has made 4G services much more affordable for users and this has helped in service uptake.
Bharti Airtel now offers 4G services in 21 telecom circles across the country. Vodafone is currently offering these services in 17 circles. Idea has deployed 4G services in 11 circles and plans to extend these to nine new service areas by March 2017. Meanwhile, RJIL, which offers these services across all 22 circles, is looking to have 100 million subscribers on board by March 2017.
Growing smartphone penetration
As per latest industry reports, India’s smartphone user base crossed 300 million in 2016 with shipments growing by 18 per cent over the previous year. There was a surge in the availability of long-term evolution (LTE)-enabled smartphones, with more than 7 out of 10 smartphones shipped in the country being 4G enabled. A key growth driver was the steep decline in the cost of 4G devices, which, in turn, was facilitated by the economies of scale achieved by handset manufacturers through large-scale 4G adoption in several Asian markets. Another important growth driver was the accelerated 4G network roll-out by the incumbents.
The issue of high prices of 4G-enabled smartphones was addressed to some extent with affordable 4G smartphones flooding the market in 2016. There was no significant price differential between 3G and 4G devices at the entry level. The situation is set to improve further as the government has asked manufacturers to develop affordable 4G smartphones – priced as low as Rs 2,000. Karbonn and Intex have stated that they can meet the low-price criterion, depending on variables such as the size of the order and the government’s support.
Spotlight on Wi-Fi
The major factors driving the growth in Wi-Fi services are higher data usage on mobile networks, the growing uptake of new applications, and low fixed line coverage. Telecom operators are increasingly deploying Wi-Fi networks to bridge coverage gaps and offload cellular data to reduce the traffic on their networks. In the past one year, public Wi-Fi has evolved in a big way in the country. There are currently around 31,000 public Wi-Fi hotspots in the country, and this number is expected to increase to 202,000 by 2018.
Progress on BharatNet
The BharatNet project is finally picking up pace. The project, which is aimed at providing high speed broadband connectivity in rural areas and is being funded by the Universal Service Obligation (USO) Fund, has faced implementation issues over the years, owing to which it has repeatedly missed its deadline. During 2016, the speed of laying ducts and fibre under Phase I increased eightfold to 400 km a day from 50 km a day earlier. As per the Department of Telecommunications, the expenditure on remote and rural telecom infrastructure projects (primarily BharatNet) from the USO Fund is estimated to be at least Rs 75 billion in 2016-17, about 2.5 times more than the Rs 30 billion spent in 2015-16. The first phase of BharatNet seeks to provide broadband connectivity to 100,000 gram panchayats by end-March 2017.
The second phase, scheduled to begin from mid-2017, aims to connect 150,000 gram panchayats at an estimated cost of
Rs 270 billion. The Telecom Commission has given its approval for the second phase of the project and the proposal is expected to be sent to the Union cabinet by end-March 2017. In addition, the government is likely to explore the aerial fibre implementation route under Phase II to expedite execution. Although aerial optical fibre cable is a less reliable and durable alternative as compared to its underground counterpart, it has several advantages in the short run, including lower cost and faster implementation.
Fillip to fixed broadband
Last-mile connectivity through fibre-to- the-x (FTTx) deployments has been increasing, albeit at a slow pace. Vodafone’s acquisition of YOU Broadband was a key move, indicating the growing relevance of last-mile fibre infrastructure in an operator’s portfolio to ensure competitiveness. As part of the deal, Vodafone acquired around 3,000 km of the latter’s optic fibre and 6,000 km of last-mile cables to connect homes across 12 cities, including Mumbai, an important market for data. Regional service providers such as ACT Broadband and YOU Broadband, and cable multiple system operators have been leading the growth in fixed broadband connections recently. While these private regional players recorded strong net additions, state-owned Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) continued to report subscription losses.
In October 2016, Bharti Airtel enhanced its fibre play by launching V-Fiber technology. This technology is based on vectorisation and promises to deliver speeds of up to 100 Mbps. Currently available in Chennai, Bhopal, Pune, Ahmedabad, Indore and Mumbai, it is planned to be rolled out across Airtel’s national broadband network and will cover 90 cities. According to the company, V-Fiber will transform home broadband services for Airtel’s customers by providing them with consistently superfast data speeds and enabling HD video streaming and heavy file downloads and uploads in a multi-device environment (over Wi-Fi).
The industry still has a long way to go before it appears on the global map in terms of broadband penetration. The state of fixed broadband remains dismal with only 7 per cent household penetration. In addition, the urban-rural digital divide continues to be significant. Therefore, it is imperative to change the prevailing rural broadband ecosystem and improve broadband infrastructure reach in these areas.