There was substantial uncertainity in the Indian telecom space last year. The cancellation of 122 2G licences by the Supreme Court and a muted response to the 2G spectrum auction greatly impacted the sector’s growth. Nonetheless, the introduction of the National Telecom Policy 2012 and the launch of commercial 4G services by Bharti Airtel in the country were positive developments.
In an interview with tele.net.in, Ashish Khanna, managing director, communications, media and technology, Accenture, India discusses the performance of the telecom sector and allied services space over the last year in and a likely future roadmap for the industry. Excerpts…
How did the Indian telecom sector perform during 2012? What were the key developments?
The Indian telecom industry had its share of highs and lows during 2012. The roll-out of 4G long-term-evolution (LTE) services and reduction in 3G prices by telecom operators was one of the significant developments. The launch of 4G LTE technology resulted in better data speeds, faster downloads and access to online gaming for end consumers.
Further, the drop in the prices of 3G services by the majority of telecom operators was a welcome move. This is expected to facilitate uptake of the technology in the near future. The introduction of the NTP 2012 by the government was another important development for the Indian telecom sector. The policy has the potential of paving the way for reforms in this space.
However, the cancellation of telecom licenses by the Supreme Court of India came as a big blow for some telecom companies. Considering the huge investments made by different companies in this sector, cancellations meant the end of road for some. This also resulted in build-up of negative sentiment about the sector amongst foreign companies who were viewing at the sector as a revenue spinner. A lukewarm response to the 2G spectrum auction was another non-favourable development for the sector.
Telecom operators felt that the price quoted by the government and the regulator was too high and bidding at such high prices would not have helped them obtain expected returns. For the first time, telecom companies experienced a decline in wireless subscribers which was another negative development for the sector.
How has the 3G landscape evolved over the past one year? What developments can be expected in the 4G space in 2013?
Every new technology takes time for reaching an expected level of uptake and this is true for 3G/4G as well. With price reduction for 3G services, telecom operators are expecting an increase in the uptake of these services. Since India is a price sensitive market, a blanket price reduction strategy will help spike demand in the shorter term, but will prove to be detrimental for the operators’ revenue in the longer term. In order to be profitable, telecom operators will have to develop a win-win solution that is beneficial for the end consumer as well as the operators. With the help of technologies like analytics, telecom companies can develop a model that delivers differentiated experience to its customers.
A few of the operators have started 4G services as pilots in few states. They are likely to extend these services to other states as well. In 2013 more operators will offer 4G services. However, to drive uptake amongst end consumers, telecom operators will have to come up with plans that are targeted towards specific consumers.
What key trends are likely to be witnessed in the telecom space in 2013? What will be the key regulatory and policy moves?
The worst is behind for the telecom industry and in the coming years, the sector will see some interesting developments. However, for that to happen the government will have to ensure that policy issues are dealt with and future norms help usher a healthy ecosystem within the sector. The introduction of NTP 2012 is a welcome step that the government has taken and it showcases the government’s willingness to revitalise the sector. However, one has to wait and watch how the policy is implemented.
The launch of 4G enabled handsets in the coming years will help build the 4G ecosystem in metros and some urban areas. To ride the next wave of growth, telecom operators will need to be more customer-centric than ever and reach the right customers at the right time in the right places. Again, technologies like analytics can be a big enabler for the telecom operators in this case and help them create focused solutions that meet customer needs. The same is true for 3G services as well.
