Nokia Siemens Networks (NSN) has released the MBit index, a report on mobile broadband performance in India.

 The MBit Index has been created by tracking the actual data payload generated between December 2011 and June 2012 on all 2G (GPRS and EDGE) and 3G networks operated by NSN for multiple Indian operators. Data traffic has been monitored at a pan-India and circle levels.

The 2G and 3G mobile data usage patterns of about 290 million subscribers have been examined and the data has been sourced from NSN?s managed services and packet core footprint in India.

The primary objective of the MBiT Index is to prove time series-based statistics and insights about the growth in mobile broadband traffic in India and co-relate those trends with changes in various ecosystem drivers, such as subscriber usage patterns, devices, coverage, etc.

The MBit Index is not based on an end-user survey of a small sample population or projections. It provides an aggregated view of how 2G and 3G subscribers in India are using data services.

Overall findings

  • Mobile broadband usage is growing. According to NSN, total 2G and 3G mobile data has witnessed a 54 per cent increase over the last seven months (between December 2011 and June 2012) in India. This indicates that mobile data usage is doubling every 12-14 months in the country and is expected to be the next big ?growth driver?, especially as subscriber additions are slowing down. NSN is of the opinion that data is growing, owing to a huge pent-up demand for the internet in India. Mobile handsets are the most preferred medium for internet access.
  • 3G is driving this growth. In the last seven months, 3G services have witnessed 78 per cent growth, compared to 47 per cent in 2G. In terms of growth in data traffic, 3G services have outpaced 2G, despite low penetration of 3G devices (6 per cent) and inadequate coverage (one-tenth of 2G). Although 2G accounts for three-fourth of total mobile data, the share of 3G services has grown steadily, from 20 to 25 per cent. Given the current device penetration of 3G, NSN says that 2G data will continue to meet the requirements of a large proportion of end users. Therefore, operators ought to continue investing and enhancing their GPRS/EDGE networks.
  • Subscribers are increasingly opting for 3G services. On an average, each 3G subscriber utilises four times more data than each 2G user. According to NSN, each 3G user uses 397 MB of data every month on an average, while each 2G subscriber uses 95 MB per month. Average 3G services consumption has doubled since about a year ago, which indicates that 3G is emerging as a viable alternative for broadband in terms of speed and user experience.
  • Reduction in 3G tariffs has helped uptake. From December 2011 to May 2012, 3G traffic in India grew by 7 per cent month on month. However, from May-June 2012, 3G traffic grew by 17 per cent, owing to operators reducing 3G services tariff in May. This indicates the price elasticity of 3G tariffs and the future potential of 3G uptake. According to NSN, as 3G tariffs reduce, coverage improves and devices become more affordable, 3G services will grow exponentially.
  • Category B and C circles are leading the growth in mobile data. Mobile data usage is growing the fastest in these circles, indicating a demand for broadband services, despite the dearth of fixed broadband. Also, improved speeds on EDGE and 2G/3G dongles are driving this data growth. 

Trends in mobile broadband at the pan-India level

  • Web browsing is the ?killer? application on mobile data, though the contribution of audio and video has gradually increased over the last quarter. According to NSN, these services have grown from 13 per cent in February 2012 to 17 per cent in June 2012. To illustrate, NSN considered a sample size of 7 per cent of the total GSM users across four category A and B circles. This represents about 15 million users.  The sample showed that web browsing comprised 81 per cent of 2G mobile data usage, while audio and video comprised 17 per cent and other services made up 2 per cent.
  • About 14 per cent of the current 3G mobile data is driven by uploading of audio, video and pictures on social networking sites, such as Facebook and YouTube.
  • The peak hour for 3G is between 10 pm and 11 pm, indicating that a large proportion of users access 3G services at home for personal entertainment.
  • To illustrate the 2G and 3G mobile data usage per active subscriber in December 2011 and June 2012, NSN considered the total 2G and 3G network payload for five operators. In December, 2G mobile data usage stood at 86 MB and 3G stood at 338 MB. In June 2012, both increased substantially to 95 MB for 2G and 397 MB for 3G data.

 Category-level mobile broadband trends

  • Metros (11 per cent of covered population) account for 21 per cent of total mobile data usage. 2G data consumption is stabilising at 24 per cent growth (slower than the national average), while 3G usage is rising sharply. This is owing to increase in 3G device penetration in these areas (10-12 per cent), which indicates the beginning of the 3G substitution effect. 
  • Category A circles(35 per cent of covered population) account for 36 per cent of total mobile data usage. 2G data continues to grow as 3G device penetration remains below 5 per cent. 
  • Category B circles (40 per cent of covered population) contribute 36 per cent of total mobile data, driven by 2G and 3G dongle users, as smartphone penetration is low. 3G data has grown by 87 per cent since December 2011, indicating strong demand for mobile data. NSN is of the view that operators ought to focus on building data coverage here. 
  • Category C circles (14 per cent of covered population) account for 7 per cent of total mobile data. 2G data usage remains dominant and is growing fast. These numbers are owing to the base effect, i.e. the low user base. 

Measures to boost mobile data adoption in India

For operators

? 3G coverage in residential areas: Mobile data (especially 3G) users consume data mostly at home during nonworking hours. Operators need to focus on in-building coverage and ensuring good speed and quality of experience in these areas, perhaps target residential areas with limited fixed broadband reach.

? Bridging the gap in data affordability and speed: In India, the ‘perceived’ gap between 2G and 3G tariffs is higher than the ?perceived? (Re 0.02 per KB for 2G and Re 0.03 per KB for 3G for a standard 300 MB connection for 30 days) the ‘perceived’ difference between 2G and 3G speeds. Operators needs to bridge this affordability gap by offering value for money plans, sachet plans, application based plans as well as investing in improving the end-user experience for 3G. NSN is of the opinion that the recent 3G tariff cuts will boost data uptake significantly.

? Investing in channel education: Most subscribers purchase 3G connections through retailers and distributors, of which 70 per cent are still not educated about the benefits of 3G. Operators must invest in educating the channel about benefits of 3G and how to use 3G services to boost mobile data adoption in India.

For vendors

? Driving penetration of affordable smart phones and 3G enabled devices: Unlike other markets, the entry barriers for 3G adoption in India is higher as a large proportion of users need to replace their handset to access 3G and data services. While operators in other markets subsidise and bundle devices, Indian operators need to look at new business models to improve smart phone penetration.

  • TCO friendly technology: This is expected to enable the most cost efficient and dynamic mobile broadband technology
  • Customer experience has to improve.

Ecosystem-based factors

  • Boosting local content and applications: China’s internet usage surge was accompanied by a boom in Chinese language based internet sites, which grew from a few thousand to 3.5 million today, taking China’s internet penetration to 35 per cent. Similarly, Internet content in India also needs to be enhanced with more local, regionalised applications that support multiple languages and cater to specific target groups.
  • Policy support