The growth of 4G as the most preferred technology has been rapid in the Indian telecom sector. Within a short span of time, the 4G user base has grown to 500 million subscribers, which accounted for approximately 92 per cent of the total data traffic consumed in 2018, as per Nokia estimates. Falling data tariffs and migration to smartphones, along with the emergence of a digital ecosystem, have driven the growth of 4G in India. The proliferation of 4G presents a huge opportunity for various stakeholders in the ecosystem. These include telecom infrastructure providers, handset and device manufacturers, equipment vendors, testing and measurement (T&M) players and over-the-top (OTT) content providers.
Each of these stakeholders has contributed to enhance 4G adoption in the country, in turn, leveraging opportunities arising from a maturing 4G ecosystem. While infrastructure providers, equipment vendors and T&M players work more closely with operators, handset manufacturers and OTT content providers drive user adoption by providing affordable 4G-enabled handsets and driving demand for 4G services mainly through video consumption.
tele.net takes a look at the future opportunities for stakeholders in the 4G ecosystem…
Infrastructure providers
Increasing 4G coverage is high on the priority list of telcos and this is being achieved in partnership with towercos by expanding their network of mobile towers and increasing fiberisation. It is crucial for towercos to fiberise their towers, which is essential in deploying high speed data networks to meet the rapidly growing need for telecom operators to upgrade networks to 4G. Currently, approximately 22 per cent of telecom towers in the country are fiberised, which is significantly low when compared to developed countries. This represents a major opportunity for towercos to increase tower fiberisation. To this end, the government is also mulling a proposal to provide telecom towers with access to BharatNet fibre. The increasing fiberisation of towers will also assist the Department of Telecommunications’ (DoT) Bharat Wi-Fi plan, which envisages establishing a nation-wide common interoperable platform of 1 million hotspots. These hotspots will be owned and operated by telcos, internet service providers (ISPs) and virtual network operators. Public Wi-Fi will also drive telcos to expedite 4G roll-outs.
The biggest opportunity for the 4G ecosystem lies in the fact that more than half of the Indian population still remains outside the 4G ecosystem.
In addition, with the exponential increase in the volume and rate of data generation, there is a greater need to bolster backhaul capacity. Currently, backhaul in the country is dominated by microwave, but going forward, the industry needs to focus on fibre and advanced microwave backhaul networks. This is yet another potential area, that the telecom tower industry can leverage to fuel its growth. Towercos can set up operator-agnostic fibre companies and provide this infrastructure on a shared basis.
Handset manufacturers
The device ecosystem has witnessed substantial growth with 4G assuming centre stage in the Indian telecom industry. There were approximately 335 million 4G-capable devices in the country in 2018, an increase of 53.66 per cent from the installed base of 218 million devices in 2017. Further, approximately 83 per cent of the total installed base comprised VoLTE-capable devices.
This growth can primarily be attributed to the availability of affordable 4G devices from handset manufacturers and rising competition between telcos to grab 4G market share. A significant number of 4G users have upgraded from 3G devices. They demand feature-rich yet affordable smartphones, a requirement that has largely been successfully fulfilled by Chinese handset manufacturers. The launch of 4G-enabled feature phones by Reliance Jio has also ushered in an era of 4G feature phones. In the past three years, the operator has launched two generations of Jio phones and was able to capture a market share of 21 per cent in the Indian handset space in 2018. Attractive exchange offers and effectively zero pricing have contributed significantly to this growth.
While the 4G smartphone user base has increased substantially, a large portion of the Indian population, mainly in rural areas, continues to remain out of the fold. Factors such as network unavailability or unreliability and lack of digital literacy continue to keep them away from technology. This rural population needs to be mobilised for the next wave of growth.
OTT content providers
The affordability and widespread availability of 4G has been the biggest factor in enabling the growth of OTT services, audio and video, in India. The fall in data prices by around 90 per cent over the past five years and the rise in smartphone penetration have fuelled the consumption of video content in the country. Consequently, video streaming has emerged as a major contributor to mobile data traffic and accounts for anywhere between 70 and 80 per cent of the total traffic.
While initial moves in this segment were made by small and independent companies, the segment has seen a spate of larger and well- established companies enter the space. Amazon, Hotstar and Netflix remain the most popular players in the space. Further, a number of conventional film production houses and television channels have launched their own platforms and are offering their content on these platforms as well. Some of these platforms also offer live streaming services, which are growing in demand especially when it comes to sports. Telecom operators have also launched their audio and video streaming platforms and are partnering with other OTT platforms in order to retain subscribers and enhance customer satisfaction.
This space represents a big opportunity for a host of stakeholders associated directly and indirectly with the telecom space. One such category is content creators. Owing to the multiplicity of languages and cultures in the country, creating regionally relevant content has major scope. At present, much of the content is either in Hindi or English. While dubbings and subtitles are available, they do not compare with originally developed content in regional languages.
T&M players
Growing bandwidth and next-generation wireless technologies such as 4G and LTE are contributing significantly to the increasing demand for testing equipment and services. The complexity of the testing scenario has increased in a 4G environment. The launch of multiple input, multiple output technology has necessitated intensive field testing of devices and over-the-air testing. Further, specific test requirements have changed to ensure reliable device performance, owing to the presence of multiple radios within each device. Also, ensuring that devices are capable of seamlessly switching between 2G and 3G as well as 4G networks requires appropriate testing. The testing of the equipment which will be used in the government’s Bharat Wi-Fi plan represents a big opportunity for T&M vendors. Further, DoT’s plan to roll out a mandatory device testing framework from August 1, 2019 is expected to provide a boost to the demand for testing equipment and services. The testing framework is expected to focus on key areas relevant to the safety of devices, electromagnetic interference, electromagnetic compatibility, radio frequency and specific absorption rate, among others.
Equipment vendors
Equipment vendors have a significant role to play in the evolving 4G landscape in the country. They are increasingly partnering with telcos to assist them in upgrading and modernising their networks and deploying infrastructure to enhance 4G capacity and coverage. Network and equipment vendors will also benefit significantly owing to the government’s Bharat Wi-Fi plan.
Bharti Airtel has partnered with Nokia for a fronthaul solution for 4G and 5G and enterprise services; Vodafone Idea has partnered with Ericsson to deploy 5G-ready equipment across select markets; Reliance Jio is deploying Ciena’s Transport Software-defined networking capabilities to create a highly efficient and scalable network.
The way forward
The biggest opportunity for the 4G ecosystem lies in the fact that more than half of the Indian population still remains outside the 4G ecosystem. The sheer size of this market presents a large opportunity for stakeholders to focus on expanding coverage and launching relevant services. Rapid inroads being made by OTT content providers in semi-urban areas points to the fact that video consumption will be critical in driving the adoption of 4G in newer markets. Given the operators’ focus on expanding network coverage and the affordability of supporting handsets and devices being at an all-time high, the 4G ecosystem is flush with opportunities for all stakeholders in the value chain.
