Nishant Bansal, Senior Research Manager, Telecom, IDC Asia/Pacific
2022 was a revolutionary year for Indian telecom industry as 5G services were finally launched in India and the Indian government also introduced a “Draft Telecom Bill 2022” to replace the three old laws which have been used to regulate the telecom industry in India i.e., Indian Telegraph Act of 1885, Indian Wireless Telegraphy Act of 1933, and Telegraph Wires (Unlawful Possession) Act of 1950. With wider rollout of 5G services and implementation of a well-articulated and thought out “Telecom Bill” which has approval of all the relevant stakeholders, 2023 will continue to accelerate the transformation journey of the Indian telecom industry into a brighter and better future.
Telecom Trends in 2022
India finally becomes a 5G nation: While delayed, India did finally become a 5G nation in 2022. 2022 was all about 5G, 5G and more 5G for the Indian telecom industry. The first half of the year was largely led by talk around 5G, its potential use cases and trials, final spectrum pricing and announcement of the auction date while the second half was dominated by telcos performance at the spectrum auction, official inauguration of 5G services by Prime Minister Narendra Modi on October 1, 2022, and its subsequent launch by Reliance Jio and Bharti Airtel in multiple cities. All three telcos i.e., Jio, Airtel and Vodafone Idea Limited (Vi), along with Adani Enterprises ended up spending $19 billion at the spectrum auction to purchase the 5G spectrum. However, out of the three, only Airtel and Jio launched the 5G services in 2022 while Vi is expected to announce its 5G services sometime in 2023. Both Airtel and Jio are offering automatic upgrade from 4G to 5G to users with 5G smartphones with their existing data plan now. At present, adoption of 5G seems to be slow among consumers owing to lack of compelling use cases warranting migration to 5G and availability of affordable 5G smartphone devices. Despite the challenges, 5G is a game changer for Indian telecom industry and will be a major driving force in pushing India towards a digital economy.
India introduces “Draft Telecom Bill 2022” to replace old telecom laws: Advances in the means of telecommunications such as introduction 5G and use of emerging technologies such as artificial intelligence (AI), the internet of things (IoT), machine to machine (M2M), and augmented/virtual reality, necessitated the need for introduction of the draft telecom bill 2022, the purpose of which is ostensibly to have a modern, future-ready legal framework intended to repeal the existing legislations and replace them with a new regulatory framework that addresses the requirements of the telecommunications sector today. The draft telecom bill, along with its explanatory note, was released for public consultation in September 2022. The draft in its current form has both salient features in terms of easing right of way (RoW) approval issues faced by telcos and simplify the procedure for mergers, demergers, acquisitions, insolvency, and other forms of restructuring of corporates. There are some concerns about certain elements of the draft such as the aim to expand the definition of a telecom service, which many stakeholders see as an overreach, especially because the bill aims to cover broadcasting and messaging apps under its ambit including the over-the-top (OTT) communication providers. Dilution of the Telecom Regulatory Authority of India (TRAI)’s powers and empowering central government with far too much control has also been an issue which has been highlighted by some stakeholders. Despite the concerns, there is no denying that the draft bill is a much-awaited reform in transforming India into a digital economy, keeping in mind the accelerated pace of digital transformation and the entry of new players in the market.
Predictions for 2023
Pace of 5G adoption picks up among consumers and enterprises: As Jio and Airtel continue with the 5G rollout and Vi joins the party sometime in 2023, we will see the pace of adoption of 5G services pick up. 5G also provides telcos with the opportunity to generate revenue from enterprises owing to its high speeds and ultra-low latency making real-time communication and data transfer possible with minimal or no lags. Enterprises adoption of 5G is likely to pick up in 2023 led by manufacturing, healthcare, and education vertical. In consumers, the adoption is likely to accelerate as more cities are added with 5G services and infrastructure situation improves across the cities where it is available already. However, 5G services being available pan India with proper indoor coverage is still likely to push beyond 2023 and enterprises adoption also may face some pushback as organisation move towards cost-cutting measures in 2023 to navigate a downturn in the macroeconomic scenario. Telcos may not charge premium for 5G services but are expected to increase the average revenue per user (ARPU) possibly in the first half of 2023 and likely make this an annual exercise till ARPU reaches Rs 250+ or reaches close to Rs 300.
India gets a new telcom bill: The government is scheduled to release the second draft of the Telecom Bill 2022 in the early months of 2023. Hopefully, a revised draft will address stakeholder and analyst concerns from the first draft mainly around the dilution of TRAI powers, expanded definition of telecommunication services and providing too much control to the central government. We can expect a new telecom bill likely to be passed and in effect possibly by late 2023. The bill not only addresses the legacy and current issues facing the telecom sector but also proposes to provide a future-ready framework. The only thing that remains to be seen is in what shape and form the law will be implemented.
Private non-telco enterprise will be allotted spectrum and it will drive private 5G opportunity: The Indian government in its spectrum auction guidelines document allowed enterprises to “apply” for spectrum for deploying private 5G networks. Around 20+ enterprises including Infosys, Capgemini, GMR, Larsen & Toubro, Tata Communications, Tata Power, and Tejas Networks etc. have applied for direct allocation of 5G spectrum for setting up private communication networks. The GOI before allocating the spectrum is committed to undertaking a demand study and then referring the matter back to the TRAI for recommendations. International Data Corporation (IDC) believes that this whole process will take 9-12 months. However, at the end of this process, there is likely to be a lot of demand for spectrum from enterprises and this will drive a significant wave of private 5G networks.
Satellite internet services likely to commence in India sometime in 2023: TRAI has indicated that India will likely be the first country to auction spectrum for satellite communications. With auctions likely happening mid-2023, we can possibly see Satellite communication and internet services launch in India possibly by end 2023. Satellite internet will be key to delivering internet services to remote areas which are difficult to cater via broadband or mobile network.
Overall, the Indian telecom industry is expected to have a bright 2023 driven by accelerated rollout of 5G services and a robust future-ready framework with implementation of new “Telecom Bill 2022”. 5G, satellite communication services supported by future-ready Telecom Bill will lead India towards the next phase of economic growth and accelerate India’s journey towards digital economy.
