The Indian Telecom industry has had a long and eventful journey. Starting way back during the British Raj it has grown and developed into a massive industry connecting millions everyday across the country.
From the first experimental electric telegraph line started between Calcutta and Diamond Harbor way back in 1850 to the ushering of the cell phone revolution in Calcutta in August 1, 1995 and to the launch of 4G services 16 years later in Kolkata the Indian telecom industry has come a long way. From a paltry 37 million telephone subscribers in 2001 to 915 million subscribers in 2013 ? Indian telecom industry is now the second largest in the worth based on fixed and mobile telephony subscribers. According to the Internet and Mobile Association of India, The internet user base (desktop and mobile user) has reached 190 million.
The Indian Telecommunication Industry ? telephony, internet and television broadcasting ? is supported by the INSAT series of satellites connecting each and every part of India through the medium of radio, television, internet, and phone. Liberalisasation of this sector has led to influx of technology and reduction of tariffs due to hyper competition in the market. A corresponding increase in customer awareness and rights has led to a slew of new products and customer service centers or contact centers across the length and breadth of the country. Tele-density ?defined as number of telephony connection for every 100 ? has increased dramatically to 73.16 per cent. The Tele-density figure for 2011 was 76.8 per cent. This slight reduction in Tele-density can be attributed to new norms laid down by the telecom authority which lead to many cancellations.
Considerable investment in telecom infrastructure became necessary for supporting such massive networks. State of the art digital telephone exchanges, mobile switching centers, media gateways are supported by a variety of transmission systems including fiber optics and microwave relay transmission. While urban Tele – Density reached 139.33 in April, 2013, rural Tele-density stood at only 40.49 per cent. The lower density in rural areas can be blamed on poor last mile connectivity and reluctance of telcos to leap into markets that are not lucrative.
Predominant trends in Telecom
Increase in subscriber base
Low tariffs and affordable handsets will continue to drive growth in the subscriber base. According to Gartner, mobile user base is expected to grow 9 per cent this year and reach 696 million. Mobile penetration which is 51 per cent now is expected to reach 72 per cent by 2016. With more handset manufacturers entering the fray the handset manufacturing market is expected to grow to $7.8 Billion by 2016. One big reason driving growth in the market is the sheer range and diversity of handsets available in the market suiting every pocket and purse.
Value Added Services
Since margins are extremely thin due to the hyper competitive nature of the Indian market telcos are looking to value added services (VAS) like music airplay, video on demand, gaming in-order to augment their revenue stream. There is huge demand for apps in the smart-phone and tablet market which can be tapped by telcos.
All You Can App (AYCA)
A monthly subscription based product offering bundled with normal telecom offering. A good example is Reliance offering the phone customer access to facebook for a small monthly subscription. A typical AYCA customer is one who has recently migrated to smart-phone and is wary of running up a huge bill. Email, movies, social media, music ? the possibilities of AYCA is endless.
Smart-Phone Revolution
Stats are out ? smart-phones are outselling computers. Tablet sales are also very encouraging. This is nothing but great news for telcos because smart-phone and tablets can drive data usage. The challenge for the moment is driving data and app usage in this segment because the newly migrated user is still vary of using their smart-phone for anything other than calling and text messaging.
Bring Your Own Device (BYOD)
A hot trend since 2010 but showing signs of slowing in 2013 interest in BYOD is expected to fall as organisations grapple with the complexity of plugging freewheeling systems into organization systems and protocols. BYOD may stilly distill down to BYOC (Bring your own computer) or maybe not. Watch the space.
Challenges in Telecom
lack of spectrum
Much like land, spectrum is not available in unlimited quantities. Spectrum is exhaustible resource. With data utilization going through the roof, performance is going to be a major worry for most telcos, especially in high density urban areas. The likely fallout will be slow browsing speed, poor video streaming and call dropping (voice over IP) during peak hours on high density routes. Not whole of the available spectrum is the same. Of the available spectrum between 600 MHz to 3600 MHz only 900 MHz qualifies as prime estate. Due to this paucity of prime estate within the spectrum band telcos have to look forward to newer technologies like LTE or 4G.
Converting Smart-Phone users to avid Data Users
With smart-phone costs going south-wards the number of smart-phone users is bound to increase. As the user base continues to grow, the number of users using smart-phones full range of features is also going to increase. But there is still going to be a vast majority of smart-phone users using only the basic functionality of the smart phone ? call, text, fm. The challenge for telcos is to drive data usage in this segment. The major problem standing in the way of greater data usage is failure to understand the billing mechanism. Most smart phone users will run up a huge data usage bill at some point or the other. Some, chastised, swear ?off data usage, using their smart ? phone only for taking calls, texting and entertainment. The challenge before Telcos is two fold: 1) driving costs down; 2) educating public on proper usage. The All You Can APP (AYCA) model holds great promise.
Benefits of the Telecom Revolution Not Distilling Down to SME/SMB
SME and SMB segment have not benefited much from the telecom revolution unlike big biz. Thanks to the capital intensive nature of telecom small players cannot compete with big biz outspending their smaller rivals out of competition. Since SME segment contributes more than 45% of the GDP they are important. Telcos need to provide product and services catering to the SME segment.
Security
The Conficker worm unleashed in the world in November 2008 woke security experts to the possibility of the worm paralyzing registries that oversee high level internet domain. The worm exploited a loophole in a widely used OS and festered inside the host computer after repairing the loophole so that no other worm could enter the same way. The worm was so sophisticated that only a few knew about it. Conficker self destructed but it woke up security experts of the many risks facing telecom sector.
Future Trends
Telecom and IT heading for a collision
Due to rapid development in IT the difference between telecom and IT is blurring. IT companies are coming out with new cloud based technologies that is taking communication to the next level. One such technology known as cloud telephony is fast gaining acceptance.
Cloud telephony is basically virtualisation of hard physical components of a premise based telephony system into software based interface that is easy to learn and use. Unlike premise based telephony systems, cloud telephony does not require CAPEX upfront. One can plug it into existing internet connection and start communicating right away providing Fortune 500 communication capabilities to small organizations.
Already some cloud telephony vendors are providing a full range of communication capability including telephony, IVR, Fax and cloud conferencing services on a managed communication basis. The demand for cloud telephony is such that telecom and IT companies are heading for a head-on collision.
SME/SMB Segment
Businesses all over the world are steadily moving toward a managed service business model. Owning infrastructure is on the way out and there?s a perceptible paradigms shift toward cloud technologies. The trend is catching even in developing countries like India where knowledge about cloud based technologies is low.
SMBs are looking at enterprise class features and resources to change the way they consume IT and reduce infrastructural requirements. The operative word is fast moving from cost benefit to strategic benefit. Some SMB vendors are not even looking at cloud telephony as a cost advantage but as a strategic advantage as it helps in rapid deployment and ramp up to scale.
M2M Communication
As devices with microprocessors profligate the internet will bring all of them together ? machine to machine or more prosaically internet of things. It is predicted that M2M communication will prevail over H2H (Human to Human) interaction in the near future. The expansion of IT networks across the world has made it easier for M2M to take place. Sensors located on a device will transmit data to other devices allowing it react in a dynamic fashion. A good example is a dynamic billboard that reacts to changing environmental conditions.
