2019 was a turbulent year for the Indian telecom industry. While the hyper-competition started in 2017 prevailed, resulting in the worst quarter for Bharti Airtel and the pushing Vodafone-Idea combine to the edge, Reliance Jio increased the pressure on incumbents through launch of its fiber- to- the home service through Jio Fiber and has major goals in terms of subscriber connects.
While OTT applications are becoming major drivers for consumption, security breaches have become point of contention with the government. As we move forward, let’s analyze the trends which are expected to dominate the coming year:
Telecom moving towards 2-3 player market
Indian telecom has witnessed major consolidation in the preceding 7 years with number of operators decreasing from 16 to 4.Telecom debt is in excess of $50 billion on the three major operators. To add to it, the apex court rules against the incumbents for payment of license fees worth $13billion to government, which includes, approximately $4 billion from Vodafone and $3 billion from Bharti.
Though, the government provided interim relief through two years’ moratorium on spectrum payment dues, but it remains to be seen whether it could revive the industry.
Monetization of services
With the entry of Reliance Jio, with a complete 4G network, there was start of price war with rates slashed up-to 70-80% as compared to earlier levels. While it was good for consumers, it started burning holes in pockets of Airtel, Vodafone-Idea and BSNL — all suffering major losses.
As per news, Bharti Airtel and Vodafone-Idea indicated for around 20% increase in rates. Reliance JIO and BSNL expected to follow the path.
Apart from these, it’s expected that soon operators will be developing ways to monetize through their OTT platforms.
Advent of 5G
“In the 5G era, telcos will earn 70% of their net revenue from enterprises. Right now, only 30% of their revenue comes from enterprises, while the rest comes from consumers”, remarks Sanjay Kaul, Head of Asia Pacific and Japan, Service Provider Business, Cisco. 5G is being envisaged as major revenue generating source and panacea to the cash starved sector.
With 5G already rolled out in patches, major global deployments are expected to commence in 2020. As per initial estimates, India was expected to follow the suit with rollout targets from 2020. 5G spectrum auctions have been held twice without any bidders mainly due to higher base price and inadequate spectrum bands had been offered.
With the Indian government looking at spectrum auctions as a tool to hive off its fiscal deficit, the deadlock is here to stay, leading to delayed deployments.
Increased IoT deployments
Two basic requirements for IoT are: devices getting smarter and, high-speed Internet connectivity. While the process has already started in terms of devices with all major organizations developing IoT verticals and investments going into R&D, high speed connectivity are expected to be boosted through fiber to the home and 5G deployments. Telecom majors have begun their pilot programs to seize business opportunities.
Increase in percentage of fiber in wired networks
With fiber-to-the-home already commercialized from September 2019, it’s expected that fiber will be forming large part of wired connectivity deployments across India. While connecting home is major target, enterprise connectivity through fiber will be major revenue generating stream for operators, which in part will increase fiber penetration.
With Big Data and higher bandwidth requirement from enterprises, it will further fuel the demand for fiber.
With the increased consumption of the Internet and breaches in privacy through major applications in 2019, the government is getting serious regarding the regulation of the Internet. Recently, the Indian government has proposed the development of a regulation body for online news portals, in-line with Press Council of India.
Also, there is proposal for Internet censorship by amendment of Section 79 of India’s IT Act, which would require Internet companies to take down content marked as inappropriate by authorities. In a legal document filed with the country’s apex Supreme Court, the Ministry of Electronics and Information Technology said it would formulate the rules to regulate intermediaries by January 15, 2020.
Until the OTT players develop reliable means to protect privacy and remove censored content, government is expected to bring strong regulations in near future.
While we consider the business aspects, telecom is expected to be major platform to drive social changes. With number of telecom connections just shy of 1.2 billion, it’s already a source of information which wasn’t available earlier.
With banking, commerce, education, etc., all using the Internet as platform for proliferation, and the government making efforts to connect the remotest of places through fiber (NOFN project), and to use the Internet to take government schemes, telecom is expected to gain more prominence and serve as wheels of Indian development cycle.
- Abhinandan Sharma
— The author is Senior VP, Citadel Intelligent Systems Ltd.