Unprecedented Change In India’s Telecom Market Country To Have 225mn 4G Subscribers

Through the last one decade when telecommunication globally evolved from 2G to 4G taking along the subscribers from a mere 56 Kbps to streaming of HD videos & music on your handset, data and content has evolved by giant leaps far faster than anyone predicted. The evolution not only provided a broad variety of services to the end users but also magnified the economics of content provision, VoIP services and e-Commerce by leaps and bounds.

The evolution of LTE differs not only from an end user product offer perspective but also from the point of network architecture. This makes LTE evolution very different from the 3G evolution wherein only a few components changed along with minor adjustments in xDR formats. These minor changes resulted in majority of the core RA practices to accommodate a 3G risk mitigating process with minor adjustments to already existing controls. However this would not be the case when it comes to LTE wherein majority of the network components are different with layers of complexity that originates from the perspective of how products are designed and offered.

LTE is a wireless technology often discussed alongside its more mature alternative, WiMAX, in relation to the evolution of mobile telecom networks to “4G.” Both LTE and WiMAX technologies can deliver wireless data connectivity that is able to compete with fixed-line broadband services provided by DSL or cable. LTE’s proponents state that it may allow customers to drop their fixed-line broadband connections altogether. LTE’s primary objective is to enable operators to better and more cost-effectively transport the rapidly growing volume of mobile IP data traffic on their networks. This mobile data traffic is growing exponentially, while the service revenues paid by end users are either flat or falling due to intense competition. This disconnection between income and costs is threatening to undermine the positive revenue-generating potential of mobile data services for operators.

Therefore, LTE offers a long-term route to financial security. Nonetheless, migrating to LTE does require significant investment from mobile operators, and not just in upgrading base stations. For example, operators’ core networks, which carry the consolidated traffic from all base stations, will also need to evolve. Operators will also have to deploy SAE/EPC (System Architecture Evolution/Evolved Packet Core) network elements in parallel with LTE.

LTE technical specifications are defined by the 3GPP (3rd-Generation Partnership Project). The 3GPP’s role is important because it provides the technology with an enormous addressable market. In 2008, 89% of mobile connections worldwide, including those from AT&T and T-Mobile in the U.S., used one of the standards defined by the 3GPP. In addition, in an unprecedented move in the industry, many operators are shifting away from rival technologies and converging on LTE.

Creating a 4G ecosystem

Experts believe unless a 4G ecosystem is created in India, it will be very difficult for telecom players to sustain in the market. Currently, the inability to support voice, SMS and spectrum concerns, including the lack of spectrum harmonization, is likely to dampen its adoption. Indian telecom operators should offer cost effective 4G services in order to increase the subscriber base. This means that price of dongles need to be reduced, there has to be a greater broadband penetration and telecom players should launch 4G in more circles than they are doing at present. And all of these may take some time.

Handset subsidies in India are contributing considerably to the LTE growth and penetration over the last two years and more so in recent months. Although at present few telecos Bharti are offering 4G services in select in India. But India will see some more development in 4G in the coming months. MediaTek for example, released its 4G chipset processors adding to the eco-system. Apart from Bharti-Airtel that is offering 4G in more circles in the next one year.

The industry sees 3G and 4G are the key growth drivers for tablets which are expected to grow exponentially. Tablet PC shipments, according to market research agency Canalys, accounted for 40% of PC shipments in 2016. According to the forecast, tablet domination is set to continue. Apple and Samsung are likely to surge ahead in the medium term, but there could be challenges for both vendors as competition in the tablet market continues to heat up, believe experts.

LTE brings new business opportunities for mobile carriers

Television produced the most efficient and powerful content distribution and consumption platform of the 20th century. In the new millennium, the potential of Internet and innovation, coupled with the rapid technological advancement of mobility, is already disrupting television’s dominance as a media platform. More specifically, with the introduction of the smartphone and high-speed 4G networks, the notion of mobile TV has become a reality. Despite a rather lackluster start for mobile video in the previous decade, the underlying business opportunities are arguably stronger than ever—especially with the growth of LTE-enabled networks and devices. Operators are acquiring content as part of a strategic initiative to offset the incursion of over-the-top content providers. However, the ability to efficiently transmit this content to their high-value mobile customers has become nothing less than a barrier to transforming their business and offering more revenue-generating services to their customers.

Industry believes LTE Broadcast (also referred to as eMBMS) provides both a technology and platform that will help. Delivery of video content is one high-value opportunity for which LTE Broadcast is well-suited given its highly efficient characteristics. The total addressable market for video has increased beyond just entertainment to include delivery of e-magazines and newspapers, enterprise video content to corporate employees including the sales force, and specialized content to emergency first-responders. Content is being pushed out to personal devices beyond the TV, including tablets phones, automobiles, and public transportation. LTE Broadcast allows operators to deliver high-quality service to dense segments of their subscriber base, thus creating the best possible opportunity for monetizing the investment.

Video constitutes most of the traffic that flows over networks today. There is demand for specialized video and related content services that can be delivered over LTE Broadcast. For instance, in IDC’s most recent Smartphone Survey, 54% of smartphone owners were streaming video content for consumption over their mobile devices. Furthermore, in the U.S., 27% of respondents said that they purchased movies on their smartphones, which was slightly ahead of worldwide respondents at 23%.

For operators, the growth of mobile video traffic from over-the-top providers has created an increasing financial burden as they must continuously invest in their networks to handle the massive influx of mobile traffic. During its 2014 Q2 earnings call, Vodafone noted in Europe that video traffic grew by almost 90%. This trend is replicated in a report by 4G Americas, in which it expects mobile video traffic to increase by 70% by 2018. Given the fact that most of this traffic is generated by over-the-top providers in which little if any revenue is collected from the content originators, mobile operators will need to look to other revenue streams to help balance the need for greater infrastructure investment to handle the large increase in mobile video traffic.

Another area where LTE Broadcast can help is with software upgrades. The pervasive use of smartphones has created many challenges for operators. Prior to the smartphone era, software upgrades followed a predictable and highly managed process. This was primarily due to the static, singular use case of the feature phone, as well as reliance on proprietary operating systems. The smartphone introduced a shifting and unpredictable relationship between operating system vendors, OEMs, mobile operators, and application developers. The software upgrade process is never complete, but rather responds to a variety of issues, including fixing software bugs, updating versions to introduced new features, and patching security holes.

This upgrade process can be especially difficult and costly on mobile operators, who must make operational decisions regarding when and if to push a particular software release, balanced by the effect on their network resources. For example, a recent iOS update was approximately 1.47 gigabytes in size, requiring careful network management when pushing out the update to iPhone users. While updating customers to the latest versions of operating systems and applications are important, several operators have stated that maintenance upgrades to close holes and patch critical application functions are the primary focus. In pushing critical updates, some operators utilize their LTE network, which, according to them, can increase successful downloads and installations from 70% to upwards of 95%. The addition of LTE Broadcast can help the process of completing critical software upgrades more efficiently.

Strategic partnerships

During 2015, many operators entered into strategic partnerships with network equipment manufacturers. Bharti Airtel has awarded a contract to Nokia Networks for 4G deployment in the 1800 MHz band in the Andhra Pradesh, Northeast, Punjab, Rajasthan, Himachal Pradesh and Karnataka circles. It has also signed a $200 million agreement with Nokia for building its 4G network in the 1800 MHz band in Mumbai, Madhya Pradesh, West Bengal, Odisha, Punjab and Kerala.

Apart from partnering with vendors for technology support, operators also struck deals with competitors to enhance their 4G foothold and service potential. RJIL pioneered this trend by signing several infrastructure sharing agreements with companies like Bharti Airtel, Viom Networks, ATC India and Indus Towers. RJIL and RCOM’s spectrum trading and sharing agreement will allow RCOM to trade its spectrum in nine service areas where RJIL does not have spectrum in the 800 MHz band. The two operators will also share spectrum in 17 circles.

In August 2015, Bharti Airtel acquired 100 per cent stake in Augere Wireless Broadband India, which holds 20 MHz of BWA spectrum in the Madhya Pradesh and Chhattisgarh circle. In November 2015, Idea Cellular purchased Videocon Telecom’s spectrum in two circles in India’s first ever spectrum trading deal. Idea intends to use Videocon’s spectrum for launching 4G in 2016. RCOM has signed an agreement to merge with the Indian subsidiary of Russian company Sistema, Sistema Shyam TeleServices Limited (SSTL). The merger with SSTL will allow RCOM to use the former’s 800 MHz-850 MHz spectrum to provide better 4G services for competing with companies like Airtel and RJIL. SSTL holds liberalized spectrum in this band in eight circles: Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh (West), Kerala and West Bengal. Vodafone India is also reported to be in early talks with Tikona Digital Networks to buy the latter’s 4G spectrum for expanding its high speed broadband footprint.

India to have 225mn 4G subscribers by 2017

While 3G gradually expands its wings in India, the latest fourth-generation mobile services (4G) is seeing a rapid growth over the past one year and is likely to impact the Indian telecom market significantly. India will certainly have almost 225 million 4G clients towards completion of 2017– thanks to the launch of 4G function phones and credit also goes to Reliance Jio. 40-45 percent of the existing Jio subscribers will certainly continue to utilize their solutions after the Happy New Year deal that will certainly expire on March 31, 2017. Jio has obtained 100 million clients during the totally free promotion offer.

4G feature phones will certainly assist Indian telecommunications drivers such as Bharti Airtel, Idea Cellular, Vodafone, Reliance Jio, among others, to add over 53 million clients by the end of 2017. India has a little over 160 million 4G users as of mid March, mostly driven by Jio’s cost-free 4G services. India anticipates to add an additional 139 million smartphones taking the possible 4G client base to 235 million. With 4G attribute phone enhancement, this possibility might go across 285 million mark by the year end.

Marketing research firm Counterpoint Research earlier said virtually 200 million 4G function phones will certainly be marketed in India in the next five years. Close to 60 million systems of 4G attribute phones can deliver this year around the world from practically a million devices in 2015, with India possibly adding to nearly half of that this year.

CMR India stated 4G attribute phone will certainly not aid in releasing the power of data capabilities of a 4G network. It will help telecommunications drivers to bring voice users on to the same network of 4G as well as at some point ease their discomfort point of managing multiple generations of networks of 2G, 3G and 4G.

Reliance Jio grabs 72.4 million 4G LTE subscribers in just 4 months

The telecom operator owned by India’s richest man continues to win over half-a-million subscribers each day. The 4G LTE-only Reliance Jio from India’s largest industrial house Reliance Industries Limited (RIL) has revealed it has over 72.4 million subscribers on its network. The feat comes just four months after the service was launched to the public. The company said it is seeing over 600,000 subscribers join its network every day, at a pace that it claims surpasses the likes of Facebook, WhatsApp and Skype.

Though the milestone falls short of company’s own expectations (RIL’s Mukesh Ambani had hoped to see 100 million subscribers by the end of 2016), Reliance Jio’s ability to get 72 million subscribers will worry incumbent players. India’s oldest private carrier, Airtel, has 260 million subscribers, for instance. Vodafone, which is the second largest carrier, has over 200 million subscribers. State-run BSNL has around 90 million mobile subscribers. It’s not difficult to assess why Reliance Jio has become so popular in the country. At a price sensitive market such as that of India where many hesitate to browse much on the internet, Reliance has been offering a all its services, including 1GB of 4G LTE data every day, for free 4G LTE data to its subscribers at no charge.

On top of that, Reliance Jio is also offering these subscribers something to browse. It is offering nearly a dozen of apps, offering services such as access to live TV channels, movies and music streaming to subscribers at no cost. Subscribers will be able to enjoy these bouquet of services for free till the end of this year. However, things are not as rosy as they seem. Jio has been forced to offer everything for free as its users are unable to make calls to other networks. The company announced that 17.5% of calls made by its users to those on rival Airtel’s network failed to connect. Jio alleges incumbent players of blocking its calls by giving lesser number of points of interconnect. Its rivals blame it on Jio’s network and the heavy traffic owing to all voice calls being free.

Country’s 4G benefit

The shift to fourth-generation networks will be faster than the take-up of previous generations of mobile technology in most parts of the world, marking an unprecedented shift in mobile communications. A report by Frost & Sullivan released earlier this year estimated LTE revenues in India to reach $11.88 billion in 2017 that is projected to grow at a CAGR of 220.5% over the period 2012-2017. “4G is expected to herald a new age of productivity for remote business users. Greater capacity, lower cost of deployment, support for high mobility, spectrum flexibility and superior quality of services are some of the factors that make 4G-LTE ideal for high-speed, high-quality mobile broadband services,” says telecom analyst Ganesh Tamboli.

LTE will also boost the demand for data intensive services like mobile TV and mobile videoconferencing. This, in turn, is expected to increase telecom operators’ revenues, while enriching the overall end-user experience. From steaming corporate videos and video chat in HD as well as running presentations on tablets and smartphone while on the go – the fourth generation technology will give another new dimension to mobility just like its predecessor 3G that had changed the way we work.”

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