There are clear indications that the Indian mobile data market is finally maturing. At the end of 2017, six years after 3G services were launched, a third of India’s mobile subscribers—310 million—had 3G capable devices, 2.5 times more than the 130 million in 2015. Another 47 million had 4G-enabled devices, accounting for 5% of the country’s mobile subscriber base. In Mumbai, Delhi, Kerala and Punjab, already more than half the devices being used are 3G-enabled. However, only 38% of the 310 million devices have a 3G connection as of now. Despite the lower number of devices being connected, the average monthly 3G data usage, at 753MB, is in sync with the global norm of 800MB to 1GB. Yet it is much lower than the monthly 3G+4G data usage in Japan (2.7GB), South Korea (2.4GB) and the US (1.8GB).
A new study from Juniper Research has forecast that annual cellular data traffic, generated by smartphones, tablets, connected cars, and other M2M modules, will reach 129,000 PB (Petabytes) by 2018, equivalent to approximately 14 billion hours of 4K video streaming. The new research, Mobile Data Offload & Onload: Wi-Fi, Small Cell & Network Strategies 2016-2021, found that as 4K content becomes both more widely available and adopted by consumers, the average data usage will increase leading to almost threefold rise in cellular traffic to exceed 318,000PB by 2021. This will put pressure on network providers who will see greater usage; indeed Sprint recently collaborated with Ericsson to trial 4K content delivery over 5G networks.
Mobile data traffic highlights: 2017-2021
- Global average smartphone cellular data usage will reach 5GB per month by 2021, up from 2GB in 2017.
- Global average tablet cellular data usage to exceed 3.3GB per month by 2021, up from 1.5GB in 2017.
- Video to account for 60% of global mobile data traffic in 2017, before approaching 80% by 2021.
- Traffic generated by cellular connected M2M systems will approach 6,000PB by 2021, dominated by the automotive sector.
- Cellular-connected fixed devices including notebooks and e-Readers will onload 20% of total traffic to mobile networks in 2017.
- Data traffic generated by smartphone, tablets and feature phones will grow fourfold between 2017 and 2021 to reach 774,000PB, equivalent to 81 billion hours of 4K streaming.
Rise in data usage calls for Govt.’s special plans
As smartphone sales in India have increased over the years, it has caused an exponential rise in consumption of mobile data — almost double to nearly 14 lakh terabytes during 2015-16, compared with a three year ago period. However, this surge in data usage still hasn’t taken the centre stage when it comes to telecom policies and regulations, which are still largely based on traditional voice services.
According to data provided by TRAI, the average minutes of usage came down to 319 minutes per subscriber per month in 2015-16 from a high of 446 minutes in 2006-07. Experts believe that even though voice usage — which comprises nearly 80 per cent of revenues for telecom companies — is falling, it is unlikely that the operators will try to arrest this decline by reducing tariffs.
“It’s not because of pricing or elasticity that minutes are coming down. India is the lowest when it comes to tariffs, and on a consolidated basis, the debt is almost two times the revenue. You look at the balance sheets of these companies, there is no scope for a further fall in average realization per minute on voice,” said Prashant Singhal, global leader for telecom practice at EY. Average realization per minute is a metric that telecom companies use to understand the profit realized on every voice minute used on its network.
Despite data traffic inching into the territory of voice usage, it is likely that in the years to come, due to introduction of newer technologies such as 4G-LTE, and a possibility of internet telephony kicking in, it is expected that mobile internet would expand the revenue pie of the telecom companies.
“Younger people are now talking less and texting and messaging on services like WhatsApp, etc more. As internet usage is rising, people are finding lesser reason to make a voice call. Going ahead, the data revenue will comprise a larger proportion of telecom companies’ total revenue, but it doesn’t mean it will become the predominant source of revenue, which is voice,” said Mahesh Uppal, director, ComFirst India.
While the overall pie of revenues for telecom operators continues to expand, in terms of average revenue per user (ARPU), a key metric for telecom companies, the ARPU earned from mobile data traffic has started eating into that from voice traffic, and even though with rising competition in the sector, the data tariffs are expected to go down, the cannibalization of voice ARPU is not likely to reduce.
“The recent rise in data average revenue per user will soon start to reverse and cannibalization by data services will continue to reduce voice ARPU,” Fitch Ratings had said in a recent report. An analyst with a leading consultancy firm said that telecom operators may not see falling voice revenues as a reason to reduce tariffs and push up voice usage in terms of volumes, the competitive pressure being faced by the companies, could mean good news for the consumer.
Concurring with the argument, Uppal said: “There is no doubt that there is pricing pressure on the operators but the tariffs of the operators are largely determined by the market. If one operator offers voice services for free, another operator would have to match that offering to stay in the business. The issue is not whether there is scope or not; if there is competitive pressure, and if one company decides to use voice tariffs to expand its market share, other operators don’t have any option but to reduce their prices.”
Going forward, the data consumption in the country is only expected to grow manifold, and will continue to be one of the major causes of declining voice usage per subscriber. However, it is believed that despite several operators betting big on data services, voice revenues will continue to dominate the earnings of these companies in the near term.
India’s mobile data traffic to grow 11 times in 6 years
The total mobile data traffic per month in India is set to grow 11 times, from 1.3 Exabyte to 14 Exabyte by 2023, according to Ericsson’s Mobility Report released recently. The report estimates that the monthly data usage per smartphone (GB/month) in India will increase five times from 3.9 GB in 2017 to 18 GB by 2023. Also, the total mobile subscriptions in the country as per the report stood at 1.185 billion in Q3 2017. LTE will account for more than 60% of the total subscriptions in the country by 2023 compared to the 12% LTE subscriptions in 2017. The report estimates that there will be around 800 million VoLTE subscribers in India by 2023, growing at a CAGR of 42.5% between 2017 and 2023.
“We expect LTE to be the most dominant technology in India by 2023,” said managing director Ericsson India, Nitin Bansal. Given the current trends, 5G subscriptions for enhanced mobile broadband by 2023 are estimated to reach one billion, as per the report. The reports states that 5G will cover over 20% of the world’s population by the end of 2023. The first commercial networks based on 5G New Radio (NR) are expected to go live in 2019, with major deployments from 2020. Early 5G deployments are foreseen in several markets, including the US, South Korea, Japan, and China.
Further, mobile data traffic is expected to surge by eight times during the forecast period, reaching 110 Exabytes per month by 2023. This corresponds to 5.5 million years of HD video streaming. Also, all regions maintain mobile data traffic growth, with North America showing the highest average usage per smartphone, exceeding 7 GB per month by the end of 2017.
By the end of this year, Ericsson claims that LTE will be the dominant mobile access technology. It is estimated to reach 5.5 billion subscriptions and cover more than 85 percent of the world’s population by the end of 2023. Also, VoLTE subscriptions are projected to reach 5.5 billion by the end of 2023, accounting for more than 80 percent of the combined LTE and 5G subscriptions.
“The latest report highlights trends in mobile subscription and data traffic growth, as well as the industry’s effort to tackle the increasing demands on mobile networks globally. As we prepare for 5G, these trends will continue to set the agenda for the mobile industry going forward,” said Niklas Heuveldop, Chief Strategy Officer and Head of Technology and Emerging Business, Ericsson.