In the past six months, Indian telecom industry has witnessed an intense price war that saw users getting used to 1GB daily data allowance a far cry from the monthly 1GB data allowance. Yes, the situation looks grim as far as short term financial health of the industry is concerned, but, in the next 6 months to a year time period, the Indian telecom industry is gearing up for a major up-gradation in the network infrastructure and importantly a significant jump in revenues as well.
More than half of the 900 million mobile subscribers in India are feature phone users. These users offer the telcos ARPU of about Rs 100 per month. With the telcos offering free 4G voice calls for a minimum monthly fee of Rs 153 and above, the ARPU accruing from feature phone users is set to increase. If telcos are able to incentivise most of their 2G voice subscribers to voice over LTE (VoLTE), they will end up freeing up the 900/1800 MHz bands to be refarmed for 4G LTE, leading to an efficient use of the country’s natural resource. With the proposed migration of circuit switched subscribers to packet switched, network management will be simpler and easier with only one network to manage. As the telcos gear up to offer Voice over LTE ( VoLTE) services on 4G LTE feature phones, they need to upgrade their circuit switched network to IP- based converged signalling architecture the “IMS”. IMS coupled with Rich Communications Suite (RCS) will on one side help telcos in enriching their service portfolio with rich multimedia services that will be accessible across multiple devices thus providing them with avenues for north ward push to the ARPU. On the other, subscribers can benefit from OTT-like services such as HD Voice, location aware services, etc provided by telcos with telco-guaranteed QoS.
As M & A activities pick up pace, by middle of 2018, India will witness the global trend of having 4 or 5 core telcos and a number of virtual network operators (VNOs). With the decreased number of telcos, every telco will have sufficient spectrum holding and number of subscribers so as to benefit from the economies of scale. With adequate spectrum ,the increased penetration of 4G and regulatory mandate for raising the minimum broadband data rate will ensure that the average data rate goes up.
With all the telcos offering users a daily 1GB data allowance, content has become the king. And hence, the content providers and value added service providers will cease to play second fiddle. This will lead to higher revenue share as content providers will be negotiating from a position of strength. India is currently witnessing the entry of global content aggregators such as Amazon Prime, Netflix, Hotstar as well homegrown ones such as OZEE, JioCinema etc. Telcos in their attempt to gain access to the latest and most popular content will either buy stake in content & media companies or establish win-win partnerships with them. This will trigger innovation and creativity in content production and presentation. So, the Indian telecom industry is heading for its second major shake-out post 2008, the outcome of which will benefit all stakeholders in the long-term.
-Dr. Giri Hallur