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Telecom Trends Past and Future - COAI
Rajan S. Mathews
Director General, COAI
Past Year 2010
The past year has been an exciting one for the telecom industry with the telecom sector successfully facing the challenge of global recession. However the industry saw an intense tariff war as a result of which tariffs fell to rock bottom levels and the rediscovery of the value of a “paisa”. Growth in the mobile voice segment continued robustly, however, broadband continued to lag behind. While significant inroads were made into the rural areas by private operators, the pace rural penetration could have been further enhanced with the launch of new schemes supported by the USO.
Some of the major trends witnessed were-
- Operators offered innovative tariffs like the “per second pulse” where some of these were even less than one paisa per second.
- Launch of service by new operators in the mobile space
- Introduction of smart phones and increased appreciation in India of application stores like those offered on the i-store and Android platforms.
- Drop in prices of entry level and smart phones, with the Indian mobile phone companies enhancing marketshare.
- Auction and allocation of 3G and Broadband spectrum and launch of services.
- Increasing understanding and need to utilize “green” eco-friendly technologies and methods
Regulatory Expectations from Government in 2011
- First and foremost mandate of the policy should be to clearly state that the telecom sector is to be recognized and treated as part of the national critical infrastructure with the attendant benefits and responsibilities of this category.
- There is a need for a National Telecom Infrastructure Policies which is essential for a uniform procedure to be followed across all States. This should be defined by the Central Ministry for the optimal growth of telecom infrastructure in the country.
- Telecom, and increasingly mobile communications is catalyzing many other social and industry sectors. Eg banking, education, health etc. The pace and quality of decision making in all these needs to keep pace with the technological developments, to pass on the benefits of this to the masses. Convergence of technology is happening rapidly but there is need for matching convergence of regulations. Certainty and confidence in the regulatory environment is essential for the steady growth of this sector. Micro-regulation should give way to a market based approach.
- Renewal of existing telecom licenses in a transparent and rational basis.
- A simplified taxation and levy structure that avoids double-taxation and meets the appropriate objectives of raising revenue for government, the health of the industry and equity in the tax burden.
- A policy that incorporates the notion that the Telecommunications Industry is not a cash cow to be milked to raise revenues and close the government budget gap, but an industry that needs to be nurtured to ensure National Development goals are met through dynamic market forces unleashed by the industry and exploiting technology to enable this.
- Steady , adequate and predictable availability of spectrum.
- Provision of adequate grid power supply in the rural areas to telecom services. Government must increase allotment of funds and give significant incentives for embracing eco friendly technologies and methods.
What changes market will have?
Market Consolidation: 2011 will witness consolidation in the country’s crowded telecoms market, with new entrants scaling down their rollout plans and shying away from reducing tariffs further.
Shift of Focus from Urban to Rural: With rural teledensity at about 25% as compared to urban teledensity of 100%, the next wave of growth will come from rural areas. Connecting the unconnected will be the prime focus in the coming year 2011 as we look towards a great rural push by all service providers. Broadband will get a boost with the launch of the National Broadband Plan.
Indigenous Telecom Manufacturing: In spite of being the second largest telecom market in the world, telecom equipment manufacturing in India is still to take off and the repercussions of this delay are now being felt. The growing demand, impetus from the government will surely result in boosting the manufacturing of telecom infrastructure in India.
Voice to Video and Data Applications: Increased utilization of Video and Data and other Applications will lead to more revenue streams and will contribute enhanced revenue . Voice will see a gradual downward shift.
Financial Services on Mobiles: There will be a significant increase in the banking and other financial services, as well as other payments being offered on the mobile platform. With dedicated efforts in the implementation of allocation of the UID, this has the potential to facilitate financial services significantly in the coming year.
Brand differentiation: One of the key differentiator between operators would be the VAS offerings they have in their portfolio and the quality of service they are providing. This is expected to gain momentum, with the introduction of MNP and 3G.
Growth Drivers, Trends and Services
3G: The spectrum for 3G service in India has been allotted and the year 2011 will see launch of 3G/ Mobile Broadband services in a big way in India. 3G will not only lead to introduction of new VAS applications but will also give a boost to initiatives an new revenue streams such as m-education, m-governance, telemedicine and most importantly will become the backbone for the broadband penetration. There will be significant increase in the number of persons accessing the internet from their mobile platforms.
With 3G coming in, we expect the following trends to emerge:
- Web browsing is expected to be the most used service among mobile broadband users in India.
- Music and video related services are likely to be next most popular services.
- Data will be segmented and the plans will be tailor-made for different segments of the population.
- Price will be the most important determinant of take up of 3G services, followed by content.
- The tariff plans are expected to be competitive and innovative.
- Initially, take up of 3G services will be concentrated more among urban subscribers.
MNP: 2011 will see the implementation of the much awaited Mobile Number Portability (MNP). Operators have already made significant investments for implementation of MNP. Introduction of MNP will further increase the already intense competition and will keep service providers on their toes to attract and retain customers. There will be a greater focus on quality and service to retain subscribers.
Mobile Banking: Another initiative expected to gather pace in 2011 is that of Mobile Banking. Operators in India will increasingly leverage Mobile technology to open up channels beyond the branch network of the banks and create a banking footprint to reach banking services to the unbanked masses.
Use of Non Conventional Energy Sources: Some mobile operators are already in the process of carrying out trials on the use of non-conventional energy sources. 2011 will see a greater emphasis on use of alternate energy in telecom sector.
Shift Towards smart handsets: Though the trend was started in last year, we believe that the demand for smart phones will pick-up in 2011 because of growing economy, increasing demand and affordability.
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