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India's Telecom Trends for 2012 - Voice&Data

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India's

Telecom Trends for 2012
News | By Ritu Singh , 4 January, 2012 0 comments
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With the current year nearing an end, the technology industry, much like the human beings, tends to reassess the past and get itself ready to embrace the new year with new innovations that promise to make life easier. And not just new developments in the technology space, it also analyzes the mistakes or shortcomings of the technologies of the previous year and makes some resolutions to rectify the issues and move forward. As the year 2011 is closing in, hopes afloat on various technology and corresponding business aspects of the Indian telecommunications industry, VOICE&DATA analyzes the market by feeling the nerves of the technology space to come up with the top 10 forecasts. These predictions spanning across stakeholders in the telecom industry also explains why the forecasts, even if not spot on, have the merit to be taken seriously by the industry.

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New Telecom Policy 2011 The new year 2012 could not have brought a better gift for the Indian telecom industry than a new set of policy guidelines, afresh with new ideas and equipped with measures, which promises to iron out many wrinkles that have been bothering the industry for so long. The NTP 2011 Draft Policy, expected to be on the roll in January 2012, stresses on 6 hot areas: Broadband, manufacturing, spectrum, licensing, grievance redressal, and cloud computing. If drafted properly, the New Telecom Policy 2011 (NTP 2011) will shape the future of telecom in the present decade. Also, it will help once again in making telecom the shining star of the Indian growth story, contributing a sizable share to the Indian economy. With respect to broadband, the policy talks about providing an affordable and reliable broadband on demand by 2015. The new policy has set a target of 175 mn broadband connections by 2017 and 600 mn connections by 2020. It has also revised broadband download speed from 256 Kbps to 512 Kbps and subsequently to 2 Mbps by 2015, and 100 Mbps thereafter. So the first step towards that direction is expected to be taken in 2012. However to ensure that the mobile broadband takes off, the government should also specify timelines for 100 Mbps bandwidth. High bandwidth will result in applications like tele-education, tele-health, e-agriculture, and e-government services to flourish as these applications will require high bandwidth. The draft policy on manufacturing aims to meet 80% of the Indian telecom sector's demands through domestic manufacturing with a value addition of 65% by the year 2020. One has to see how this will translate into a reality, as it would be a gigantic task for the Government of India and needs to be tackled at all levels to have value addition of 65% by the year 2020. Plans are also to create a corpus fund for promoting indigenous R&D, intellectual property right (IPR), and entrepreneurship. And, this is a welcome step, but the policy does not specify the quantum of fund to promote local manufacturing and entrepreneurship, which is an important ingredient and will act as a catalyst to promote indigenous manufacturing. The draft policy also talks about making available adequate globally harmonized spectrum in the bands of 450 MHz, 1,800 MHz, 1,910 MHz, 2.1 GHz, 2.3 GHz, 2.5 GHz, 3.5 GHz, and bands identified by ITU for commercial mobile services. In all the above spectra, the government has not specified the timeframe for allocation of spectrum. Besides, among other proposals, the policy envisages the abolition of roaming charges in the country, meaning that the mobile phone users can treat the whole country as their local network and make calls as per their existing tariff plans. Once the policy is in place, provided it has all the answers for the issues that the industry is facing, the juggernaut of the telecom success story would again start rolling on. M&A Guidelines The NTP 2011 is expected to bring clarity on merger and acquisition guidelines for the telecom industry. The telecom operators may adopt a circle-wise acquisition strategy, as the licenses have been awarded by circle. Industry experts believe that there would be 6-7 telecom operators in each circle by the end 2012, while the rest would be acquired. The current set of players are running out of options to grow profitably and have already sought to build synergies through sharing of networks and backhaul infrastructure. This was evident in tie-ups that resulted in the formation of tower firms such as Infratel. Bharti airtel in its feedback to the government on new policy says that in order to facilitate consolidation the M&A guidelines should be liberal, forward-looking, equitable, and non-discriminatory. The leading 6-7 players would stay on to battle it out for the telecom subscribers and services revenues. However the merger and acquisition (M&A) guidelines are expected to stipulate that the merged entity in any circle should not have market share in excess of 60% in terms of subscriber base and gross revenues. In such cases, both the Department of Telecommunications (DoT) and Telecom Regulatory Authority of India (Trai) would have to approve the proposed merger. In case the combined market shares of any 2 entities is less than 35%, then the DoT alone may grant approval to the merger, provided the resultant entity does not hold more than 25% of the total spectrum for the service area. Will Mobile Broadband See the Light of Day? Mobile broadband is expected to see the light of the day in 2012, though it was rolled out during the previous year. With less than 2% household broadband penetration and less than 3% household PC penetration, India's internet market is grossly underutilized. The number of broadband connections stood at 12.35 mn at the end of June 2011. Introduction of 3G was to make broadband ubiquitous, high quality, and affordable to all. Also high bandwidth of 3G networks, which is one of its characteristics, will lead to the creation of new services that will attract customers. For this, 3G-compatible equipments are required; hence 3G handset sales will grow to circa 135 mn in 2015. “We see a strong uptake for 3G services and expansion of telecom services across the length and breadth of the country,” says Samaresh Parida, director, strategy, Vodafone India. He also says that with the introduction of 3G services, data will be an exciting space to watch out for, as after voice based service data is the next big thing that is coming up in the telecom industry. Operators are expected to invest around $121 bn in 3G infrastructure over the next 5 years. The number of 3G subscribers in India is projected to cross 107 mn mark by 2015, where the rural subscribers will comprise 24% of the overall 3G subscriber base. We expect the 3G services to stabilize and mature over 2012 and drive growth in the VAS market. By June 2011, there were 20.33 mn internet subscribers in India, out of which 60.7% were broadband subscribers. Digital Subscriber Line (DSL) is the most preferred technology used by the service providers to provide broadband services, and it constitutes 85.72% of the total broadband subscriber base, whereas wireless broadband accounts for just 2.78%. However in 2010, the Government of India granted broadband wireless access licenses to 6 operators, viz. Reliance Infotel, Qualcomm, Aircel, Bharti airtel, Tikona, Augere, and MTNL/BSNL. Most of these are at various stages of deploying WiMax/LTE TDD networks for wireless broadband access. It is expected that the services would go live during 2012, though the network rollout took place in the latter part of 2011 and services going to live through 2012. Wireless broadband may see some traction in the markets riding on these developments. Trai and DoT have also started the process for 4G LTE advanced deployments through consultation papers published for the industry review. Business of Cloud Computing In India, every operator today is either seriously contemplating or has already ventured into the business of cloud computing. Presently, cloud computing is the fastest growing component of data center services, accounting for more than 11% of the business, but touted to contribute more than 33% by 2015. The activity in the market is growing hot, with Huawei launching 2 new-generation cloud handsets; McAfee and ZTE coming up with its cloud security solutions; Tata introducing cloud services for the SMB market; Mahindra Satyam and Autodesk launching a dozen web based capabilities on cloud, products, and services that enable customers to enhance their desktops with mobility, new viewing, sharing capabilities, and more computing power. This is only the tip of the iceberg, as more and more players are about to enter the arena. In the next 5-6 years, cloud computing is likely to create 350,000 jobs in India, as India will prepare itself to play a key role in the global cloud based IT applications. Cisco has estimated in its global cloud index (2010-2015) that the global cloud computing traffic will grow 12 times from the existing 130 EB, to reach a total of 1.6 ZB by the year 2015, with a 66% compound annual growth rate (CAGR). In the current economy, businesses look to sweat every asset at their disposal and more and more will look to leverage their data center environments to offer cloud services as an additional revenue stream. Those companies wishing to address this burgeoning market will need to have the right data www.voicendata.com/voice-data/news/164737/indias-telecom-trends-2012 2/7

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center architecture in place-a highly virtualized fabric based network topology, delivering reliability and performance to meet strict SLAs-to respond to customer demands; and I predict that we will see some high-profile casualties as a result of providers trying to make a fast buck. Robust Backbone Network: To Address the Data Deluge Today's world of communication is all about mobility. We have reached a second phase of this mobility, ie, the 'data' transmission, the first phase being 'voice' market. During the first phase of mobile communications, networks had been built for voice flow but of late there is a quick transition to data transmission; hence the need of the hour is to strengthen mobile backhaul networks to deliver third- and fourth-generation services. Upgradation is a must also because of the complexity on networks due to increasing subscriber base, variations in type of traffic transported across network, and the demand for quality of service. So having a robust backbone network would be the top priority for most of the telcos. According to a recent report by Juniper Research, the mobile operators globally will have to shell out nearly $840 bn over the next 5 years to upgrade backhaul networks to address data deluge. The report stressed that when the existing backhaul infrastructure is incapable of supporting growth in consumption and radio network upgrades are not enough, then it has to be augmented and operators ought to simultaneously manage the upgrade of their backhaul networks. The report said that in India alone, microwave would account for 87% of capacity in 5 years. Advanced backhaul technologies guarantee bandwidth constraints and enhance spectral efficiency of the wireless interface. Unlike TDM based transport technologies, upgrading to Ethernet enables the operators to leverage on statistical multiplexing. This feature is important in aggregation backhaul applications, facilitating the optimization of traffic management over the network, reducing congestion, and helping operators get maximum benefits out of their networking investment. Coming of Mobile Devices: Security Headaches With smartphones, tablets becoming common place and BYOD trend picking up, maintaining a tight security on those devices as well as on networks would demand a greater traction. Analyst Ovum claims that smartphones and tablet computers will continue to be deployed by the enterprise for specific roles, particularly for customer-facing staff in service industries. Imation mobile security claims that the BYOD policy will be popular in the workplace, but at the same time create potential compatibility headaches for the IT department and increase the need for tracking capabilities and usage metrics. Network security experts believe that 2012 will bring attacks on the Android platform on a small scale, but tablets will be soon targeted by the same malware as that for smartphone platforms. In addition, tablets can draw a special interest from cyber criminals, as people are using them for an increasing number of activities; and they are more likely to store sensitive data on a tab than they have been on a smartphone. Trend Micro said the real challenge for data center owners will be dealing with the increasing complexities of securing physical, virtual, and cloud based systems. It said that while attacks specifically targeting virtual machines (VMs) and cloud computing services remain a possibility, attackers will find no immediate need to resort to these because conventional targeted attacks will remain effective even in these new environments. Rise of Smartphones and Tablets Smarter feature phones and smartphones at sub-USD100 levels would help drive data usage and subscription. New device and client based compression, acceleration, and virtualization technologies will help make the mobile internet access speedier and affordable. For example, a leading handset vendor has come up with a browser client that could compress web pages by up to 90%. Such technologies would make internet access much cheaper for a large number of feature phone users and even act as a pull to bring them into the mobile internet access fold. Chipmakers on their part, too, have already been coming up with hardware-level acceleration for internet access. Again, this would help improve quality of experience for the subscribers. These developments would help drive adoption of data services, including 3G. Content- and screen-aware pricing would also gain significance. Technological innovations are moving at such a breakneck speed that sometimes it becomes difficult for an unassuming consumer to keep up the pace. The latest trend in the device market is the advent of the tablet. And, it has already carved a sizeable market for itself, worldwide as well as in India. Being a true convergence device, tablets have been able to cannibalize the markets for e-book readers, gaming devices, and other media entertainment devices, including the ubiquitous desktops and laptops. “Looking ahead, in line with our 'Data Centric: Voice Enabled' strategy, we at MTS are all set to launch an array of smart devices in 2012 to target the youth segment,” says Leonid Musatov, chief marketing and sales officer, MTS India. He also says that MTS would also be focusing to expand our high-speed data footprint across the country. The introductory tablets came at a prohibitively high price of around `30,000- 40,000. Soon the players, especially the operators, realized that cheaper tablets can be one of the biggest drivers of wireless internet in India. By 2012-13, based on some recent strategic moves made by Reliance and Bharti, we expect tablet prices to go down below `10,000. Though a rage currently, it is unlikely that they will be extensively used as an enterprise solution in the near future; and the entire growth is going to be in the retail space. India has already seen total sales of 158,000 tablets during the nine month (ended June 30, 2011), with 3G and Wi-Fi tablets contributing in 70:30 ratio. Mobile Payment and NFC Services M-banking enables reaching out to a large section of unbanked population in rural India. Players such as Spice, OxiCash, mChek, ngpay, ICICI's iMobile, etc, are already offering some services in this area, but these are mostly restricted to information service and some basic applications. Bank of India, in association with Nokia and Obopay, has started offering an m-wallet service. However there is plenty of activity on regulatory and industrial front, and we expect m-banking to be a major driver of MVAS market in the near future. Machine to Machine (M2M) technologies enable devices with same capabilities to communicate directly over wireless or wired networks. According to a Berg Insight report, the number of cellular network connections worldwide used for M2M communication was 47.7 mn in 2008. It is estimated to grow to 187 mn by 2014. NFC is one of the most promising M2M technologies today. Even though the potential of NFC in applications such as mobile payment, data transfer, e-ticket, access control, etc, is immense, the adoption has been slow with only 5 mn estimated NFC pre-installments worldwide. This is forecasted to grow significantly by 2013, thanks to NFC becoming a standard component in upcoming smartphones. The mobile payments could become the flagship application for NFC usage. Purchases can be made by only touching your NFC mobile phone to the PoS terminal. The mobile in turn can be linked to your credit card, bank account, or online payment services. Another promising application could be in mobile ticketing. With everyone, including Google, Apple, Amazon, etc, showing interest in this space, soon things will surely get heated up. Mobile Advertising In 2011, the industry had its share of headline-grabbing news arising out of the 2G scam. However the biggest news for those in the marketing arena was the implementation of a new regulatory regime with respect to the use of mobile for promotions. The new Trai norms of September 2011 have impacted how the marketers and consumers view promotions. And, while we continue to witness an evolution of their interpretation, it's not an exaggeration to state that the industry will never be the same. As the count of the DND database swells to 150 mn, the new norms have forced service providers and markets to review all businesses operations, which has SMS as a promotional component. www.voicendata.com/voice-data/news/164737/indias-telecom-trends-2012 3/7

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In the face of adverse news, it's useful to remind ourselves that at 75% teledensity levels, mobile is the only mass addressable channel available, and as a result its current share of marketing budgets is extremely underleveraged. Therefore rather than viewing them as deterrents, the new anti-spam regulations should be seen as a catalyst to unlock new thinking and approaches with the target to better engage with the consumers. 2ergo India, a firm in mobile marketing space, says that the Google search accounts for a large portion of the total digital marketing revenues. Since that portion of spend is performance based, it is very resilient to marketing budget cuts. “In 2012, catalyzed by a surge of the Indian mobile internet users, expect a significant portion of that budget to migrate to mobile search,” says Raj Singh, managing director, 2ergo India. One noticeable consequence has been that the marketers have now started to pay closer attention to the mobile web and apps market. The rapid multiplication of the number of mobile web users to an estimated 80 mn has been one of the positive highlights of 2011; and with the proliferation of new handsets into the market, we expect to see that trajectory continue into the new year to the extent that the mobile web user base becomes equivalent to that of the desktop internet. BYOD: A Sure Trend BYOD is expected to be a sure trend across the industry and mostly in the ICT industries. It is expected to change the IT procurement. The company PC is becoming a thing of the past, as businesses increasingly allow and even encourage the employees to bring their domestic, consumer devices at their workplace and access corporate applications. Hence will allow application availability at anytime and from anywhere and will help business slash procurement costs. The smartphone/tablet phenomenon will fuel this trend and will drive uptake of Virtual Desktop Infrastructure (VDI), wireless networking, and end-point security solutions in the corporate arena. However it will create many problems for the IT departments, as they attempt to mitigate risk and signal a tough future for PC and laptop manufacturers. “Next year, I believe we will see at least one high-profile security disaster as a result of this trend and that will act as a wake-up call for the companies to get proper security processes in place before unlocking their networks to all and sundry,” says Rajesh Kaul, India regional sales director, Brocade. Without doubt, with innovations expected at all aspects of the ICT industry, 2012 promises to be a year to watch for and the above trends deserves a greater amount of focus. Follow V&D on 0 comments
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