India may witness 4G boom 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.
According to a recent report by global telecom body GSMA, 4G-LTE (long term evolution) connections across the world is forecast to pass one billion by 2017 of which the Asian market will account for over 47% of all 4G connections – driven mainly by India and China.
Towards accelerating growth
According to the report, by 2017, it is expected that LTE will account for over eight billion total mobile connections forecast by that point, up from 176 million LTE connections at the end of 2013.
Hyunmi Yang, Chief Strategy Officer, GSMA mentions in his blog that timely allocation of suitable spectrum to mobile operators, availability of affordable LTE devices and the implementation of innovative tariffs will encourage adoption of high-speed data services.
Yang states mobile operators in both developed and developing markets are seeing LTE services contributing to a significant increase in average revenue per user (ARPU).
According to the GSMA data, about 20% of the global population is currently within LTE network coverage range. “As operators continue to expand LTE coverage over the next few years, it is forecast that LTE networks will be available to half of the world’s population by 2017,” it said.
In the United States, LTE networks already cover more than 90% of the population, compared to 47% population coverage in Europe and 10% in Asia, the study said. In most cases, the migration to 4G-LTE is happening considerably faster than the earlier migration from 2G to 3G, the report said.
In developing economies, operators have noted that LTE users can generate ARPU seven to 20 times greater than non-LTE users. In developed markets, operators have found that LTE can generate an ARPU uplift ranging from 10% to 40%.
India’s 4G benefit
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,”
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.
Tamboli points out 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. Bharti Airtel is the only company offering 4G services in select circles in India. But India will see some more development in 4G in the coming months. MediaTek for example, recently 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, Aircel conducted trials in Andhra Pradesh. Reliance Jio also bagged the rights to offer 4G services in that region.
Currently, operators have also become more innovative in their pricing. For example, Bharti Airtel announced that it is offering 4G services in India at 3G rates currently in India.
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 Q3 2013, less than half a million units behind global notebook shipments. According to the forecast, tablet domination is set to continue, with 285 million units expected to ship in 2014, growing to 396 million units in 2017. 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.
Apart from The country’s second largest manufacturer, Micromax, plans to launch 4G-enabled devices by the end of the year. Karbonn might also be testing 4G-enabled devices for the coming year.
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