South Asian countries to witness massive mobile broadband growth

by Sohini Bagchi    Apr 16, 2013

mobile broadbandTechnology is all about transition, whether it’s about a shift from PCs to mobile phones, from servers to storage, from licensed software to cloud, or fixed to mobile broadband. Experts believe that over the next few years, there will be a phenomenal transition from fixed to mobile broadband infrastructure and services growth and adoption, especially in the South Asian markets. In fact, a new research from analyst firm Frost & Sullivan reveals that mobile broadband services market is expected to witness a twentyfold growth with a CAGR of 52.8 per cent till 2018, while the fixed broadband services segment will grow only fourfold with a CAGR of 21.2 per cent during the same period.

According to the report, the infrastructure and services markets earned revenues of more than $6.09 billion and $6.89 billion respectively in 2011 and is estimated to reach $17.36 billion and $48.72 billion respectively in 2018. Analysts at Frost & Sullivan believe that low broadband penetration, coupled with high mobile subscriber base in South Asia holds a lot of promise for the growth and development of mobile network and infrastructure in the location.

In India alone, the mobile broadband penetration is projected to reach $30 billion by 2016, as reported by Gartner last year. The report also highlighted the total mobile penetration in India is currently 51 per cent and will become 72 per cent by the end of 2016 with the number of mobile connections rising from 900 million to 700 million at present.

Growth engines

Apart from high mobile subscriber base, factors such as increasing demand for high-quality, seamless broadband connectivity are driving the growth of fixed and mobile broadband services market in the South Asian markets of India, Bangladesh and Sri Lanka, said the report.

On the infrastructure front, the Frost & Sullivan report mentioned that the telecom sector in South Asia will deploy several next-generation technologies in the coming months. This would lead to higher investments in mobile and fixed network transformation. Besides, commercial third-generation (3G) and pilot fourth-generation long term evolution (4G LTE) projects in India and Sri Lanka, and pilot 3G deployments in Bangladesh will boost the market in this location.

The Frost & Sullivan report noted that infrastructure vendors will gain more opportunities for revenue generation as operators look to overhaul their networks to support packet-based Internet protocol (IP) traffic. Government initiatives to bridge the digital divide and a focus on data services will ensure the rapid growth of broadband services.As far as broadband services market is concerned, the rise in the demand from the domestic and business segments rising popularity of social networking applications will further expedite adoption of mobile broadband services in the region.

“The falling prices of mobile access devices, especially smartphones and tablets, will continue to propel demand for broadband services in the South Asian countries,” says Suresh Vedula, Director – Enterprise Sales, Nokia India.In the enterprise segment alone Vedula informs that the percentage of employees using a smartphone to access business email or apps has even gone up significantly over the past one year. With businesses and individuals seeing greater profitability and value in smartphones, he believes that smartphones will become the most preferred medium of access for broadband over the next few years.

Challenges ahead

The broadband adoption and infrastructure growth in South Asia will further be supported by government initiatives and public-private partnerships (PPP) for broadband deployment, and this is true especially in far-flung rural areas. However, the study noted that despite these efforts by governments and operators, regulatory uncertainties in the region and rising capital and operational expenditures can hamper network deployment.

“In India alone, the telecom industry is plagued with multitude of issues related to spectrum allocation, litigation between the Department of telecommunication (DoT) and the GSM players as well as concerns overfiber optic network. This will affect the growth and adoption of  mobile broadband to a great extent,” said Smita Sen, telecom analyst and appellate advisor with Aircel.

Sen states in order to address these issues, mobile operators are currently looking to provide broadband services to bolster their average revenue per user (ARPU) and differentiate themselves from their competition. Similarly, telecom analyst Hafiz Siddiqi opines that the main challenges for success of mobile broadband implementation in Bangladesh are related to proper frequency planning, policies on Mobile broadband license and renewal of 2G license, and of course the high start up cost for the end subscriber due to the SIM Tax and the Tax on handsets.

Differentiating strategies that appeal to a wider customer base can enhance the scope for the adoption of mobile broadband solutions. However, the report pointed out that although service providers are striving to extend their reach, the poor quality of service, slow connectivity, and lack of localized vernacular content threaten to slowdown the uptake of broadband services in South Asian markets. At the same time, lack of innovative pricing models may further impede market growth.

To ensure market expansion, the entire broadband value chain must come together to provide affordable services, believes Siddiqi. The governments, telecom operators, device manufacturers, value added service providers, and infrastructure vendors should create an environment of seamless collaboration for both urban and rural consumers to accelerate the growth and transition of mobile broadband services, which has significant scope for growth in the South Asian markets.