COVID-19 Brings Some Relief to Indian Telcos
The nationwide lockdown for 21 days to fight Coronavirus has bought some relief to telcos like Vodafone Idea and Airtel that are were under tremendous pressure to pay hefty AGR dues. As the lockdown compelled more services to move online and with more people working from their homes, the Department of Telecom (DoT) has reportedly decided to set aside the matters related to AGR dues and concentrate on the telecom infrastructure. Analysts see this as an opportunity for Airtel and Vodafone to focus on smooth running of operations during the pandemic.
Many industries, from healthcare to IT and education to government services are now facing challenging times. People have been experiencing a spike in their telecom, internet needs as they operate from their homes. According to the Bank of America Securities reports, there has been a 20% increase in internet traffic for telecom service providers (TSPs). India has over 630 million mobile (3G/4G) users compared with around 19 million fixed broadband users, pegged at around 6%, indicating that a large part of the work-from-home pressure is and will be on mobile networks. As Dr. Tom Leighton, CEO and Co-Founder of Akamai said, “With businesses and consumers adjusting their routines amid the various COVID-19 restrictions, the internet is being used at a scale that the world has never experienced.”
Telcos respond to consumer demand
Telecom players are already responding to the high demand and encouraging more people to work from home. Last week, state-run BSNL announced free broadband service for its landline and new customers for a month to support ‘work from home’ allowed by most organisations amid the coronavirus outbreak.
Following the trend, Reliance Jio will offer free broadband service to new customers and doubled data limit for all existing customers to support work from home in fight against coronavirus. The Reliance Jio Work from Home plan at Rs 251 offers 2GB data every day and it is valid for 51 days. However, the plan solely provides internet benefits and doesn’t include any calling or SMS benefits.
Bharti Airtel said its home broadband customers are upgrading to faster speeds and bigger data plans to work and study from home.
Airtel home broadband customers are now upgrading to faster speeds and larger quota plans to support working from home and studying from home,” said a company spokesman.
The telco has asked Vodafone Idea, Reliance Jio Infocomm and BSNL to join hands and pave the way for intra-circle roaming (ICR) pacts to ensure uninterrupted mobile and wireless internet services amid the surge in data consumption. In a letter to all the companies, Airtel said the world was witnessing an unprecedented situation and all efforts were being made on the ground by the government to contain the spread of Covid-19.
Rethinking mobile internet ecosystem
While telcos are coming up with easy plans in the time of crisis and many companies are strengthening their virtual private network (VPN) connections to allow secure and fast access, there are several challenges ahead. While residential internet connections are largely meant for content consumption with strong download speeds, whereas enterprise connections require stronger upload speed and much more bandwidth to process large files.
The current situation requires a completely new way of thinking the mobile internet ecosystem, believe experts. A senior telecom official notes, traffic management is the need of the hour for ISPs and TSPs. “There has to be a clear directive from the central government to the state governments, effective policy must be laid down to secure fiber network by adhering to deployment standards with an eye on Wi-Fi, access spectrum among many others for residential as well as public access,” he told CXOToday.
Read more: Telcos in Trouble, But Unpaid Govt. Dues Nothing New in Business
Meanwhile, with more people moving to video OTT platforms such as Amazon Prime Video, YouTube, Hotstar, Zee5, and Netflix among others, mobile network congestion was reaching its peak, disrupting other major online services done on mobile network.
The Cellular Operators Association of India (COAI)’s request to DoT and OTT players to ensure that load on the network is reduced on the telcos reaped positive results. In a meeting organized on March 24, 2020 by Uday Shankar, Chairman, Star & Disney India, with key stakeholders of the digital industry all OTT players in India have announced that they will suspend their HD services till April 14 and prominent OTT players to only stream content in Standard Definition (SD).
One thing, however, needs to be taken into consideration. In dire times like these, the country needs three telcos or maybe more. A situation of duopoly and monopoly as anticipated earlier will disrupt the entire telecom industry. As Faisal Kawoosa, a telecom expert, earlier said in the current scenario, government intervention is the need of the hour as telecom is part of critical services. “Telecom was owned by the government initially before it was privatized. Also, the industry needs to work with collaborative competition rather than rivalry,” he said.
Given the situation, while Airtel, Vodafone get temporary relief from DoT on AGR dues due to Covid-19 lockdown and they may prove worthy during difficult times, there could be many more dramas unfolding in the sector in the days to come.
Read more: Can Govt Intervention Prevent India’s Telecom Duopoly?