4G calling; 2015 has promises and challenges for the Indian telecom sector

Another year comes to an end for the Indian telecom market. While 2014 year was significant, 2015 will be crucial in defining the Indian telecom market. We present below the key trends which we believe will dominate the industry in 2015.

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OTT wars: Fresh from the Airtel’s move to charge internet usage differently, we expect to see many such wars between operators and OTT players in 2015. While the wars were more subtle in the past and regulators were used to tame OTT, operators have now taken it upon themselves to fight the OTT wars. We expect differential charges, bundled packs based on preferred applications (promoting self apps) and revenue sharing agreements with OTTs as kinds of strategies which operators would resort to in 2015.

4G market: Reliance Jio 4G services will be launched in India in 2015. The launch of Jio will lead to multiple things simultaneously:

• We expect data price wars between Airtel and Jio thereby benefitting the customers
• Wide availability of 4G will lead to its wider adoption thereby increasing the 4G subscriber base
• There will an influx of 4G handsets at entry and mid-segments levels due to increased demand for 4G devices
• To incentivise 4G, stress will be laid by operators on different forms of content right from music, videos, images, gaming etc 

Tariffs: with respect to tariffs we expect the following from the industry:

• Increase in 2G data tariffs to bridge the gap between prices thereby prompting subscribers to adopt 3G and 4G
Read More
Increase in 3G data tariffs and reduction of 4G data tariffs to promote 4G by select operators
Voice tariffs might increase due to factors like aggressive bidding by operators in the upcoming spectrum auction.

Consolidation: MD of Vodafone India has expressed on various occasions on how competitive the Indian telecom market is with 12 players and there is a need for consolidation in the industry so that the players can operate more efficiently. With Loop mobile already closing the shops, and NTT announcing its plans to pull down shutters, industry is already moving towards consolidation. We do not expect major mergers in 2015 but industry conditions will prompt TRAI to revisit the regulations and make it more conducive for mergers and consolidation to take place in the industry.

VAS Services: Value added services have gone down considerably. Operators are not looking at VAS as source of additional revenue. Rather they have shifted focus on content like music and videos which will rather push their voice revenues.  The key reason for this shift is due to the way the customers have started consuming data.

Spectrum auction: The auction in 2015 will be key for Airtel, Idea Vodafone and Reliance communications as their licenses expire in 2015-2016. We expect that spectrum auctions will be a blood bath due to increased competition and insufficient spectrum available for auction. The Decision to hold auction in different slots for different bandwidth ranges will only add to the operator woes driving the auction prices north. Reliance communications and Reliance Jio will focus on 1800MHz while Airtel will bid in the 2300MHz band.

CDMA voice: CDMA voice subscribers have continued to decline over the year with a negative growth rate while they make a switch to GSM services. EVDO networks are getting upgraded to Rev B with peak download speeds of 14.7Mbps. Coupled with 800MHz spectrum still not being considered for LTE, it may become a data only platform for data cards.

Broadband speeds: As per the National Telecom Policy, we expect the minimum broadband speeds to touch 2 Mbps. Broadband is an alternative to the mobile data and with operators coming up with differential charges of services, broadband is a very good alternative.

Rise of Public Wi-Fi: Availability of Wi-Fi in public places is slowly catching up in India and operators have been actively taking this forward. We expect it to continue in 2015 with Wi-Fi connectivity being made available in many more places. This will become even more significant after Jio lunches its hotspots to enable Wi-Fi offloading. TATA Teleservices and Vodafone have been other active players in this domain.

TelecomTalk Thanks its Readers:

While we at TelecomTalk strive to report all the happenings in the industry, it is our readers, experts, critics and analysts who have kept us motivated and our spirits high. We would like to thank each and every one of our readers for making TelecomTalk what it is today. 2015 will be significant in the journey of TelecomTalk as we plan to grow it beyond what it is today. We seek your guidance in helping us transform and taking TT to the next level. Do drop us an email or comments to let us know your suggestions.

Team TT wishes its readers a Happy New Year!!!