Telecom Lead India: Mobile data traffic is expected to grow 50-60 times in the next 5 years in India. Despite this, 4G take off will be slow as users will have options from 3G to compare. Is it a warning to Reliance Industries’ 4G/LTE gamble?
In a recent interview with TelecomLead.com, Neeraj Arora – director Internet Business Solutions Group, Asia Pacific Japan and China, Cisco Systems, talks about mobile broadband trends in India. Future of 4G, 3G and 2G will not be bleak though there are no takers for 2G spectrum in India. He says Reliance Industries’ voice plans on 4G will pay off in the long run. Excerpts of the interview:
What are the mobile technology trends in Asia Pacific?
There are two or three key trends that are emerging:
• Mobility – Mobile internet
• Big Data perspective
• Different access platforms (More pronounced in the Indian market). With limited spectrum as opposed to other countries such as Australia where you have adequate spectrum and the challenges are different)
Mobile data traffic is expected to grow 50-60 times in the next 5 years. China would also grow at around 40-50 times. Developed countries like Japan or the US and other countries; the growth will be 10-30 times. The traffic is going to come from consumers, about 70 percent of it will come from the consumers, and they will not just look at basic broadband access, they will look for transformational experiences, in the way the consumers live today, work, play and learn. That is what they are looking for, that’s the mobility experience.
Entertainment is a common denominator for the kind of services subscribers are looking at. In the urban areas, users will be probably looking for more live services such as mobile healthcare, education etc. We are already doing a lot of that with various state governments like Gujarat, Andhra Pradesh, Madhya Pradesh, Haryana, etc. as well as with service providers.
India’s GDP comprises 17 percent from SMBs. It’s going to grow to 20-22 percent in the next 5-10 years. They are looking at opportunities to IT enable their business processes in an affordable way. They are looking for mobility as well, business mobility. Besides BYOD, we believe there are specific verticals, financial services, education and manufacturing will contribute to around 50-60 percent of the overall business mobility traffic.
The second thing I wanted to emphasize on is the Big Data perspective.
We see that there are big opportunity that is unfolding now from the side of not just mashing up the customer side data, but then also bringing in the network side data from the elements, base stations that you have, you can see the traffic patterns from the Wi-Fi hotspots, you can see the traffic patterns and pin the two together and based on the data set, you can do a better segmentation, targeting new campaigns, something that you can really launch in the near term. So that’s basically the opportunity for the SP’s but if SP’s play their cards right, they have the opportunity of not just benefitting themselves from Big Data, but also act as a key ecosystem player. They can have a greater say in the overall eco system, from the point of view of sharing that data, with the ecosystem partners, but also trading a lot of that data.
We are working with service providers such as Orange and BT globally. There are Indian mobile operators as well. India SP’s, who have limited 3G spectrum, are struggling with how to ensure a good customer experience with the limited spectrum.
Indian telecom operators are looking at alternate access platforms, Wi-Fi specifically. They are now thinking about how to monetize a lot of data traffic that will come from the Wi Fi. We recently acquired Thinksmart technologies, a provider of Wi-Fi analytics. It really helps the SP’s to monetize the traffic that is coming in from these Wi-Fi networks.
Is there any significant progress in terms of investments being made?
SPs realize that there are certain investments that they really need to make. Some of these investments are from the point of view of mobile internet. Big Data will be better in terms of Return in Investments. It will probably give them lower margins in comparison with voice and SMS, but it will help stem the decline in their profitable growth. Wi-Fi has the potential to significantly reduce Capex outgo, depending on the overall coverage capacity objectives you have for the regions. They really need to think where exactly they want to invest their Capex and where they see a higher return, and I think the SP’s based on the context are making serious decisions regarding the same.
Do you feel that the investment will continue in the near future?
It will continue, though it will be more rationalized, structured around specific initiatives, which will probably give more returns. Mobile data is really the top of mind.
What are your views on consolidation among Indian telecos?
Consolidation will happen in the Indian market, it’s a matter of timing.
Reasons for lack of interest during the 2G spectrum auction…
India is an attractive market. SP’s globally would be thinking of the pricing pressures of the Indian market, where the spectrum is limited, it will require a huge investment for them to be successful particularly against the incumbents. So to win in this particular market, you need to think out of the box. In the years going ahead, there is an expectation of large players coming in, maybe not directly participating in the auctions but taking alternative routes.
3G adoption has just started. What are your views?
It’s not because 3G cannot deliver in terms of some of the customer aspirations but the ability of SP’s to offer that infrastructure, the reliability of the infrastructure that was there when it was launched or the lack of it. They launched the 3G service but the overall ecosystem and the other factors were not in favor of big 3G adoption.
3G is slowly and steadily taking off. It’s available in many locations in terms of connection and will not break up connection too often.
It’s not going to be a sudden gush of consumers moving into 4G. Consumers would again take a look and decide how their experience is going to be, on the different platforms so 3G vs 4G at that point in time. The other challenge is in terms of the in building penetration at the band that we are talking about for 4G.
In the long run, 4G will take off.
4G with voice…
Yes, with voice, from the point of view of 4G data, there’s a potential to potentially commoditize voice by adding voice over IP on the 4G platform, but then again, sometime late. Beside voice, beside communication, I think the service providers must look at other options such as entertainment, getting the content ecosystem right. SPs should think of offering affordable, more relevant and scaled down versions of business applications on a cloud basis on the 4G system. India needs applications that will really help not just large retailers but the small grocery stores.
Are you optimistic about ICT enablement?
ICT enablement will be there, internet and mobile internet will again play a key role, selected sectors as I was suggesting, financial services – big potential, education has a big potential. If you talk about going to some remote areas, you have mobile ATM’s, small branches that exist, agentless branches. It reduces your cost of operations but still helps provide the same experience. You still have a virtual expert who will connect with you. In the Indian context, I see a big potential in it.
Neeraj works as a trusted advisor to CXOs of mobile service providers in the region, on strategic imperatives at the intersection of cutting edge technology and business. Some of these imperatives include monetization, optimization and innovation through mobility, Cloud, video, big data, access platforms, etc. He focuses specifically on how service providers could become more innovative in developing new business models, more effective orchestrators of new business processes and more intelligent in their technology deployments.