How long will 2G networks survive in India?

The Indian telecom scenario is undergoing major transformations currently, having witnessed increasing growth in the past 15 years.

Voice and data services on 2G network were the lifeline of millions of Indians since the middle of 1990. Today, Anil Ambani, CMD of Reliance Communications, said the company added more than 1 million paid 4G subscribers in 90 days. These one million 4G users are using more than 1 GB data. This indicates that both 3G and 4G will eclipse 2G networks across the country.

If Mukesh Ambani succeeds in selling his free voice services to 900 million plus Indians, 2G networks — mainly used for voice services — owned by Bharti Airtel, Idea Cellular, Vodafone India, Reliance Communications, Tata Docomo, BSNL, etc. will be forced to undergo migration for high speed Internet.

With 5G to make an appearance in 2020, and the latest addition of Reliance Jio, with lucrative 4G launch offers and free voice calling, the era of voice connectivity on 2G networks seems to shift towards an end.

Jio, if successful, will lead to many more price cuts in both voice and data services. Also since its launch, many carriers have cut down their 3G internet rates, to meet the competition posed by the Mukesh Ambani-owned carrier.

All of this can result in a market shift from 2G, offering mainly voice connectivity and internet browsing services, to 3G, 4G and the soon-to-arrive 5G.

India: 2G Market Stats

The Indian telecom market is set to witness a growth of 10.3 percent y-o-y to attain $103.9 billion by 2020, suggest reports by IBEF.

In December 2015, India had 1.01 billion mobile subscribers and 25.52 million wireline subscribers.

But, the 2G or GSM/EDGE subscriber base is expected to decline after 2016 due to operator initiatives to migrate to 3G, decreasing handset prices and bundling of data with devices, revealed Ericsson Mobility Report India edition, recently.

In parallel to this, 3G or WCDMA /HSPA population coverage will reach 90 percent by the end of 2021, while 4G LTE network population coverage will span 45 percent.

Also, the average data consumption per user in 2014 was 688 MB per user for 3G and 216 MB per user for 2G, with the average 3G user consuming about 3 times data payloads as compared to corresponding 2G counterparts, suggest reports from Deloitte.

Future Prospects

With call drops recently identified as the most prominent issue with 2G networks across India, TRAI is taking measures and actions intended to rectify the quality issues.

If the data cost is slashed by 66 percent, a Facebook-commissioned report conveyed that four of five Indians can afford the internet. The Indian telecom operators operating the data services at around 11 percent loss has been an issue. The report has also added that if 100 percent penetration can be achieved it will lead to $1 trillion increase in Indian GDP by 2020.

Recently, BSNL has entered a 2G intra-circle roaming agreement with Vodafone, having entered the same with Aircel earlier this year, for enhancing and expanding 2G services provided by both carriers.

With the largest telecom spectrum auction about to begin, the future of data networks in India is set to transform, with resultant effect on 2G remaining to be seen.

The transformation among Indian telecom network operators created by Mukesh Ambani and his 4G team has the potential to move away from 2G networks in phases. American wireless major AT&T has already announced its decision to dump its 2G network and focus on 4G and 5G.

Since shifting away from 2G network will not be a costly program for telecoms, Indian mobile users need not wait for the migration to high speed networks.

Vina Krishnan
[email protected]