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Expanding Ecosystem: 4G trends and opportunities
During the past year, 4G services have proliferated in India, owing to the increase in operator coverage and user interest. According to GSMA Intelligence, India has around 70 million 4G subscribers as of end-2016.
This growth has created several opportunities for all stakeholders across the 4G value chain, including the government, handset players, technology vendors, telecom infrastructure providers and application developers. They are playing a vital role in promoting the usage of 4G services, bringing more users on board and shaping up the 4G ecosystem in the country.
The expansion of 4G services has given a major boost to the government’s efforts to promote digitisation. The massive 4G roll-outs and network expansion and improvement initiatives taken by telecom operators in 2016, mainly in rural areas, have provided a momentum to the Digital India programme. The recent drive to achieve a “cashless” economy is another policy move aiming to build on the expanding the 4G ecosystem. This is because 4G enables users to gain access to faster data speeds, thereby making the usage of digital payment applications like Paytm and FreeCharge easier.
Meanwhile, telecom infrastructure providers have benefitted from the growth in 4G as operators depend on them for expanding their networks. Given the diverse spectrum holdings in India, each operator has a unique mix of spectrum, ranging from 800 MHz to 2500 MHz. However, 4G has largely been rolled out on higher frequencies, which suffer from higher propagation losses. Therefore, to maintain the quality of service in terms of data in dense areas and to mitigate propagation losses, operators require additional sites even in areas that already have coverage. This gives a boost to the infrastructure business in the form of new tenancies and deployments. The handset market too has reaped the benefits of expanding 4G uptake, which was one of the key drivers of smartphone sales in India in 2016. As per market reports, nearly 70 per cent of the smartphones shipped in the country are 4G enabled. Meanwhile, technology vendors such as Ericsson, Nokia and Huawei are making efforts to tap the existing 4G potential in India by partnering with operators for the roll-out of 4G services.
The final important link in the 4G value chain that has driven the growth of these services is the applications segment. While network and infrastructure improve access to 4G, applications, both content based and over the top (OTT), propel more users to join the 4G bandwagon.
The increase in 4G coverage has provided an impetus to the market for 4G-enabled devices. These include smartphones, 4G dongles and Mi-Fi. During the quarter ended September 2016, 4G smartphone, shipments grew 24.8 per cent as compared to the previous quarter. During the period, seven out of 10 smartphones launched by handset vendors and nine out of 10 smartphones sold by e-tailers were 4G enabled. Although high-end 4G handsets have been available in the market for a long time, the key trend in recent years has been the availability of affordable 4G handsets. Most of the handset players have launched affordable 4G handsets, priced as low as Rs 3,000. Reliance Retail has been at the forefront with its Lyf series of 4G-enabled handsets starting at Rs 2,999. Meanwhile, Karbonn, Videocon, Swipe Technologies and Samsung have launched 4G-enabled handsets in the sub-Rs 5,000 smartphone category. Therefore, affordable pricing has been one of the key factors driving the 4G handset market in India. Moreover, the growing dominance of Chinese handset vendors, such as Xiaomi, Gionee, OnePlus, Lenovo, Oppo and LeEco, has been a major contributor to the 4G handset market in India. During October 2016, Chinese handset vendors accounted for 40 per cent of the total market share of 4G-enabled handsets in top 30 cities in India.
Meanwhile, the industry has witnessed an increase in the demand for 4G dongles, Mi-Fi, etc. This can be attributed to the rise in the adoption of OTT services and content-based applications, and the need for 24-hour internet connectivity. In sum, the devices market grew phenomenally on the back of increased 4G coverage, and will gain further momentum as operators continue to expand their 4G reach.
The 4G roll-outs have been facilitated by trusted partnerships between operators and global vendors for deploying 4G architecture. Several operators tied up with equipment vendors to expand the reach of 4G services in the country and provide voice over long term evolution (VoLTE) services through their networks.
In January 2017, Nokia won a 4G contract from Vodafone India for deploying and expanding the latter’s 4G services across 10 of the 22 telecom circles in the country. Prior to this, Nokia signed two contracts with Bharti Airtel to help the operator in deploying VoLTE services by using its internet protocol multimedia system solutions, and to deploy 4G services in three new circles. In April 2016, Nokia signed a contract with Idea Cellular for deploying the latter’s 4G network in the Kerala, Andhra Pradesh and Haryana circles. Earlier, it had signed a three-year 4G network deployment contract with Vodafone India for the Mumbai, Kolkata and Punjab circles.
In February 2017, Vodafone awarded a 4G deployment contract to Ericsson for the Uttar Pradesh (West), Rajasthan, Odisha, Northeast and Assam telecom circles. Prior to that, Ericsson signed a network modernisation and expansion contract with Bharti Airtel for the Delhi circle. It also signed a contract with Idea for 4G deployment and supervisory management services across select circles for two years. Meanwhile, Huawei signed a contract to deploy base transceiver stations and other equipment for Vodafone 4G networks in the Karnataka, Kerala and Delhi-NCR circles during February 2016.
The growth of 4G services has also increased the uptake of certain applications including video-based, music and OTT applications. These applications require faster and ubiquitous connectivity to the internet, which has been provided by the evolving 4G ecosystem. According to Cisco, video content is likely to account for nearly 50 per cent of the total mobile data consumption in India by 2017. This is because faster internet connectivity offered by 4G enables users to either download videos or view them online. A number of applications like Hotstar, Voot and Netflix have recently come up, which allow users access to a variety of content ranging from regional to Bollywood or Hollywood movies and television shows in Hindi, English and several other languages. Another remarkable feature of these applications is video-on-demand, which enables users to access premium content online by paying a minimal amount. Further, 4G services have made video calling easier. Moreover, easier access to 4G has also led to an increased usage of music applications like Saavn, which allow users to access a variety of music ranging from Hindi, English and regional songs online.
Meanwhile, another segment of applications, which have gained traction are OTT applications like WhatsApp, Line, Skype and Facebook. These applications allow users to connect to each other at minimal cost. The evolving 4G landscape in India has enabled users to switch from basic text messaging services to OTT messaging applications. However, the scope of these applications has expanded beyond providing just messaging services. They now allow users to make voice over internet protocol-based calls over the internet. Therefore, increased coverage of 4G has helped application developers get more users on board.
The way ahead
4G has already arrived in India. As per market reports, the number of 4G subscribers in India will account for 17 per cent of the total market share of internet subscribers by 2020. Meanwhile, operators will continue to expand 4G coverage to the areas still untouched by these services. This expansion in 4G will enable various stakeholders in the industry to not only build on the existing business opportunities, but also to bring in a variety of innovative offerings to tap the growing 4G potential.
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