India’s telecom evolution – Shaping a connected tomorrow

India’s telecom industry is a dynamic canvas, constantly evolving to meet the demands of the digital era. As per recent reports, Indian telecom industry is the second largest in the world with a subscriber base of approximately 1.1 billion as of December 2023 (wireless+wireline subscribers). The total number of Internet subscribers is close to 900 million, with almost 850 million being wireless Internet users. It is close to 18 months since 5G services were launched in India. As per a report released by KPMG during the India Mobile Congress in late October 2023, India boasts one of the fastest and the largest 5G deployment in the world, with close to 130 million users as of late 2023. With one cell site being installed every minute, Reliance Jio have ensured pan India coverage and Airtel is expected to complete their rollout by Q1 2024. Both these providers had also launched their 5G fixed wireless access service, which has use cases for both the consumer and the enterprise segments. There has been significant investments made by Reliance Jio and Airtel in building their 5G infrastructure and also buying 5G spectrum over the last 12 to 18 months. The CapEx on 5G is likely to moderate in 2024 once pan India coverage is completed by early 2024. It is also likely that there may be another round of 5G spectrum auctions in the first half of 2024.

Given that the service providers did not raise tariffs after 5G services were launched, it may take a while for them to monetize their 5G investments. The lack of killer 5G user cases for the consumer industry and high cost of 5G smartphones are the reasons why the telecom service providers have not seen growth in revenues post launch of 5G services. Hence the real monetization opportunities from 5G investments would come from the enterprise segment. Some of the key drivers for potential growth of the telecom services providers as they target the enterprise segment are as follows:

• Enterprise applications today are increasingly becoming bandwidth-hungry, and hence would require extremely reliable, secure and, in many cases, very-low latency networks and this is where 5G networks will come into play. The convergence of 5G with IoT solutions, analytics, and AI and leveraging the elasticity and scale of the cloud, all working in conjunction, will be a good compelling proposition that the telecom providers can offer enterprises. IoT adoption in India is still very low and especially for use cases around connected cars, fleet management and smart metering applications the opportunity for telecom service providers to offer integrated IoT solutions that include provisioning of IoT devices and their management, cellular connectivity and connectivity management as well as application enablement by integrating with back-end enterprise applications will give them new avenues for growth, and increase stickiness with their enterprise customers. 5G can definitely be a catalyst for IoT growth.
• Enterprises are looking for solution providers who can understand their key business challenges and have the ability to stitch and integrate different technologies together that can address the business challenges and hence deliver value. This is where the telecom service providers can play the role of an ecosystem orchestrator by collaborating with device manufacturers, hyper scale cloud providers, startups, etc., and thus be the one-stop-shop provider for enterprises. This solution centric mindset needs to be strongly inculcated within the front line sales and technical teams of the telecom service providers so that they can position themselves as trusted advisors to their customers.
• There are many use cases where enterprises need a reliable, high-speed, and secure private network within a campus, especially large factories, ports, large commercial real estate buildings, hotel chains, etc. In-building connectivity can be established using private 5G, Wi-Fi and wired networks. The ability of the service provider to offer any flavor of connectivity, depending on the use case, and also ensure an end-to-end managed service will give them a competitive advantage. Players like IBUS Networks have built a strong set of capabilities in this space and have implemented a number of private wired and wireless networks for large- and medium-sized enterprises.
• Given the cyber-security challenges being faced today by enterprises, the telecom service providers are again well positioned to offer a whole suite of cyber-security products and service, dovetailed with reliable and secure connectivity.

Challenges encountered by the telecom industry
Spectrum costs in India are the highest in the world and coupled with high GST and AGR, the overall cost structure of the telecom service providers is very high. The onus is on the Government of India to ensure that spectrum acquisition costs be significantly lowered, reduce GST (currently 18%) and AGR (adjusted gross revenue currently at 8%), and do away with the service providers having to contribute to the Universal Service Obligation Fund since the fund `accumulated so far has not been efficiently utilized. The pace of fiberization of towers has to take place at a very fast pace. In addition, the ecosystem that is required to be built to manufacture telecom equipment within India has to increase at a much faster pace. The PLI scheme of the Government of India was a very good initiative to really incentivize manufacturing within India so that we can make high-end sophisticated telecom equipment within India.

If these challenges are addressed, the opportunity for the telecom service providers is massive. Enterprises in India are accelerating their digital transformation initiatives to sustain their business growth and this presents a big opportunity for telecom service providers to make significant inroads. The sheer breadth of their current service offerings, namely, connectivity solutions leveraging SD-WAN, communication-platforms-as-a-service, data centers and cloud enablement, cyber-security, etc., and combining that with end-to-end IoT solutions and powered by 5G networks gives them a very strong value proposition.

5G adoption status in India
Adoption in India as on date amongst enterprises has been low and largely been confined to manufacturing companies and mostly in the automotive space. A few use cases for example, Sundaram Clayton, a large automotive component manufacturer has done a pilot to use 5G to monitor and control autonomous mobile robots within their factory in Chennai, Mahindra and Mahindra have tested 5G for a quality-related use case within their Chakan plant near Pune. Apollo Hospitals have piloted a 5G-connected ambulance use case, working with Airtel and Cisco. 5G is expected to contribute USD 170 billion in the next 5 years to India’s GDP (KPMG report). Given the potential of 5G to significantly create business impact, the Government of India announced setting up of 100 5G labs within various engineering institutes to facilitate the development of 5G applications and services to bolster smart transport, precision farming, and smart learning, among other opportunities.

Many of the CXOs that I have interacted with from the manufacturing industry are keen to test 5G for a variety of use cases – machine data acquisition, video surveillance for safety of workers, monitoring of material handling equipment within a factory, quality-related use cases leveraging computer vision, etc. The adoption of 5G is thus likely to see an uptick in the next 2 to 3 years as we see use cases mature, the entire ecosystem evolving, and the cost of the 5G telecom hardware coming down.

Satellite communications – Opening up new revenue streams
The role of satellite communications has become increasingly important, especially in a nation as diverse as India as we have to ensure that the digital divide is bridged so that connectivity reaches every nook and corner of India. Satellite technology emerges as a catalyst that can propel India into an unprecedented era of progress. There is a huge potential market in India and its size can touch USD 600 billion in the coming years. While 2023 was very positive in terms of growth of satellite communication, there are still challenges that need to be addressed, e.g., the need for a single-window clearance and the need to provision a regulator for the NTN (non-terrestrial network) integration. Looking ahead to 2024, the satellite communication industry is poised for significant transformation triggered by an array of innovations that promises to reshape the way we communicate.

Augmentation of rural telecom infrastructure
Funding of rural telecom infrastructure is an absolute imperative to bridge the digital divide. In my view, the government should make a contribution to the Universal Service Obligation Fund, which is used to build rural infrastructure. The quantum of government contribution to the fund every year depends on the planned budgetary allocation for that particular financial year. This will to certain extent offset any losses incurred by telcos in building infrastructure and offering services in rural India. We need strong network infrastructure using a judicious mix of fiber, cellular, and satellite networks in rural India, given the terrain and the remoteness of the locations. The next level of growth of wireless and wireline subscribers will be from rural hinterlands.

Roadmap to 6G
India is already gearing up to move beyond 5G to create and install its much faster and superior successor, 6G. Technology Innovation Group on 6G, has developed the Bharat 6G Vision, a strategy to create and commercialize 6G technology in India by 2030. The objectives of this vision are to create and deploy 6G network technologies that can provide highly secure, hyper-intelligent, and ubiquitous connectivity, enabling people all over the nation to have a better quality of living. The vision statement clearly emphasizes India’s commitment to socio-economic prosperity, as well as the potential benefits of India’s pioneering 6G technology, which enables ultra-low latency and speeds of up to 1 terabit per second. It is still early days as standards for 6G are still in the works, but when 6G networks eventually get rolled out in 2030 or later, it could be a potential game changer for the Indian economy.

Conclusion
The Indian telecommunication industry is at the cusp of a significant transformative change as we begin 2024. Last year the industry demonstrated tremendous resilience in a year, which was confronted with significant challenges – geo political, economic, and extreme weather events. We had seen tremendous advancements made across technology, infrastructure, and the regulatory domains. The entire digital public infrastructure, through which government services are offered, are running on a digital backbone, powered by high-speed telecom networks and hence the telecom industry is a key enabler of all digital services offered for public good.

This article is authored by Sunil David, Digital Technology Consultant; Ex-Regional Director (IoT)-AT&T; Co-Chair of Digital Comm. Group of IET Future Tech Panel; and CII National AI Forum Member. Views expressed are personal.