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Shree Parthasarathy
Chief Innovation Officer and Leader Cyber Risk Services, Risk Advisory
Deloitte India

Taking the Pulse of the Telecom Industry – An Insight into the Emerging Trends

The rapidly evolving digital technology has changed the game for businesses across sectors. One of the major industries which witnessed transformation of huge proportions is Telecommunications. Technology adoption, increased use and penetration of data, changing customer preferences, aggravation of the content-war, and entry of new player(s) in the market are some of the factors that have significantly changed the business model for most of the telcos in India. According to a Deloitte study, the emergence of the following trends will further compel the telecommunications industry and the regulators to keep pace with the rate of change and the corresponding impact.

Data Analytics

With the integration of external and internal data, enormous insights can be generated which can help businesses to broaden their revenue base and provide better quality and experience to the customers. The telecommunication industry with its rich repertoire of customer information is uniquely poised to explore interesting use cases.

Data Quality and Security

Organizations will put in place a well-deserved yet long overdue focus back on data organization, quality, and management. Data quality related initiatives are already on the rise in 2017–2018 with around 50 percent of telecom organizations focusing exclusively and deeply on data quality improvement initiatives, which is expected to gain further momentum. Besides, data protection and cyber security will top the priorities for the telcos as well as other data driven enterprises to sustain the business and ensure consumer trust.

Artificial Intelligence

As cloud becomes more pervasive and thereby more affordable, all the branches of artificial intelligence will gain momentum in the next year. With renewed focus on infrastructure, manufacturing, and other core sectors enabled by telecom and technology growth catalysts, physical artificial intelligence assisted by a machine learning algorithm to solve a specific business question and/or opportunity will have significant adoption. Telecom players will play a critical role in getting the backbone ready. Along with devices, product technology players will also build contextual algorithms for local issues.

Over the Top (OTT) Platforms

Original content will be the key driver of OTT growth and the regional content library is expected to increase its share on the OTT platform. The OTT platform has been benefited as telecom players are offering affordable 4G data. Data rates have dropped drastically across the board with the launch of broadband services by one of the major telecom players in the country. By 2021, the vernacular Internet users are expected to be 2.5 times more in number than the English Internet user base.

VoLTE

More than 60 percent of all broadband subscribers would be utilizing voice over LTE (VoLTE) technology for voice services by 2023 surpassing 5 billion subscribers globally, thereby making VoLTE the most prevalent voice technology in the future. Since the launch of 4G/LTE by telcos, the data traffic has globally grown 65 percent year on year and had almost reached 14 EB (1018 bytes) per month by end of 2017. The spectrum freed up as a result of retirement of legacy technology (2G, 3G) will be used for IoT and M2M communications, thereby adding to the operator services bouquet and additional revenue streams.

In addition to the advantages of improved spectral efficiency, reduced cost per bit, improved Quality of Service (QoS), and the application across retail and enterprises, the ever increasing VoLTE bouquet of services is allowing telcos to compete against the OTT challenge. Video capabilities which would comprise bulk of the traffic in the future enhance the VoLTE business case. As a result, most telcos are advancing their plans and commencing trials/deployment of VoLTE.

Smartphone Usage

By the end of 2023, penetration of smartphones among adults in developed countries is likely to surpass 90 percent, a five-percentage-point increase over 2018. By 2023, 5G networks should have launched in most developed markets, offering much greater capacity and connectivity speeds. Furthermore, advanced 4G networks, which can also support peak download speeds of over 1 GB/s, should have rolled out in most of the remaining markets.

India would be leading the smartphone revolution in the coming years as the largely untapped market slowly gets included into the realms of digital services. India currently has around 300–400 million smartphone users and is expected to lead the smartphone growth reaching 810 million by 2021.

The telecommunications market in India is characterized by an urban–rural divide which is manifested by an urban tele density three times higher than that of rural. However, the scenario will change soon with the increasing availability of affordable telecom services and handsets in the market and the numerous government initiatives to connect the unconnected. India is poised to be at the forefront of the global data revolution with the introduction of bundle-based sales of smartphones with cheap data tariffs.

When telecom service providers in India started offering 4G data services at low prices and the OEMs reduced entry level smartphone prices, a large number of feature phone users were expected to upgrade to smartphones. However, the smart feature phones introduced by one of the new entrants (telecom service provider) in the market proved to be a game changer. These phones would potentially bridge the digital divide by reaching out to the bottom of the pyramid with several data-driven functionalities bundled into a device.

Digital Media Subscriptions

The steady rise in broadband speeds has fueled the success of online streaming and in-turn facilitated the increase in number of the online subscribers. 2018 will see increase in number of homes consuming streaming services in 4K or ultra-high-definition (UHD) resolution. The rollout of 4G networks by telcos has made music and digital content streaming far more reliable than before, even in transit. Global industry leaders in the digital content space have launched their services in India. Likewise, domestic leaders in the content industry are also gaining popularity with increasing number of paid subscribers on their digital platforms.

Mobile-Only

In 2013, only 10 percent of the population was relying on wireless for data at home; by 2022, a mix of cellular and fixed wireless access (FWA) technologies could lead to an increase in the numbers by 20–30 percent.

In the near future, demand for wireless broadband services would be higher as compared to fixed broadband services. This is because at times, mobile is the only form of data connection available, especially outside cities. Other factors – income, age, living alone, or using better and faster networks with bigger monthly data allowances – also seem to play a role. This tendency also follows a trend; many people have discontinued wired home phones, and the same shift is occurring in Internet access.

Demand for fixed broadband services would be majorly limited to urban consumers, who have higher bandwidth/QoS requirements for accessing services like gaming, high definition video streaming, etc.

In-flight connectivity (IFC)

In 2018, one billion passenger journeys on planes (about a quarter of the total) are likely be on aircrafts equipped with IFC. This trend implies that within a few years, the airplane may no longer be one of the last remaining connectivity-free zones – in any part of the world. Mobile operators will need to consider whether they should extend their reach into the
sky. One of the operators has already sponsored free access to messaging and one hour’s in-flight Internet access.

Way Forward

Content can now be consumed at any time, place, and surrounding of the consumer’s choice owing to technological advancements. Digital capabilities are being leveraged by the masses to augment their entertainment experiences and this trend is likely to guide the developments in the media and telecom sector. The Indian telecom sector is expected to generate four million direct and indirect jobs over the next 5 years according to estimates by a multinational human resource consulting firm. The mobile industry is expected to create a total economic value of INR 14 trillion (US$ 217.37 billion) by the year 2020. It would generate around 3 million direct job opportunities and 2 million indirect jobs during this period.

India is at the juncture of a digital hyper-revolution and smartphone is the lynchpin of this technological onslaught. Telcos must adopt a synergized approach with the media and content of consumers’ choice. Each stakeholder in the telecom value chain will have to harness the market potential to help drive transformational changes that go well beyond their core businesses.

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