1. India high on 3G

India high on 3G

Indian consumer’s growing appetite for affordable smartphones and tablet computers has led to a 74% increase in mobile data traffic in 2014. 3G is the key reason for higher data uptake, with an average 3G subscriber consuming over 3 times more data than his/her 2G counterpart

By: | Updated: February 23, 2015 12:51 AM

The revolutionary success of India’s mobile industry is well known. What is not as well articulated is how the increasing popularity of mobile devices, such as smartphones, tablet computers and other forms of Internet-enabled devices, coupled with established mobile applications and services catering to these devices, has led to a pronounced increase in mobile data traffic. The following facts presents a glimpse of that phenomenon:

* There has been a 74% increase in mobile data traffic generated by both 2G and 3G mobile broadband services at the end of 2014, compared to the beginning of the same year.
* This rise was primarily driven by a strong 3G growth with 114% increase, while the 2G data traffic was  41%.
* An average Indian subscriber consumes 680 MB/ month of 3G data
* India has about 130 million active 3G capable devices but only 69.9 million subscribers are active 3G users. It indicates a significant opportunity for further 3G penetration in the country.

The above mentioned facts have been highlighted by Nokia Networks’ MBit Index study, an annual exercise which aims to provide insights about mobile broadband traffic growth and co-relate these trends with changes in various ecosystem drivers such as subscriber usage patterns, devices and tariffs. But before we dig further into the report, it is pertinent to take the viewpoint of the service providers on how data use is increasing their revenues.

Mobile-data

“Growth in India has accelerated again (October-December), driven by data,” Vodafone’s group chief executive Vittorio Colao said. Bullish but simultaneously sounding a note of caution, Idea Cellular’s chief executive Himanshu Kapania told FE that  mobile data is yet to evolve to the stage voice services have reached in the country. “People will have to make investments in 3G-enabled phones to access high-speed data connections,” he said. According to Gopal Vittal, MD and CEO India & South Asia, Bharti Airtel, “Our mobile data growth is at 74.3% in Q3.”
It is obvious that data traffic growth is reflecting fast in mobile data revenue growth for service providers—a sign of healthy growth in Indian telecom industry. On the devices front, research firm CMR estimates that the India mobile handsets market in 2014 grew at 4% in terms of shipments over CY 2013, to touch 257 million units during the period. Of this 77 million were smartphones accounting for nearly 30% of all shipments, a first for India. The smartphones segment grew at 46% vis-a-vis CY 2013.

In 2014, the growth of mobile broadband traffic in India prompted many operators to expand their 3G and 4G networks. Nokia Networks, with its Single RAN (radio access network) Advanced platform, helped Bharti Airtel and Tata Docomo expand their 3G networks across several cities in India. In addition, Nokia Networks has recently been selected by Bharti Airtel for launching India’s first FDD-LTE 4G network on the 1800 MHz and expanding its TD-LTE4G network on the 2300 MHz.

Back to the Nokia study. It highlights that 3G data consumption was 52% of the total data consumption in December 2014 as against 42% in January 2014. September 2014 witnesses 3G data consumption surpassing 2G use across India. On an average, 3G data use increased 688 MB per month in 2014, indicating a 29% jump compared to 2013. On an average, 2G data use also increased 216 MB per month, indicating a 48% jump. Also, on an average a 3G user consumed 3.2 times more data than a 2G user in 2014. The study also revealed an increase in the smartphone use in 2014, as consumers migrated to smart devices due to their affordability.

“There has been a surge in data consumption across the country,” said Sandeep Girotra, VP and head of India region, Nokia Networks.

“Smartphone shipments exceeded forecasts in 2014 leading to the availability of increased potential of mobile data users. The 2014 study results clearly show the strong momentum of 3G in India, which has been the primary driver for the data traffic growth. A surge in 3G and 4G-compatible smartphone use underlines the greater need for operators to expand the 3G network coverage and selectively rollout 4G services for higher speeds across all the circles while modernising the 2G networks.”

The highest 3G growth, according to Girotra, came from Category A circle, exhibiting a surge of 129% in data usage in 2014. Category A circle contributes the most (43%) to the overall mobile data consumption in India. Metro circle ranked 2nd in 3G growth in 2014. 3G data grew at 120% in 2014.

On the implications for network operators, Girotra said that 3G is driving the data growth but 2G data growth is stabilising. Hence, operators need to sustain the 2G networks while continuing to strengthen and expand 3G networks.

Additionally, Girotra said that operators need to encourage the untapped smartphone user base to subscribe to 3G services, with a special focus on B and C circles. “Specialised 3G services plans can be launched for smartphone users to promote 3G data consumption. India has about 130 million active 3G capable devices but only 69.9 million subscribers are active 3G users. It indicates a significant opportunity for further 3G penetration in the country.”

Lastly, although 4G in India is in its early stage, the country already has 5.5 million 4G capable devices but only about 85,000 subscribers are active LTE users. In short, there are enough indicators to prove that we may be on the cusp of a very exciting phenomenon.

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