Will the Golden Era Return?
— Himanshu Kapania
Let us begin with a simple question. What is more expensive—a cup of coffee daily or a prepaid mobile plan bundling daily unlimited voice, 1.5 gigabytes of broadband data, and free access to a wide assortment of content across music, movies, and live TV channels? in the world at 10 gigabyte per user. It’s amazing how the mobile data rates in India fell to Rs7.70 per GB (USD 0.11 as per TRAI June 2019 report) against an average of USD 12.37 in the USA, USD 9.89 in China, and USD 8.53 per gigabyte globally as percable.co.uk online report.
However, we have a long distance to traverse, as digital service is not just about entertainment, information, and commerce. Digital has the power to impact lives of people at the bottom of the socioeconomic pyramid, solving India’s deep-rooted challenges in the fields of education, healthcare, governance, social inequality, justice, and climate change. The Indian mobile operators are on a mission to bridge the digital divide, by transitioning the remaining 700 million Indians into the fold of internet revolution and thereby improving their lives meaningfully.
While the consumer side of digital is well known, the new emerging story is in the enterprise domain as we introduce innovative technologies like artificial intelligence, cloud computing, robotics, virtual and augmented reality, internet of things, Blockchain, big data, machine learning, 3D printing, and more. Like in other parts of the world, India is gearing up for an outburst of connected devices estimated to cross 10 billion by year 2030 as we disrupt existing business models with smart cities, smart homes, driverless automobiles, and automated manufacturing, thereby connecting everything with intelligent, immersive, and inventive solutions and forcing a tectonic shift in business practices.
Our Prime Minister aptly identified Digital India 2.0 as a key impetus for doubling country’s GDP to over
USD 5 trillion and leading India into the 4th industrial revolution. The USA and China have experienced similar digital economic successes. For example, China’s digital contribution has risen from 15% in 2008 to 38% in 2018 of its GDP. India has the potential of matching such performance and growing its digital economy to USD 1 trillion in size.
India’s citizens and its enterprises are once again looking forward to the private-sector mobile operators initiating Telecom Revolution 3.0and launching latest 5G services—the likely key driver for India’s evolution to a gigabit society with ultra-reliable low-latency networks. The question is whether the financially stressed telecom sector rise as a phoenix, invest additional USD 100 billion to deliver 5G services and meet the country’s Telecom 3.0 aspirations.
However, the brutal price competition in the last three years has led to unsustainable losses for telecom operators. Industry revenues have declined by 15% and average revenue per user is down by 28% while the consumption has peaked to world’s highest levels. Also, telecom operators’ costs have accentuated due to globally highest spectrum prices; 35% of customer bill charged as taxes; and falling IUC settlement rates. Also, despite the sector moving to auction-based pricing for spectrum, it continues paying revenue-linked spectrum usage charges.
This forced a number of serious early strategic investors to exit India during 2016-17. These include Telenor, DoCoMo, MTS, Maxis, Axiata, Tata, and RCom. The apex court’s recent AGR ruling is further threatening the current ‘3+1’ market structure.
I am an eternal optimist and am confident that just like the past golden era, the sector, with active support from government, will reinvent itself. The rock-solid digital infrastructure backbone with each telecom operator generating surplus is critical not only for economic
for each stakeholder. Deepening of relationship, sharing of knowledge, and accepting core competencies and strength of each partner are a key to take the industry forward. For example, alliances across industry vertical for use cases in media & entertainment, education, health, manufacturing, automobile, banking, and logistics sectors will foster new innovative business models.