Mobile Internet: Indian TelecomLeading the World

Dr V Sridhar and Dr Heikki Hämmäinen
The authors are research fellow, Sasken Communication Technologies,
Bengaluru and professor, department of communications
and networking, Aalto University, Finland, respectively

In a recent research study, it was pointed out that mobile data traffic will grow at a CAGR of 92% from 2010 to 2015, reaching 6.3 exabytes (1015) per month by 2015. The study also points out The mobile only Internet population will grow 56 fold from 14 mn at the end of 2010 to 788 mn by the end of 2015. These trends clearly indicate the possible exponential growth in the use of mobile devices to access internet and bandwidth intensive application. Though newer technologies such as Long Term Evolution (LTA) and LTA Advanced that increase the speed of access by roughly 10-fold are getting deployed, the battle between telcos that offer mobile services and the internet firms such as Google that provide content over the internet has intensified.

The year of smartphone pioneered by Apple and Google are changing the landscape of the mobile communications industry worldwidefrom hardware centric to software centric (the operating platform and associated applications are the key differentiators in the mobile industry); bandwidth to content (raw bandwidth is commoditized while content is becoming critical); the center of gravity shifting from Europe to the US (once dominated by Nokia and the likes giving way to Apple and Google); from mobile to internet technology standards; and from de jure to de facto standards.

Though the Federal Communications Commission (FCC) in the US gave an interim relief to the wireless service providers on compliance to Net Neutrality, the telcos are under tremendous pressure to augment their infrastructure to handle the growing data and internet traffic. The internet companies on the other hand are using ingenious ways to bypass the bottleneck access providers to penetrate deeply in to the users. Google is testing its 1 Gbps open community based internet access infrastructure in the US. Google carries more than 7% of internet traffic on its backbone making it one of the largest internet service providers in the world. Apple recently announced its iCloud service that allows all applications, music, video and data files to be exchanged through its cloud wirelessly.

What does this mean for India? India leapfrogged to 2G when mobile services were introduced. The large demographic dividend created strong network effects for the industry to propel forward and grow at an exponential rate. The hyper competitiveness in the market created some positive effects including drastic reduction in air-time rates and hence the associated increase in subscriber base. Surprisingly, the Indian market was able to record high voice traffic of over 300 minutes per subscriber per month. This is higher than that witnessed in most developed markets. What is more amazing is that this happened at a record low price with operator revenues as low as 100 per subscriber per month.

Indian telecom sector has witnessed some market innovations including the dual SIM phones that uses cognition of the end users to access telcos networks,
sachet pricing that allows users to pay as little as possible to get air-time, outsourcing of the core network and IT management by the operators to reduce costs to bare minimum in a highly competitive market.

With about 7 operators and multiple technologies in the wireless broadband space, can India repeat the wireless internet revolution, with large traffic volume at record low costs? The current wired internet and broadband subscriber base at a pathetic low of 18 M and 11 M respectively, does not indicate the possibility. However the diverse population in India can really drive demand for broadband content. Lack of alternative access to the internet (viz. wired broadband as in developed countries) can drive demand for wireless broadband. The software industry in India can create innovative internet based services that can drive demand. Positive policy directions including the implementation of National Broadband Plan, allowing unrestricted internet telephony, unleashing m-financial, m-government, and m-education services will certainly pave way for the above possibility.

According to a recent research report, the mobile internet users in India have jumped from 8 mn last year to 25 mn and that about 49% of internet users use mobile only for accessing the internet. Innovation in internet software and services, incubation of internet companies, government investment in internet infrastructure, and government adoption of internet for public service delivery will pave for success. By promoting operator competition and service innovation, India has a true opportunity of becoming the international driver of the mobile internet platform. This is an opportunity that the Indian technology companies should not miss.