The real-action starts now for the Indian telecom industry at the onset of new financial year. Amidst the scams and licensing issues, India is still one of the fastest growing telecom markets. The growth is driven by increased adoption of mobile phones and seamless rural connectivity. There is still ample space for growth left in the market, before moving to maturity and consolidation efforts.
Finally Consolidation is here
Telecom business in India is dependent on volumes, rather than margins. The prediction of 2010 around consolidation of operator market into 4 or 5 national operators is now likely to become a reality. Due to repeated regulator interventions on voice tariffs, the voice ARPU in Indian market is one of the lowest in the world. This helps a lot in improving penetration in the market, particularly in rural areas. However, it raises serious challenges to operator’s profitability.
New Revenue Stream through Next Gen Services
However, in a highly price sensitive market, there has been significant uptake of Value Added Services, particularly that of entertainment and social networking applications. The Indian market is very price sensitive and characterised by high volumes and low margins. Since the launch of 3G, the Government of India has focused on increasing broadband connectivity throughout India to provide e-learning, tele-medicine and government services. Operators are also exploring new business model like mobile money, M2M, surveillance, cloud Storage, OTT messaging, authentication services and mobile advertising. While voice revenues stagnate, video, data and other new business models will keep on balancing the revenue streams for operators.
Rural is going to be the focus
The rural tele-density in India is about 38% as on January 2013 according to TRAI. Industry observers have predicted that the next wave of growth will come from rural areas and it looks most likely to happen going by the current trends. Hence, mobile operators are expected to focus more on programs targeted at improving penetration in rural markets. We may see resurgence of Rural focussed campaigns and first time internet users on mobile may surprise the industry with data and VAS consumption. Operators will adopt innovative strategies to reach out to rural population through public/private, profit/non-profit and organized/unorganised organization networks.
Need for regulatory support
Regulation will have to do a lot of support to re-invoke the vigour of Indian telecom sector. A policy to ensure that National Development goals are met through dynamic market play and advancing technology is the need of the hour. Transparent policy on license and spectrum, and support for opening of new business models and segments will be of importance to this. A government staged/supported FDI in telecom will revive the sectors uncertain outlook.
Technology will hold the key
The market is likely to move towards adoption of LTE and 4G over the coming year. Enhanced bandwidth, flexibility, and agility provided by technology adoption will enable an advanced telecom ecosystem.
Operators will need to do a lot of technology revamp across infrastructure, and deploy specialized applications like analytics in order to win the new age market. Applications that support new business models like mobile money and mobile advertising, as well as provide actionable insights into areas like customer experience will enable success in leveraging the market conditions. Transactions in e-commerce space are likely to reach the peak of hype cycle and online security becomes a real threat. Significant upgrade of technical capabilities will be required to enable integration of subscriber database with Aadhaar numbers.
Telecom and mobile communications are enabling other industry sectors such as banking, energy, education, health etc. Telecom will thus become a pivotal industry in enabling industry convergence.
Customer Experience is the new Differentiator
As the number of connected devices and transactions multiple, the market will move to the big data era, where high volume transaction processing, warehousing and analytical capabilities will matter. Big data analytics will provide immense opportunities to enhance customer experience, and thus to differentiate in a highly competitive market. Operators focusing on customer experience through campaigns around better network, speed and innovative products and services will generate substantial incremental revenue, which will lead to long term sustainability.
As the market matures and competition intensifies, operators will have to differentiate their services with respect to customer focus, personalization and delivering tailored offers. Capabilities that are built over big data analytics and campaign management will be increasingly important for Indian telecom operators to ride through this wave in 2013.