Ericsson Mobility Report: February 2013 (Summary)

Total number of net adds for Q4, 2012 accounted 140 million.

In terms of new subs/net adds, China leads the fray with 30 mln subs, followed by India (11 mln), Bangladesh (9mln), Indonesia (8 mln) and Nigeria (5mln).

Mobile subs have grown around 9% y-o-y and 2% q-o-q

In Q4, mobile broadband subscriptions1 grew ~125 million to 1.5 billion, reflecting a 50% year-on-year increase.

There is continued strong momentum for smartphone uptake in all regions. Approximately 40 percent of all mobile phones sold during 2012 were smartphones, compared to around 30 percent for the full year 2011. Only around 15-20 percent of the worldwide installed base of mobile phone subscriptions uses smartphones, which means that there is considerable room for
further uptake.

By the end of Q4, 2012, Global mobile penetration reached 89% totalling 6.3bln connections- However, actual number of subs is around 4.4 bln, since many users have multiple connections

GSM/GPRS/EDGE subscriptions grew ~44 million and WCDMA/HSPA grew ~70 million. Together these technologies represent ~80 percent of total net additions. LTE subscriptions grew from 14 million to 57 million. GSM/GPRS/EDGE + WCDMA/HSPA + LTE accounted for 90% of the global mobile net adds.

World wide data traffic continues a healthy uptrend and shows significant and stable growth. Data traffic has doubled Q-o-Q Q4, 2012 versus Q4, 2011 with a 28% quarterly growth between Q3, 2012 and Q4, 2012.There are variations in data consumption patterns across geographies and maturity of markets.

Source of data and Infographic: Ericsson Mobility

Is there a Business case for LTE in India? (Part II)

This post is the second of a two part series on the scenario around LTE network deployments in India.Read First post here

Aircel and Bharti Airtel are believed to be targeting the enterprise segment. While the enterprise segment are the biggest in terms of data usage, the success of LTE will depend on the fact that there has to be a compelling reason for large enterprises to move to LTE network.Initial traction on Data services will depend on how well the vertical applications are engineered for key industry verticals. Verticals like healthcare and banking, which have to be always-on are likely to be the early adopters of LTE, provided applications are developed around them. In case this happens, it might be possible to expect a much higher ARPU from LTE. Having said that, going by the 3G experience, it is quite clear that price is going to be a critical factor (if not the deciding factor!) for the uptake of BWA services.

Further to this, the government needs to put in place a telecom policy that could be instrumental in regulatory guidance and support which would impact faster roll-outs of the services at reasonable tariffs. Unlike 3G auction mechanism, where spectrum licences were bought by operators had extremely high bids leaving precious little CAPEX for network roll outs and resulting in high and unreasonable tariffs (for recovery of investment), government needs to play a more inclusive role in successful 4G LTE roll outs. In the 3G auction case, the only winner was the government who made a handsome lot through the bidding process. This time, the government could keep the bids controlled, lease the spectrum, sponsor the networks infrastructure (or cost share) and foster network infrastructure sharing arrangements between the service providers. This would leave a pool for the Telecom sector where investments could be made into value added ancillary services which would promote usage of the network.

Besides enterprise segments, some operators might also be looking at the rural market initially for LTE services. Experts believe that it will be sometime before Indian operators expect returns from this new service. They might have made huge investments, but right now it is unclear as to how long the investment will take to make profit.

Is there a Business case for LTE in India? (Part I)

This post is the first of a two part series on the scenario around LTE network deployments in India.

Ten years of trailblazing performances and more, the Indian Telecom story needs a new super hero. This is necessitated by the demands of the bandwidth starved data hungry customers are placing an inordinate amount of pressure on the spectrum. The Indian government has been instrumental and forward planning to meet the challenges of increased data bandwidths. That is where 4G LTE services hold out a promise to provide super speed technology on high bandwidth spectrum.

Despite the initial success in field trials, a key question facing the operators is the financial viability and the unclear business models surrounding this emerging technology. Though the industry remains gung-ho about the potential of LTE TDD, it is imperative that the industry evaluates certain critical factors to decide on the business case of the technology. Of the 160 million broadband connections expected by the end of 2014, a good percentage is to come from LTE services which is expected to drive 60 per cent of next level mobile broadband growth.

However, post the lukewarm response to 3G, experts believe that operators need to have a viable business model, clear go-to-market strategy and a marketing campaign designed to target specific segments, niches and user segments of the society to make a business case from the soon-to-be launched Long Term Evolution Time Division Duplex (LTE TDD) technology. There has to be a proper strategy in place to make sure that all investment-related decisions (for LTE TDD) are being taken after due consideration. Operators are yet to make 3G a true business case in India, and if proper targets are not set, many operators may find it challenging to survive.

Contrarian to the earlier view, analysts also believe, what works in favor of operators in India is the relative lukewarm response to 3G, which leaves a lot of scope for LTE to make headway. However, on the flip-side, discouraging numbers for 3G uptake is likely to have some impact on LTE roll-out as well. If 3G has been unable to set the mobile broadband segment on fire in the country, what is it that LTE would offer which will make customers embrace it.

Highlights of Draft National Telecom policy 2011

Mission of NTP 2011:- To offer Broadband on Demand to all Indians and develop state of Art network special focus on rural broadband.

Vision of NTP 2011:- To provide secure, reliable and high speed broadband to all.

Rural Initiatives:-
1) To increase the rural density to 60% by 2017 from 35%. And ultimately to 100% by 2020.
2) Provide high speed Broadband to village panchayat through the high speed fibre by 2014.

One Country, one license regime:-
1) Intra Circle MNP to be allowed.
2) Review of the roaming charges, with the ultimate aim of removing them.

Spectrum initiatives:-
1) To provide 500Mhz by 2020, 300Mhz by 2017 and further 200Mhz by 2020.
2) To allow pooling, Sharing and Trading (later on) of Spectrum .
3) Separate spectrum Act to be enacted for the management of spectrum.
4) Spectrum to be de-linked from license. And the price to be determined through market driven process.
5) Periodic Audit of spectrum to make sure that it is utilised efficiently.
6) Roadmap for spectrum every 5 years to ensure the future availability.

Other highlights:-
1) Affordable broadband on demand to 175mn by 2017 and 600mn by 2020, with minimum speed of 2Mbps.
2) Will seek TRAI’s recommendation on new licenses, migration to new licenses and exit policy.
3) To regulate VAS, in order to provide the converged services.
4) Change in the definition of broadband from current speed of 256Kbps to 512Kbps and finally to 2Mbps.
5) Delinking license from the usage of service- network provider is not necessary the service provider.
6) Promote the domestic manufactured equipments upto 80% of total requirement.

Telecom success inspires Indian Policy Makers

Inspired by the success of Telecom sector and the advent of mobility, the Government of India is relentlessly pushing for better services, reach and depth of telecom services as a economy support, enabler and growth engine for India. The policy makers think of Telecom as a medium to reach out to the far and inaccessible corners of a rather large state.

A couple of new initiatives are worth mentioning in this regard.

1. The Ministry of Human Resource development (mHRD) along with a UK based device maker DataWind have produced the cheapest tablet/ computing device in the world. Called Aakash (meaning Sky In Hindi), the 7” tablet combines Android 2.2 Froyo, a 336 MHz processor, a 800*480 WVGA resistive screen, 256 MB RAM and 2GB flash memory along with 32GB expandable memory with a 2100 mAH battery in what could be best termed as Frugal Innovation targeting the bottom of the period. The product is priced at an unbelievable $38 and the government is subsiding a lot of it to make it available to colleges and universities.

Not only does this mark the entry of a computing devices to Sec C,D and below consumers, it also opens up a new avenue for internet penetration. It is also expected to spawn off a hundred apps and other value added services

2. To support services through wireless, the government has also at least five new frequency bands, including the 700 Mhz band, for telecom services (mobile broadband). The 700MHz digital dividend was earlier being used for analogue TV signals. The other major spectrum allocation is the use of S-band has been opened up for broadband services. This band, falling between 2.5 Ghz and 2.6 Ghz, is being currently used exclusively by INSAT systems for satellite based services including meteorological data dissemination. If the Plan is implemented then telecom companies could get access to about 200 Mhz spectrum more, which could boost broadband coverage. However, the NFAP is only a broad guideline outlining the future roadmap for spectrum usage in line with international standards. The actual implementation of this Plan depends upon inter-ministerial negotiations.

Indian Telecom Story (Part XXXI): Government rings in Rs.1 trillion from 3G and BWA auctions!

The spectrum auction for broadband wireless access (BWA) services fetched the Government of India an unprecedented Rs.38.543.61 crores (USD 8.56 billion) after 16 days and 117 rounds of auction. 11 companies were a part of the auction. The pan India licence price stood at Rs. 12,847.77 crore ( USD 2.85 billion), which was 634% (6 times) the base price set by GoI at Rs.1,750 crore. Unlike the 3G event, Infotel Broadband won a pan India license, while Aircel bagged 7 slots, Tikona got 5 slots, Qualcomm and Bharti 4 each and Augere 1. The others failed to pick up any stakes in the BWA circles. The total revenue of the government from sale of spectrum for both 3G and BWA touched over Rs.1.06 lakh crore. Reliance Communication, Tata Communications, Vodafone Essar, Spice,and Idea missed picking up even a single circle.

BWA spectrum is essentially for rolling out WiMAX services enabling handheld devices and laptops to access Internet.
GoI has been pushing for more widespread access to broadband usage in the country which is at a paltry 9% of the population currently. McKinsey study projected that a country GDP improves by 0.6% for every 10% increase in penetration levels of Broadband.

1. The high prices (above expectations) paid in both auctions, which were too rich for several major cellular operators who dropped out of the second BWA auction, ease the strain on the country’s public sector deficit for this fiscal year.
2. At the same time they exacerbate the financial difficulties of the two state-owned operators BSNL and MTNL which although automatically awarded both 3G and BWA spectrum are obliged to pay the same amounts for their spectrum as the winning bidders.
3. Furthermore, the outcomes of these auctions introduce additional players into India’s mobile market, whose supply structure, absent consolidation, is already unsustainable with an uneconomically large number of competitors.
4. The real impact and value of allocating this new spectrum for mobile broadband will depend upon sensible consolidation between operators – which will require a change in M&A regulations – and the establishment of roaming arrangements between operators.
5. The combination of very high spectrum prices (e.g. $1.34 per MHz/pop for 20 MHz of BWA spectrum at 2.3GHz in Delhi) will intensify the pressure that winning bidders will exert on the prices offered by equipment vendors for network rollouts to minimize capex, while the need for intercircle roaming agreements will favor technologies that are widely supported.
6. Qualcomm which won BWA spectrum in 4 circles – including Delhi and Mumbai – will be looking for roaming agreements with operators in other circles that deploy either WCDMA 3G (Qualcomm is the pioneering supplier of 3G/LTE chipsets) and/or TD-LTE networks.
7. Infotel Broadband is being acquired by Reliance Industries Ltd. This thus enables Mukesh Ambani who was barred under a family non-compete agreement from entering the telecom sector to re-enter and establish himself in the telecom sector.
8. Qualcomm which won BWA spectrum in 4 circles – including Delhi and Mumbai – will be looking for roaming agreements with operators in other circles that deploy either WCDMA 3G (Qualcomm is the pioneering supplier of 3G/LTE chipsets) and/or TD-LTE networks.
9. Infotel’s (Reliance) choice of technology will be critical in terms of introduction of TD-LTE. It will be influenced by Infotel’s ability to offer roaming as long as its network does not have nationwide coverage, as well as by the pricing of alternative technologies, and even the availability of international roaming arrangements (since target customers for mobile broadband customers will include the most internationally active of Indian customers).

Mobile Internet: Gaining mainstream acceptance in India

In a few earlier posts, i had lamented the lack of data traffic focus in TELCOs in India. Given the tariff war, hyper-competition and the near advent of 3G and the necessity to augment voice incomes, TELCOs in India are changing their focus very ostensibly from Voice to Data Traffic. Ad Mob’s mobile ad requests for India is a surrogate measure but then it carries home the point that internet on Mobile is here and here to stay for good.

Over the last 24 months, Internet requests from Mobiles have registered a 220% CAGR in India. The growth percentage is 3X i.e 660% on a four month basis in 2010. Over the last 2 quarters, Indian Telecom Operators have been trying to make a point with data services and the data tarriffs have now breached the Rs.100 per month mark, which is a critical pricing threshold for mass acceptance. With the coming of 3G and Broadband, this number will become self sustaining given the following factors:

1. The high quality content and delivery systems that 3G will provide will increase traffic volumes
2. Increased traffic volumes will bring in economies of scale reducing prices and making Internet more accessible to more people.
3. The strong eco-system that is beginning to take shape with Telcos, OEMs, ODMs, Developers and Consumers will further drive compelling content that will drive data traffic.

The internet and data habit is quickly becoming mainstream and the TELCOs and other VAS players are pleasantly surprised and are hoping for an extended run into this source of revenues.

The growth registered in the last 4 months in India was also forecasted study by Cisco released in February 2010 projected that India has the highest country mobile data traffic growth rate of any country, with a CAGR of 222% from 2009 to 2014. The study says that annual global mobile data traffic will reach 3.6 exabytes per month or an annual run rate of 40 exabytes by 2014. Such a figure equates to a 39-fold increase from 2009 to 2014, or a CAGR of 108%. If AdMob is to be believed, these numbers are happening already. The same survey also concludes that by 2014, more than 400 million of the world’s Internet users will access the network solely through a mobile connection.

The rapid consumer adoption of smart phones, netbooks, e-readers and Web-ready video cameras as well as machine-to-machine applications like eHealth monitoring and asset-tracking systems, is continuing to place unprecedented demands on mobile networks. In spite of the economic downturn, the demand for mobile services has remained high, posing both challenges and opportunities for service providers worldwide.

I shall be exploring the opportunities and challenges that the proliferation of Mobile Internet will be bringing to the Indian context in my next blog.

Associated content: The Indian Internet User
State of Internet in India

Profiling IPTV (Part IV): The Outlook on Indian Markets. A Billion Dollar Opportunity

Outlook

Wireless IPTV: Wireless IPTV also called ‘Quadruple Play’ is going to be a revolution in India. Launch of 3G and WiMax technology will bring about a huge change in the Indian market.

User generated content: IPTV is much ahead of DTH when it comes to user generated content. Exclusivity of content and differentiation will be key requirements for IPTV to be successful has gone beyond DTH potential to go beyond DTH when it comes to brining user interactivity believes that wireless IPTV is going to be a revolution in India. Launch of 3G and WiMax technology will bring about a huge change in the Indian market.
Interactivity: IPTV is all about interactivity, services from a cable or satellite operator are ‘pushed’ into your home. The user has limited choice and has to keep on surfing channels for variety. Cable TV is a one-way communication where as IPTV provides for a two-way communication. Users have complete control over the content they wishes to view. Content providers and operators will have to come up with more innovative interactive services to capture the imagination of Indian consumers.

Competitive environment: IPTV is not just restricted to telecom operators, globally leading cable operators have also aggressively marketed IPTV services to reach out to new customers. Cable operators can leverage their existing cable network infrastructure, existing customer base and customer reach to offer comprehensive and high quality services at affordable prices.

Recommendations

Indian operators providing IPTV services have not aggressively pushed and promoted IPTV like the way they have promoted DTH. The marketing efforts have been lacking to a great extent. Though BSNL has tried to some extent, the efforts are more of an evaluation strategy rather than a marketing strategy. A more focused marketing strategy would yield better results for these companies. Long term success will depend on Operators collaborating with content developers, content providers and VAS providers to offer unique customized customer centric content. Exclusive content, such as any sporting event exclusive rights, is another area where global operators have been able to push IPTV.
IPTV operators should leverage flexibility of IP platform to extend services to mobile platforms and develop effective approach for content acquisition. Operators need to build advanced services and offer more options for bundling with other services to improve value proposition. Web based and mobile video delivery by working on IPTV into a cross platform strategy could be a significant leverage available.

The Indian market could be the next billion dollar opportunity for the equipment providers for Global and Indian IPTV equipment providers. The need is to have innovation and technology to produce low cost customized set top boxes that can cater to Indian masses. Equipment makers will have to draw inspiration from mobile devices manufacturers like Nokia and to some extent healthcare device makers like GE who have learned the art of building low cost and quality products targeted at Indian consumers.

Profiling IPTV (Part III): Technology Challenges and Pricing in India

Technology Challenges: SDTV versus HDTV

Not all the available set-top boxes in India are scalable from standard definition to high definition technology. Most of the IPTV or DTH set-top boxes are just meant for SDTV. Customer has the choice to choose HD compatible set-top box and pay much more for it. In addition he needs to have high definition LCD, plasma TV, etc.

Validation from agencies globally that IPTV has a 4X-5X growth in the next 3-4 years.

Also one of the reasons why not many players are aggressively looking to promote IPTV services is because currently in India, TV program producers are not making programs in HD TV format.

The price drop in HDTV in India expected, as DishTV, Reliance BIG TV and Tata Sky satellite TV channel providers are having plan to start HDTV channels.

Experts say the push to HD TV has been prompted by the government’s decision that the 2010 Commonwealth Games will be broadcast only in high-definition. As a result, Doordarshan is also expected to launch HDTV on an experimental basis, has stated it will produce content for the Commonwealth in this format.

Sun Direct (DTH) is the only player either in DTH or IPTV or digital cable areas who is providing ‘Sun Direct HD’ which provides high definition broadcast service on the DTH platform in India. It provides two HD channel in India, both are movie channel and regional languages (Tamil and Telugu).

Technology Challenges: Network and Bandwidth

Challenges like robustness and scalability of IPTV technology. Choice of middleware platforms and video server architectures, changes in bandwidth requirements and availability and interoperability among enabling technology products are the key challenges to effectively delivering high-quality video services. The market is in its infancy and the more established commercial rollouts attracting limited take up. Growth of over-the-top (OTT) video consumption poses a particular challenge to the growth of IPTV, which shares many functional attributes with Internet video-such as time shifting, interactivity and on-demand program scheduling-but which currently still relies primarily on a subscription based revenue model.

Basic deployment challenges are classified as network issues like bandwidth drop offs that have a direct effect on video quality due to copper usage , operational issues like frequently updating routing tables, bandwidth issues and network management concerns and in home issues like wiring, interference, additional CPE requirements ,post installation requirement and multi-room DVR and HDTV requirement.

Pricing in India

Indian market is extremely sensitive to price and to succeed stakeholders will have to carefully price their services to win in a competitive environment. Currently, IPTV packages are aggressively priced. In fact some of the packages are at par with prices of DTH packages. However, cost of set top boxes are extremely high and needs to come down drastically to attract more subscribers. This can be the potential make or break for success of IPTV in the Indian market. The Indian market offers a great opportunity for set top box manufacturers for a long term growth. These manufacturers can look at innovative design models with low cost manufacturing capabilities to support mass demand from the Indian market. Companies would have to draw inspiration from mobile/handset manufacturers like Nokia, LG, Samsung, etc, who churned out low cost customized devices targeted at the Indian market. Globally companies are trying to integrate HDTV with a built-in set top box which acts as a multi compatible device that can support cable, DTH, and IPTV. The next wave of development in highly competitive markets like India and China might bring global innovation for IPTV.

Profiling IPTV (Part II): Key issues in IPTV implementation in India

The IPTV Value Chain

India’s first IPTV deployment was in 2006, when MTNL rolled out its IPTV service in Mumbai followed by BSNL. Other major players like Bharti Airtel and Reliance Communications were given the go ahead to launch their IPTV services in the Indian market in February 2008 by Trai. Airtel has launched its service in January 2009, while Reliance has launched their services in Mumbai.

However, India still has a long way to go before IPTV can pick up momentum like wireless communication or DTH services. India has a lot of problems that exists as a barrier for growth of IPTV in India.

Some of the key issues in IPTV implementation in India are:

Physical infrastructure: One of the biggest challenges India faces is the required infrastructure for growth of IPTV. India lacks the required high-speed wiring and copper cables and is still dependent on copper or coaxial cables for deployment of IPTV network. Some parts of the world have successfully shifted to optic fiber for deploying high quality IPTV services.

Broadband penetration: One of the biggest and most important factor for success of IPTV in any country is its infrastructure for broadband services and broadband penetration. India’s broadband penetration is one of the lowest in the world and the success of IPTV is directly dependant on broadband penetration. India’s broadband penetration rate is 2% (rate of Internet penetration of the total households). Although, it is expected to pick up pace in the coming years, advanced technologies like VDSL, WiMax or LTE can save the day for IPTV in India.

Network capability: IPTV requires at least 1.5 Mbps line (with MPEG-4) for basic services at a good QoS and 8 Mbps line (with MPEG-4) for HDTV services. Some part of the broadband networks, especially MTNL and BSNL networks are not ready yet. Most of the major cities like Delhi, Mumbai, Pune, Bengaluru, Chennai, etc, are SDTV compatible this is largely due BSNL and MNTL network and these are the cities where BSNL and MTNL first launched its IPTV in India. Quality of service: India lacks the required infrastructure to support IPTV. Current subscribers have criticized the QoS offered by these companies.

Content readiness and cost: Content is critical for success of IPTV and to compete with DTH and cable operators IPTV service providers will have to provide high quality innovative content. With respect to content there are various costs which are involved and it totally depends on what route does the player take. It can be either fixed fee deal with broadcaster or Ala carte price per channel. Operators will have to offer services that are not being already provided by their competitor including live TV, video on demand (VOD) and digital video recorders (DVRs).

Cost of service for user: The cost of IPTV services offered are quite competitive but the cost of IPTV STBS is still very high. Cost of IPTV STBS will have to fall further, as they are more expensive than traditional DTH or Cable set top boxes

Regulatory framework: Some of the potential regulatory issues identified includes advertising: targeted advertising and advertisement less content delivery to allow next generation business models; time shifted TV: legal framework to support content storage, redistribution and super-distribution (for example, access from multiple devices); privacy: protect privacy of user content (with consideration for lawful intercept); piracy: provide a framework for detection and prosecution. Alternate models: watermarking, crawling, etc ; multimedia communications: triple play, voice, video and data regulations; and content classification: larger scale production.

IPTV ecosystem: IPTV infrastructure is not at par or as required for areas like broadband/transport infrastructure and technology, favorable regulations, customer understanding of product proposition, content readiness and cost, unified standards development and pricing and promotions