Research Study on Telecom Sector - GRM Institute

Research Study on Telecom Sector

Indian Telecom Sector

 

By Vineeta Sharma (PGDRM Jan’20-21) and Jyoti Shrivas (PGDRM July’20-21)

 

Introduction to the Indian Telecom Sector
  • As per the last few decades, the Indian Telecom Sector has emerged as one of the critical components of economic growth required for the overall socio-economic development of the country as there is a positive correlation between the penetration of mobile services and the internet on the growth of GDP of a country.​
  • Also, the World Bank believes that an increase in mobile and broadband penetration increases the per capita GDP by 0.81% and 1.38% respectively in the developing countries and developed countries. India, being one of the developing countries saw exponential growth in telecom industries post-liberalization, which helped the country for its economic development.​

 

 

Industry after Jio

In September 2016, JIO launched its 4G services offering free data and voice services till 31 December, which was later extended till 31 March 2017. The share of customers using 3G and 4G services rose to 52% of the total subscriber base, up from 14% three years ago. Jio is now planning to become vendor-neutral, disaggregate between hardware and software functions. 

 

Effect on other companies

With the entry of JIO in the market, data volumes were sky-rocketing and this was aided by a sharp cut in tariffs and the result was net customer spend dropped by 41%. It forced competitors to lower their prices and drove category consolidation. This disrupted the whole telecom industry in India. Telecom companies are in losses because of the high operational and spectrum costs and low tariff worldwide costs, tough market competition, Low switching costs, and mobile number portability. Also, the quick transition of technology from 2G to 3G now to 4G has led to reinvestment in new towers which resulted in high Capex cost.​

 Airtel is one of the competitors of Jio launched few similar packs at a reduced price and now India’s telecom industry may be quickly moving towards a duopoly. Losses in the September quarter of 2018 have cast a shadow on the operations of Vodafone Idea, India’s third-biggest telecom firm. ​

  • However, this did not stop the companies to offer courtesies like: BSNL- Free Roaming, TATA Docomo- Per Sec Charging, Airtel- Low-rate data pack, and Reliance JIO- Everything free.​

  • All this had made customers the absolute winners, due to their high bargaining power in the market. They are now enjoying the low tariffs rate be it for calling, data consumption, or messaging.​

 

Spectrum Allocation

At the point when the cell phone was first propelled around two decades prior, very few imagined that such a massive and costly gadget would proceed to get one of the world’s most irreplaceable methods of correspondence. In earlier point in time of life, two technologies based on the different parts of the spectrum were used i.e. GSM and CDMA. This was not all, DOT (Department of Telecommunication)  started auctioning for the spectrum for 2G and 3G servers in the range of 1959 – 1979 MHZ. Telecom Industries made a move towards S band and V band simultaneously. Later in time, DOT  led auctions happen all over the country and for that, the country was divided into 23 circles which led to the permissions for 2 operators per circle. The government on the other end thought that Auction was not appropriate for allocating the spectrum and profound that they end up giving the allocations at much lower prices. Simultaneously the world has drifted towards 5G with Reliance Jio sweeping ahead to lead the industry to a Monopoly.

 

Telecom Regulatory Authority of India

TRAI(Telecom Regulatory Authority of India) has decided not to divide the spectrum to an Individual and would follow a holistic pattern of Allocating spectrum to the companies that are struggling to keep their head up above the water. Enabling 5G would require a massive makeover in infrastructure and need to set up a universal standard for seamless integration. Mitigation of high costs is also a question mark for the allocation. No back door agreements with the telecom companies and the government would be appreciated for the empowerment towards the new revolution. Future Technology should be indigenized and spectrum allocation should be done in a way for the bright shine of knowledge to curb the way to the futuristic world of 5G.

 

Network Slicing

5G networks, in combination with Network Slicing, permit business customers to enjoy connectivity and data processing tailored to their specific business requirements. Mobile communications provided by smart networks will enhance the efficiency and productivity of business processes and create more opportunities for operators to address Business to Business segments. When populated with values for all or a subset of the attributes, the generic slice descriptor can serve many purposes: 

 

Read the complete research paper here: Research study on telecom industry GRMI

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