As the "idea economy" and "digital transformation" pervade every aspect of citizens' lives, the telecom industry is concurrently undergoing massive changes. Users are increasingly turning to mobile data and wi-fi, and this is rendering traditional telecom services such as voice calls and SMS obsolete. We may soon reach a time when the term "telecom" will have to be replaced by "datacom"!
Currently, India has around 333 million internet users, second only to China's 720 million, according to the Broadband Commission's report "The State of Broadband 2016: Broadband Catalyzing Sustainable Development". And a NASSCOM report further states that by 2020, the number of internet users in India will reach 730 million. For telcos, this represents a major opportunity as a large portion of these internet users use smartphones to access the web, and will continue to do so. In fact, mobile website views have now overtaken desktop views for the first time ever, heralding good news for the future of telcos.
The challenge is that the existing telecom infrastructure in the country today is not sufficient to meet the exponential data growth that the country is witnessing.
With that in mind, it's easy to see why smartphones are the catalyst for a digital India future. Enhanced smartphone usage and broadband penetration are positively changing several industries—ecommerce, banking, transportation, healthcare, education and more. However, the challenge is that the existing telecom infrastructure in the country today is not sufficient to meet the exponential data growth that the country is witnessing.
Telcos have an uphill battle on their hands due to rapidly changing customer expectations and high ROI pressure due to massive cash flows towards capital expenditure and mobile spectrum. This is highlighted by the fact that the industry debt was ₹2,90,000 crore in March 2014 and is expected to go up to ₹4,25,000 crore by March 2017.
Moreover, as data plans are becoming cheaper ever since Reliance JIO's introduction, auctioned spectrum space is going to waste even though telcos need more data to replace traditional mobile services. Subsequently, telcos are attempting to win consumer mindshare by slashing data prices, rolling out improved 4G plans, offering free voice calls and focusing on better service.
Incumbent players have to manage several generations of technologies and underlying complexity. This is in stark contrast to greenfield deployments that are fully IP optimized with homogeneous protocol stack.
In spite of all this, the great Indian telecom revolution has just begun and we can expect a lot of fireworks and further changes in the months to come.
What should telecom companies do in order to position themselves as leaders?
Adopt on-demand VAS and OTT apps content
As consumers have become familiar with services such as Netflix, Hotstar, HBO Go and more, there is an increased preference today for on-demand content and OTT apps. Telcos need to divert substantial resources towards these outlets and create customised content and apps as the service channels with the best content will ultimately win. More revenue will pour towards application providers rather than telcos as a result, and this will improve the features that people use but it also may hurt the margins of telcos if not approached with the right mindset.
Push instant and faster data access
A Counterpoint Technology report states that VoLTE (Voice over LTE) demand has grown significantly over the last few months; VoLTE enables calls to be transmitted as data while using 4G networks. Increased data speeds at cheaper prices is something that people need more than ever, even though data plans in India are cheaper than most of the world. If telcos can jump on this bandwagon and figure out strategies to provide faster data speeds, they can leverage customer satisfaction.
Companies need to think of novel ways in which to improve bottom lines without compromising the neutrality of the internet.
Other developments such as free wi-fi provided by a partnership between Google and the government (RailTel), the long pending NOFN (National Optical Fiber Network) project, called Bharatnet, and more, will also make a world of difference and telcos can capitalise on such infrastructure to improve their offerings.
Find a way around net neutrality without damaging it
Some telcos recently tried and failed to introduce special plans and preferential rates for consumers using data and VoIP services such as WhatsApp, Skype and more. However, these were viewed with a lot of scepticism and were rejected as the public trust in such offerings is fragile and because they violated net neutrality and the equality of all services over the internet.
Companies need to figure out a way to balance net neutrality in order to stay afloat but this could be a losing battle for them. Preferring selected apps or services is not the answer, so they need to think of novel ways in which to improve bottom lines without compromising the neutrality of the internet.
Adopt the virtualisation of networks – NFV and SDN
By implementing NFV (Network Functions Virtualisation) and SDN (Software-Defined Networking) technologies, telcos can achieve what their customers truly want—better QoS (Quality of Service). These processes, with the help of virtualisation and commercial servers, change the very ways in which networks are built and run. NFV effectively decouples network functions from hardware devices such as routers, firewalls and load balancers and hosts them virtually.
This will drive down their CAPEX and OPEX costs and will also reduce the burden of heavy capital expenditure and spectrum purchase. NFV and SDN can alter telcos' cloud and network architecture from the bottom up, so that they can shift focus away from high ROI demands and focus on better service instead. Many leading global service providers such as AT&T, Deutsche Telekom, Orange, Telefonica and more are actively using NFV solutions and reaping benefits.
Going further, telcos may also adopt the consolidation of services or spectrum space to battle evolving customer expectations and rising ROI demands on them. However, with the right foresight they can also utilise the existing tools and disruptive technology that is already available to them. By transforming their strategies and their infrastructure, telcos can thus improve QoS and ROI to ride the wave of the digital revolution that is transforming the world's industries.