View from India: 25 years of the mobile telecoms industry
Image credit: Dreamstime
Mobile technology is marking its 25th anniversary in India. Some milestones have made the journey memorable, while disruptive solutions could ring in a transformative change in the coming years.
It’s been 25 years since the first mobile call happened in India. Over time, mobile services have added to the country’s socio-economic development, as well as enhancing the prospect of knowledge dissemination.
With a subscriber base of over 1.2 billion, India is the world’s second-largest telecom market. The country has risen to this position due to various factors such as affordable tariffs. Other features like Mobile Number Portability (MNP) as well as 3G and 4G coverage have contributed to the mobile telecom story.
With the prices of smartphones starting from around Rs 5,000, online spending has gained momentum. The consumer base has widened even further this year with the coronavirus pandemic. With lifestyles so disrupted, people have been compelled to maintain an indoor life. Consequently, apps for both services and shopping have been gaining in popularity as much as content viewing for entertainment.
India is also Asia’s third-largest economy and its telecom industry has clicked with global investors. Investor-friendly regulations and extensive data usage are among the growth drivers. Besides being one of the world’s fastest-growing destinations for smartphones, India also hosts a diverse customer base who engage with both wireless subscription and fixed-line infrastructure.
On its part, the Government of India (GoI) has brought out national programmes to connect the unconnected. As part of the Digital India programme, GoI has embarked on BharatNet project, a phased initiative that aims to link 2.5 lakh Gram Panchayats of India through optical fibre network. Gram Panchayats are the local self-government institutions at the village level, whose head is the focal point of contact between government officers and the village community.
BharatNet is the largest rural connectivity project of its kind in the world. Technology is being harnessed to connect individuals constituting the last mile of the country. Connectivity to thousands of villages is happening through mobile tower sites, while submarine fibre-optic cable is being laid between the mainland (Chennai) and Port Blair and five other islands of Andaman and Nicobar Islands.
Broadly, infrastructure; equipment; mobile virtual network operators (MNVO); white space spectrum; 5G; telephone service providers and broadband are the chief components of India's telecom sector. The Department of Telecommunications (DoT) is working to harness emerging technologies, with a focus on 5G. The DoT is offering financial assistance for nationally reputed institutes to conduct research in 5G. The aim is to establish an ‘Indigenous 5G Test Bed' at the Indian Institute of Technology (IIT) Chennai, in collaboration with other premier technology institutions, including IIT Delhi, IIT Mumbai, IIT Hyderabad and the Indian Institute of Science (IISC) Bangalore. The DoT intends to facilitate a complete ecosystem around M2M (machine-to-machine) networks in support of the ‘National Telecom M2M Roadmap'. A transition to next-generation internet protocol (IPv6) is being planned.
These upcoming initiatives reflect the fact that India’s telecom sector is not just confined to connectivity. With over 500 million smartphone users, the telecoms sector has created an accompanying digital ecosystem. This can be attributed to the e-commerce business, enterprise connectivity and digital benefits that 4G has to offer. Other than the tangible benefit of connectivity, there are intangible benefits of the telecom sector. Telecom plays a determining role in governance and it’s a resource data which the government leverages while offering citizen-centric services such as the paying of utility bills.
The telecom industry’s digital ecosystem has become part of India’s Digital Journey, which has rung a favourable tone with global investors, e.g. the 2020 digitally driven Facebook-Reliance Jio investment. As we reported back in April, Facebook announced that it will pick up a 9.9 per cent stake in Jio Platforms, a subsidiary of the wholly owned Reliance Industries Limited (RIL).
Such global investments are likely to ramp up further foreign direct investment (FDI). Another dimension is that global companies are viewing India as a manufacturing base. A case in point is the recent media reports about Apple, following its announcement that it will manufacture the iPhone 11 in India. The flagship device is expected to be manufactured in the Foxconn Plant in Chennai and future models might follow suit. Foxconn's Chennai plant also produces mobile devices for many other companies. In 2018, Samsung made news for setting up a mobile factory in Noida - supposedly its biggest such facility - while Nokia phones are manufactured in Tamil Nadu. All such manufacturing centres employ thousands of professionals.
All this manufacturing activity is in sync with the Government of India (GoI) efforts to encourage companies to invest in 'Make in India' products. This is expected to bring more such developments, as India is one of the world’s promising geographies for mobile investments.
More recently, the attempt has been to reboot and revamp the economy in the aftermath of the pandemic. The vision is to develop India into a self-reliant country, a programme described as ‘Atmanirbhar Bharat’ (Self Reliant). Clearly, the accent is on positioning India as a hub of supply chains across many industries. This will happen by reinforcing domestic manufacturing. Seen from the telecoms point of view, foreign brands will hopefully continue to set up manufacturing units in India. Local assembly, manufacturing, a diversified supply chain and ancillary services will open up many more new job opportunities.
According to the DoT website, the telecommunications sector attracted FDI Equity inflow to the tune of $4,227m (Rs 29,352 crore). This accounts for 25.89 per cent of total FDI Equity inflow of $16,330m (Rs 113,511 crore) from April-June 2019. The mobile industry in India means business.
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