According to a recent Assocham-PwC report, data consumption in India will grow from 7.2 million MB in 2017 to 1.09 billion MB (megabytes) in 2022, growing at a compound annual growth rate (CAGR) of close to 72.6 per cent.
While internet penetration is increasing in India, with mobile internet penetration set to reach 56.7 per cent in 2022, from a mere 30.2 per cent in 2017, with video-on-demand driving usage. In fact, according a Nokia
report last year, video streaming constitutes up to 75 per cent of the data traffic.
According to telecom experts, the humongous video streaming levels is also a reason for rising network congestion (even for voice services) in the country.
While incumbent telecom operators like Bharti Airtel and Vodafone Idea (VIL) have been up in arms against 5G spectrum auction in the near future due to a financial crunch in the sector, Reliance Jio has been quite vocal about going ahead with 5G trials.
Bharti Airtel hopes that the Centre will bring down the proposed base price for the 5G auctions for the company to consider participating in the airwave sale. In a recent investor conference call Gopal Vittal, chief executive officer of Bharti Airtel, said that since 5G requires large quantity of spectrum and investments in the range of Rs 50000-55,000 crore and “clearly these are prices we can’t afford as they are exorbitant, we hope the government will bring down pricing and then we will look seriously at 5G”.
While spectrum cost is a concern, telecos are also bidding on data usage as a means to grow revenue and usage over voice services.
Airtel currently has 115 million data subscribers compared, to 306 million of Reliance Jio and 146 million of Vodafone Idea. Airtel, however, has the highest data usage at 11 GB per subscriber per month, compared to 10.9 GB for Jio and 8.8 GB for Vodafone Idea.
“ With 4G penetration for Bharti Airtel and Vodafone Idea still at 25-30 per cent of the subscriber base, limited use cases of 5G at present, and a nascent 5G ecosystem, we believe it will be negative for operators to spend over $7 billion on a project offering limited returns,” noted Deepti Chaturvedi, research analyst at CLSA, in a note to investors.
Further, with 275MHz spectrum available in 3.4-3.6GHz band and only three operators in play, there is enough supply. So, even if Reliance Jio bids in current auctions, incumbents led by Bharti Airtel can purchase spectrum in subsequent auctions.
Deferring purchase will likely also lead to a cut in price of spectrum. Historically, the govt has cut spectrum prices by 30-40 per cent if it saw no demand in the previous auction, Chaturvedi wrote.
Operators in South Korea, Japan and China have been granted 100-200MHz spectrum each in the 3.5-3.7GHz band for 5G services. Over past few months, commercialisation of 5G has also started with Korean operators introducing 5G plans and Samsung launching the first commercial 5G smartphone.
In the US, Verizon launched its mobile 5G service called 5G Ultra Wideband in April in a couple of cities and plans to expand this to another 20 cities in 2019.
Data consumption in India to grow from 7.2 million MB in 2017 to 1.09 billion MB in 2022, according to an Assocham-PwC report
Mobile internet penetration set to reach 56.7% in 2022 from a mere 30.2% in 2017
High video streaming levels a major reason for rising network congestion
Airtel and Vodafone Idea have opposed 5G spectrum auction given the financial crunch but Jio has been vocal about going ahead