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Will Fast 4G Absorption In India Leapfrog Business Growth?
All telecom operators in India have pitched 4G and the focus has shifted from 2G or 3G, as people, today, don't just use their phones to make calls. More and more people are connecting with the Internet
Photo Credit : Reuters
Driven by explosive growth in the data usage due to attractive offers by telecom service providers, India is likely to become the second largest 4G handset market by next year.
According to a recent report by Counterpoint, 'With an estimated installed base of 340 million 4G devices, India will outpace the United States as the second largest 4G devices market.
Akshay Dhoot, Head, Technology, and Innovation, Videocon told BW Businessworld, "Recently, all telecom operators in India have pitched 4G and the focus has shifted from 2G or 3G, as people today, don't just use their phones to make calls. More and more people are connecting with the Internet. Basically, they have invested a lot of money in the 4G infrastructure, so, 4G handsets are going to witness a lot more demand. Further, the cost of 4G components has reduced. Thereby, all Indian brands and whoever is operating in India will manufacture only 4G handsets. As per my estimation, the market will completely switch to 4G by next year. However, some amount of feature phones will be there. Maybe, 4G feature phones will also get more traction."
Smartphone shipments in India grew a healthy 15 per cent annually in the first quarter of 2017, reaching 29 million units. The top five brands contributed to almost 70 per cent of the total smartphones market. Xiaomi, for the first time, jumped to the number two spot while Samsung continued to retain the top spot. Vivo, OPPO, and Lenovo (includes Motorola) made up the rest of the top five.
The 4G mobile handsets are gradually becoming more affordable with many companies offering 4G technology below the price range of Rs 10,000. Eric Hu, Country Head, Nubia India told BW Businessworld, “The fundamental truth of technology is that it’s expensive at its evolution stage and gradually becomes affordable when the adoption curve plateaus bringing it within reach of millions. We are definitely looking ahead to a period where 4G handsets costs will come down.”
Reliance Chairman Mukesh Ambani has also recently announced Jio 4G feature phones. "Jio is offering 4G feature phones for which they are charging Rs 1500 upfront but there are people who cannot afford that much and will switch to cheaper feature phones which cost around Rs 600 or so," said Dhoot.
Shobhit Srivastava, research analyst at Counterpoint Research said, "The ASP (average selling price) of smartphones in India increased by Rs 2,000 (US$31) during the first quarter of 2017 as compared to the corresponding period of 2016. The reason for the increase in ASP is the growing number of users that are upgrading to the high-end specifications offered by brands in the Rs 8,000 to Rs 20,000 price segment."
The advent of 4G will leapfrog opportunities for the remote and unexplored markets of the country. For instance, earlier, the northeastern land of the country couldn't get good connectivity through data carried on the optic fibre. However, when 4G services were first launched in Shillong, the per site data consumption jumped up dramatically and became second only to Delhi at that time on a per tower usage basis, thereby, highlighting the potential of the market in untapped areas. The country is soon going to witness a surge in demand for 4G handsets from these states as well.
"These new 4G handsets will have a lot of attractive features like GPS, better battery power and videos can be streamed on television through them and more like these. So, I see huge a potential in them and they might capture a major chunk of market share as well," added Dhoot.
The entertainment industry in India will register a growth in revenue in India with 4G handsets and 4G connectivity becoming handy as more and more people will start viewing entertainment shows on their mobile devices.
“4G essentially means faster transfer of data to and from your device. It means that the device can now do everything that it did for you on 2G and 3G speeds but it will be a lot faster. Today businesses are moving quicker you are having video conferences on your mobile. HD videos are easier to stream, 3D models, blueprints and all sorts of heavy files are checked on mobiles today. 4G will make business faster and seamless,” added Hu.
The 4G technology will also help financial service industry by accelerating the proliferation of active mobile banking in India. The short-term crisis caused by demonetisation last year already opened the doors for new players to provide niche financial services on mobile handsets.
In the education sector, online learning through videos and online courses are getting more popular with increasing Internet penetration. Online learning platform Byju's recently raised $ 75 million in funding from venture capitalist Sequoia Capital and Sofina, the largest funding in EdTech history of India.
In the medical sector, two-way video on a 4G platform will help rural patients from remote areas in consulting specialists in the hour of need. The e-commerce platforms are doing exceptionally well barring the fact that they are mostly limited to tier 1 and tier 2 cities. Once 4G penetrates the villages, the growth of e-commerce will be extraordinary. Indian media is also turning towards web portals estimating that in the coming years, consumption through mobile will be the most popular method to read or watch the news.
The internet speed of the country will also better with the 4G technology. “Internet speeds are directly correlated to investments in and availability of spectrum. The government is taking a lot of measures in this direction and we are confident that the connectivity challenges will be resolved in due course,” said Hu.
According to Internet and mobile association of India, over 60 per cent of Indians access the Internet through their mobile handsets. "Since 4G in India is coming slightly late as compared to developed countries, we get or manufacture the 4G components which are already tried and tested. This will considerably reduce the cost of deploying 4G infrastructure. Thus, very soon India may be able to match the internet speed of developed countries as well," explained Dhoot. With affordable 4G phones flooding in the Indian market, almost all the growth will soon come from smartphones.