August 1995 witnessed a historic event when the first call was made over a mobile services network. However the country was late in adoption of the technology as compared to the fact that the world’s first calling over 2G network was made in 1991. Again, compare this with global scenario where countries such as Japan and South Korea had started rapidly embracing 3G technology way back in 2001 while the 3G spectrum auctions itself were conducted around 2009 in India.
Connectivity Spurs Growth
The entry of 2G services in the country complemented well the economic liberalisation policy embraced during the same time. Stakeholders within the government and industry could easily observe the immense benefits and correlation between mobile penetration and higher economic growth. As mobile connectivity across India increased, so did economic welfare and empowerment of the people, particularly deprived sections.
Gradually the convergence of telecom with the day-to-day life of the users resulted in emergence of new set of innovative applications. Thus users had access to music, basic banking applications, and rich media such as video, informative services such as mandi market prices, critical weather information to fishing communities and the list goes on. Such applications were classified under the value added services popularly known as VAS services. This in way trigged the first level of demand for data services as the user experience on a conventional 2G network left much to be desired.
Thus started the pursuits of stakeholders to scale up to next level of technology adoption and apparently it resulted into evolution from conventional 2G to migration to 2.5 EDGE networks and eventually to 3G. This phase also saw convergence of GSM technology to CDMA with both the networks integrating to WCDMA for 3G. The innovation and co-optive approach adopted by mobile device manufacturers too played a very important role during this transition phase.
With devices supporting new-age applications, various central and state government programmes registered record uptake with the citizens. In particular, Connectivity has saved millions of rupees, making this available for other DBT (direct benefit transfer) schemes meant for the masses. Without a robust telecommunications network, much of this would never have been possible.
Preparing for the 5G Wave
While India was left lagging in following developed
markets for 2G to 4G, the key stakeholders are already working towards proactively working for the 5G evolution. It is probably for the first time that representatives from Indian OEMs are involved in framing of the global standards related to 5G. This serves as a strong testimony to reflect the growing influence of Indian mobile services value chain players on a global scale. It also reflects a change in mindset from being mere followers to actually being early adopters of advancements in technology.
Support & Reforms Required
Given the critical role played by telecom in the country’s economic growth, one would expect favourable measures & reforms to be in place to safeguard the industry’s wellbeing
Given the critical role played by telecom in the country’s economic growth, one would expect favourable measures and reforms would be in place to safeguard the industry’s well being. However, the sector needs further support from the government agencies from a policy & regulation perspective since presently the landscape looks headed for a slowdown with alarming repercussions. The sector has been overburdened by increasing costs and galloping debt, even as profits keep declining each year.
The incumbent government indeed has intent to lend a supporting hand to the ecosystem players. If a programme such as Make in India gets a stronger boost and policies like MSIPS promote the electronic ecosystem of India, the Indian landscape for Mobile manufacturing shall become more cost efficient and witness drastic changes. Since the Chinese manufacturers have an advantage in terms of sourcing components locally, such policies are expected to set a level playing field in the future.
On its part, the mobile telecom industry has been fully aware of its role and responsibility in driving economic growth. Consequently, telecom players have been making huge investments almost every year in establishing telecom infrastructure throughout the country. As a result, millions of jobs and entrepreneurial opportunities are created annually, directly and indirectly. Another four million direct and indirect jobs are expected to be generated in the next five years. But the lack of adequate regulatory support has meant mobile telecom companies are struggling to keep operations viable.
The telecom industry’s billion-plus base of subscribers makes it the world’s second-largest market. And with 220 million users, India is the world’s second-largest smartphone market too. The time is ripe to scale up these numbers and drive higher economic growth. The role of mobile connectivity assumes more importance when one considers the GDP numbers for the January-March 2017 quarter. The Q4 GDP is 6.1 percent – a fall from eight percent GDP in the same quarter of last year. It’s clear that the impact of demonetisation is now being fully felt. Analysts warn the April-June quarter could also mirror the same trend, indicating an economic slowdown is underway. But this short-term blowback can be offset by the long-term advantage, since demonetisation has driven higher connectivity and a faster shift towards digitalisation. Indeed, if managed adroitly, demonetisation can drive a shift towards transparent digital transactions backed by the backbone of mobile telecom connectivity.
To counter the impact of the ongoing slowdown and boost economic growth, it’s time the regulatory authorities and telecom players join hands in propelling the sector into a higher growth trajectory. For this, proper policy reforms and fiscal incentives need to be in place, particularly in the case of mobile manufacturing. Such support will also boost the Government’s ‘Make in India’ initiative, encouraging more mobile manufacturers to open units in India. All this will benefit the industry, the Government and the masses.