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IQ India 2012: Telcos On Data Consumption Patterns In India

K Srinivas, President of Airtel’s consumer business, informed that the telco was registering higher data uptake with 3G playing a major role in this growth. He said that in terms of volumes, 3G data outstripped 2G data in some cities for the company. Speaking at the Qualcomm IQ India 2012, Srinivas attributed the growth of consumption to increasing usage in rural and semi-urban regions and among the youth, across all segments.

Consumers don’t understand 2G,3G,4G; Too early to write-off 3G: He said that most customers don’t understand the technical difference between 2G and 3G, and that the company was looking at it as one integrated mobile internet play with different technologies focusing on creating differentiation with use cases – for example 2G data for web surfing and e-mail, 3G data for video streaming and gaming, and 4G for power users who need high speed video conferencing. He said that it was too early to write-off 3G, and it will co-exist with other technologies including 2G, 4G and WiFi internet connectivity. Earlier in the day, Sanjay Kapoor, Deputy CEO, Bharti Airtel, had said that the company was looking at $20 ARPU from its 4G subscribers.

Impact of increased data usage on revenues: Srinivas mentioned that Indian telcos had learnt from the mistakes made by their counterparts in evolved markets, and had the wisdom of driving a sensible tariff model instead of offering ‘all you can eat’ plans, which has lead to sustained growth in data revenue. On data revenues eating up voice revenue, he said that the company believed that the growth has been incremental over and above voice, and has not substituted voice revenue since there’s a certain minimum requirement, however, he did admit that data was gradually substituting voice in some segments, particularly among youngsters who were using their phones majorly for messaging. Citing the high cost of deploying fiber infrastructure, he said that operators need to come together to create infrastructure and support backhaul.

Deepak Gulati, Executive President – Mobility, at Tata Teleservices, said that the proliferation of data enabled handsets has considerably gone up, and a major chunk of that consumption was still coming from feature phones. He said that the major reason for this was the inaccessibility of wireline broadband.

Consumption patterns: He informed that data consumption on 3G devices was three to four times more compared to normal devices, and the company’s four major circles were contributing to half of all 3G consumption on its network. He said that there was a problem of plenty and that telcos needed to manage networks efficiently. Gulati also emphasised on the need to create new applications, saying that nearly 50% of all data consumption was just e-mail and browsing, and that there was scope for development on new local applications.

Vsevolod Rozanov, President & CEO, MTS India, said that data was still at a fairly embryonic stage in India, and was largely falling in line with the adoption pattern of China barring the fact that the availability of spectrum and the over all operating environment needed to be more conducive. He said that the growth in data was significantly higher in tier-2 and tier-3 cities, and that the average monthly data consumption on the MTS network was close to 500MB on mobile and 3GB on data cards, with social networking websites like Facebook driving data usage.

He said that the market was still emerging and there is a need for creating use-cases and giving a direction to data usage, giving the example of the company launching dedicated plans for users who majorly access the internet for social networking. He added that LTE was being positioned as data nirvana but it’s too early to see how it shapes up data use and that the EVDO technology (evolved CDMA high speed networks) were a good fall back solution.

On full scale handset subsidies: All three telco execs were of the view that economies of full scale handset bundling were difficult to achieve in a market like India where Prepaid connections were more of a norm, and with low ARPUs, and high operational and licensing costs, it was difficult to make investments and burn cash on subsidies. However they did say that telcos needed to innovate on reverse bundling, working with OEMs and ODMs to create interesting bundling offers.

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