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India’s 4G penetration at 21% in Q1 2018, behind other nations in the region: GSMA

The fourth-generation (4G) penetration in India, at 21% in the first quarter of 2018, is significantly behind the average seen in other Asian Pacific countries, at 44% during the same period, says the Economic Times citing a report by the global telecom industry body GSMA. The report, carried out by GSMA Intelligence, a research wing of the London-based telecom group, largely attributed the high cost of telecom spectrum to the poor penetration of mobile connectivity in developing countries.

“Since the 3G auction in 2010, the government approach to spectrum management has resulted in inflated spectrum prices and unsold spectrum. ARPU levels in India are also on average almost 35% lower than developing countries in the Asia Pacific overall (over the period 2010–2017). This suggests policy making by the government and regulator has played a role in the high spectrum prices,” the GSMA report said. GSMA Intelligence studied 1,000 spectrum assignments in 60 developing and 42 developed countries over a period of seven years to 2017.

It is interesting to note that the report comes months after Reliance Jio Infocomm (Jio) announced that it is aiming to cover 99% of the country’s population by Diwali (September or October). Jio also revealed that its user base has increased to 186.6 million in Q1 2018. Market leader Bharti Airtel, and the soon to be largest telecom player in the country — a joint venture between Vodafone India and Aditya Birla group’s Idea Cellular — are also rapidly expanding their 4G footprint. However, the GSMA report also points out that the telecom networks in the country were performing worse than other developing nations in the region.

“The networks perform notably worse on average than developing countries in the region overall, with slower upload and download speeds and higher latency,” the GSMA finding said. According to ET, experts believe that India’s dense population, coupled with the massive smartphone penetration results in slower data speed.

Telcos blame high spectrum prices for stymied investment

Most major telcos in India have often blamed the irrational pricing of spectrum as a key reason for high indebtedness, which in turn has hampered investments in networks over the years, the ET report adds. Addressing the issue, Telecom minister Manoj Sinha assured the telcos that the government would adopt the best practices, followed globally, on spectrum pricing in the future. He, much to the dismay of many industry players, also noted that the last spectrum auctions of 2016 was a success in terms of the money raised – about Rs 66,000 crore.

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However, GSMA points out that the only reason for the government to fetch that kind of money was because of the fact that there was a lot of spectrum on offer, whereas the demand was actually quite poor. At that auction, a total of 2,354.55 MHz of spectrum, worth Rs 5,60,000 crore was available, only a mere 41% i.e. 965 MHz worth Rs 65,789 crores was sold. In comparison, in 2015, 380.75 MHz spectrum was put on sale with only 11% of the airwaves remaining unsold.

Most notably at the 2016 auction, the 700 MHz — important for widening access to affordable mobile broadband services — received no bids, allegedly due to high reserve prices, the UK-based group said. The efficient airwave band was priced at Rs 11,485 crore per unit. Since the 3G auction, held in 2010, GSMA said that the government’s approach to spectrum management has resulted in ‘inflated spectrum prices and unsold spectrum’, which were almost 50% higher than the median price in developing countries between 2000 and 2017, the ET report says. It said that policy making by the government and the regulator has played a role in the high spectrum prices.

The UK-based group also said that if the policy objective for ensuring sustainable and affordable access to digital communication is ensured, as pointed out in the draft publication of the National Digital Communications Policy (NDCP), then it would be an important step in the right direction to help India increase its 4G market penetration.

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