In the past 5 fiscals, mobile data (data accessed through mobile phones, data cards/dongles) consumption in India has grown at a superfast 24 times. CRISIL Research expects that number to multiply four-fold in the next five years through fiscal 2022, with data subscribers expected to double beyond 900 million and penetration reaching 80% from 40% at present.
The faster penetration would be supported by a continued drop in tariffs given the intense fight for the all-crucial market leadership. That would mean telcos will have to increasingly sweat per-subscriber usage to bolster incremental revenues.
India’s mobile data usage per subscriber nearly doubled to around 1.3 GB per month between fiscal 2013- 2017 on faster adoption of 3G and 4G services. Free data offered by Reliance Jio, and a sharp ~40% fall in tariffs in fiscal 2017 were the growth propellants. CRISIL Research sees India’s per subscriber usage at 2.3 GB per user by 2022, or closer to the trend in many evolved data markets, and stabilise thereafter.
A larger chunk of the new subscribers over next 5 years would be from rural India, and their relatively lower data usage would impact the industry’s average data usage adversely. More importantly, existing subscribers may also not crank up usage sharply after fiscal 2022 as Wi-Fi usage improves sharply.
A similar trend was seen in China where mobile data usage per user stagnated between 2012 and 2014, coinciding with rapid expansion of Wi-Fi infrastructure. Globally, nearly 60% of data used on mobile phones is offloaded to Wi-Fi as it is significantly cheaper and faster than mobile data.
Says Prasad Koparkar, Senior Director, CRISIL Research, “The cost of offering services on Wi-Fi is just a fifth of mobile, and speeds are significantly faster, too. We expect a sharp increase in Wi-Fi hotspots over the next 3-5 years, which can be a drag on mobile data growth once penetration growth plateaus.”
Despite continuous drop, mobile tariffs are expected to remain 80% costlier than Wi-Fi.
Wi-Fi infrastructure is significantly underdeveloped in India with only around 35,000 hotspots compared with 58 lakh and 6.5 lakh in China and South Korea, respectively. Consequently, time spent on Wi-Fi in India (as proportion of total time spent on accessing data) is less than 20% compared with over 65% in China.
On their part, telecom operators are gearing up to spend Rs 2.7 lakh crore on network improvement, including small cell sites and fiberisation of towers, and expansion of network coverage. While this would boost speeds on existing LTE networks – at 4 mbps, India offers one of the lowest speeds globally – it may not be enough to compete with fixed broadband speeds.
Says Hetal Gandhi, Director, CRISIL Research, “Newer models will evolve gradually to offer Wi-Fi services, with white label players entering the fray. Government initiatives such as Digital India, Bharat Net and Smart Cities will also help expand public Wi-Fi infrastructure and eventually push offtake of commercial Wi-Fi as well.”
This is already taking shape in some form with operators and organisations such as RailTel and Ozone deploying public Wi-Fi hotspots in partnership with Facebook and Google. The Smart City Mission and the Railways have already started partnering for deployments over the past year. As a result, CRISIL Research expects rapid transition in data traffic from mobile to alternative networks such as Wi-Fi after fiscal 2022.