The latest data compiled by the Analysys Mason Report on the potential evolution of Mobile Broadband (MBB) and voice market in India, has thrown up surprising results that could be leveraged to change the face of telecom industry in India.
Taking into account key factors such as network availability, device availability, data tariffs, the local content ecosystem, competing factors and technologies it was discovered that barring a few negatives, most of the drivers are present in a favorable state and the country is on the cusp of a telecom revolution.
India’s current data tariffs (INR 228/GB on an average) are significantly higher than those of relevant developed (and developing) countries, when adjusted to the average income of an Indian household. There can be reasons. Major are –
- Reason 1 – India’s data tariffs (price of 1GB pack) as percentage of Gross National Income (GNI) per capita is currently 2.6%, whereas on an average the developed economies’ data tariffs as percentage of GNI per capita currently stand at 0.4-0.5%.
- Reason 2 – A comparison of data tariffs in India against those in other countries for per GB of data as a percentage of GNI per capita after normalization for per-capita incomes in the countries, shows that an average user in India spends 2.6% of its annual income to consume 1GB of data per month, which is much higher than the average of 0.2–0.4% in the developed markets.
Furthermore, the current data was assessed under a scenario in which India reaches the levels of other mature markets in terms of reduction in data tariffs and development of the digital content ecosystem i.e. a scenario where tariffs in India approach 0.42% of GNI per capita in FY20.
Attention: This theoretical analysis concluded that a 75% cut in data tariffs (ARGB of INR 57) alone could increase the MBB user base to 645–667 million SIMs, and the level of monthly data usage to ~4.2–4.3GB per SIM in FY20.
Data Usage In India – Certain Driving Factors
Another driving factor that could significantly impact the culture of data usage in the country is its local content ecosystem. Mobile internet adoption rates are often higher in markets which have vibrant digital ecosystems offering end users online content and services that are localized and relevant to their needs. The GSMA index of mobile connectivity has gives India a score of just 33 on state of content, compared to a typical score of 80 for the UK and the USA. India’s score is held back by factors such as the wide range of languages spoken in the country (lack of multilingual content), as well as a scarcity of mass-market digital products and services.
A paradigm shift in the content index score through significant improvement in the availability of multilingual content and mass-market digital products and services (in conjunction with a steep decline in data tariffs by 75%) could further increase the level of monthly data usage per SIM, to as high as 10.2GB in FY20.
The results of the transformative scenario study led to the conclusion that, from a perspective of consumer affordability, an average monthly increase in data usage to ~10.2GB at the discounted tariff of ~INR 57 per GB, coupled with a 10% contribution of voice, translates into a total (data + voice) increased monthly ARPU for an MBB user of ~INR 645 in FY20.
Hence, these transformative changes in data tariffs and simultaneous development of the content ecosystem have the potential to drive data usage of an average MBB user in India to as high as ~10GB per month by FY2020.
A 75% decline in tariffs from their current levels could increase the MBB user base in India to 667 million by FY2020, representing a 53% MBB penetration!!!