While both 3G and BWA spectrum were auctioned in Q2 2010 in India, 3G players have moved ahead with their rollouts while the BWA license holders (excluding Bharti Airtel) are lagging behind, still evaluating and trialing TD-LTE. In India, it has been over 18 months now since 3G services were launched. Most metros and “A” cities already have 3G coverage. The 3G operators in India are rolling out 3G services in smaller cities, as well.
At the end of December 2011, Maravedis-Rethink estimates that India had 16 million active 3G subscribers. We further estimate that India had 18 million active 3G subscribers at the end of February 2012. The number is close to 2 per cent of the mobile subscriber base of 911.7 million (as reported by TRAI) at the end of Feb 2012.
We expect the active 3G subscriber base in India to reach 74 million by the end of 2013 and 371 million by the end of 2017. The market share growth will depend on how fast operators can deploy 3G networks in their respective licensed circles, and how rapidly they can address the demand in rural areas. The years 2012 - 15 will be the take-off period for 3G. Beyond 2015, TD-LTE will have created a strong foothold in India's 4G market.
The holders of BWA spectrum are Reliance Industries Limited (RIL), Aircel, Tikona, Augere, MTNL, BSNL and Bharti Airtel (which is also gradually acquiring Qualcomm's licences).
In India, the major BWA spectrum holders like Reliance Industries Limited (RIL) and Aircel are still conducting TD-LTE trials and testing equipment.
At the end of March 2012, Aircel was yet to finalize its choice of infrastructure suppliers for the rollout of its TD-LTE network. According to unconfirmed reports, RIL has decided to make Nagpur-Maharastra the hub for its 4G operations.Trials are set to begin for services at the RIL complex in Jamnagar in Q2 2012.
The other state carrier, BSNL, is yet to make an official statement on whether to embrace TD-LTE or not. For BSNL, WiMAX has been largely a failure. The operators' plans to roll out WiMAX using a franchisee model flopped over procedural, legal and other punitive charges. The operator is currently focused on better rollout and consolidation in the 3G space and does not want to stretch itself in the WiMAX domain. BSNL, as the only company which ended up adopting the WiMAX platform in India, was also confronted with the possibility of isolation from an interoperability and roaming perspective. BSNL's proposal for the surrender of BWA spectrum means the end of WiMAX in India.
At the end of May 2012, Bharti Airtel had launched TD-LTE commercial networks in Kolkatta and Bengaluru in India. Despite these first 4G launches, Maravedis-Rethink does not expect huge uptake of TD-LTE services before the end of 2013.
We estimate India will reach 0.4 million TD-LTE subscribers by the end of 2012. Our estimates are conservative, but take into account the fact that as of the end of May 2012, Bharti Airtel is the only operator to have commercially launched TD-LTE (and only in two circles). Other BWA players like RIL, Tikona and Aircel are expected to launch in the second half of 2012. Maravedis-Rethink expects to see some traction on the TD-LTE front in India in the second half of 2013. We forecast that the TD-LTE subscriber base in India will reach 67 million by the end of 2017.
The absence of a TD-LTE device ecosystem remains the prime barrier to rapid growth. Operators face the challenge of bringing an inexpensive multimode (2G/3G/TD-LTE) device to the consumer. The current prices of TD-LTE devices (US$152 for a multimode dongle) are far too high for the average Indian consumer. The fall of device prices to the US$50 price which an Indian consumer can afford may take more than two years. If prices fall more slowly, TD-LTE adoption in India may evolve even more slowly than expected.
Devices are critical to 3G service uptake. The Indian base of customers using 3G devices is still very small. It will take several years to reach critical mass, even though mobile operators like Bharti Airtel, TTSL, Aircel, BSNL, Aircel, Idea Cellular and others have launched a range of devices on their 3G networks including tablets, USB dongles, smartphones and featurephones.
At the end of 2011, featurephones still dominated the total installed base of 3G devices in India with an estimated 70% market share. USB dongles had 26% market share, smartphones and tablets 3% and 1% respectively.
On the TD-LTE front, multimode devices that support 4G as well as 3G and 2G technologies will enable TD-LTE to take advantage of the 3G and 2G ecosystems. Eventually, this will create economies of scale to enable a broad choice of broadband wireless devices at affordable price points for Indian consumers. However, as discussed above, it will be several years before such devices are likely to become widely available. Although the multimode dongle (2G/3G/TD-LTE) has already made an entry into the Indian market in Q2 2012, prices are high, and smartphones are the stronger driver of new service uptake.
According to its VNI Global Mobile Data Traffic Forecast, Cisco expects mobile data traffic in India to increase 114-fold by 2015, proceeding at a compound annual growth rate (CAGR) of 158%. The Cisco estimate includes mobile phones and tablets plus machine-to-machine connected devices.
At the moment, India is primarily a voice and SMS market, but is moving towards data with the release of 3G spectrum by the government. The data traffic on MTNL's 3G network is increasing at 10% month-on-month. For IDEA Cellular, data usage is going up by more than 20% every month. The average monthly data usage per subscriber on IDEA Cellular's 3G network is 235MB.
In India, the 3G license holders were awarded only 5MHz per operator (compared with 20MHz in many other markets). The 3G operators are likely to experience increasing network congestion as 3G services are rolled out. With this in mind, they are considering various options for 3G data offload, notably femtocells and Wi-Fi offload.
Before that point, operators know there will be more and more traffic growth on their networks in the days to come. They are actively seeking other solutions to the problem of 3G data surge, especially while femtocells remain expensive, including data traffic offload to Wi-Fi networks.
For instance, in Q1 2011, Aircel launched 50,000 Wi-Fi hotspots around India and formed partnerships with Wi-Fi players like O-Zone Networks and Tikona Digital Networks (TDN) to offer public Wi-Fi services to its subscribers. Maravedis-Rethink expects more deployments of 2G and 3G mobile data offload to Wi-Fi within India in the coming quarters.
Indian operators like Tikona and Zylog providing broadband wireless services in the unlicensed frequency bands (2.4 GHz and 5.8 GHz) are expected to play an important role in 3G data offload. These operators aim to become partners for the various 3G players who will reach capacity exhaustion in the coming quarters, providing the Wi-Fi infrastructure to carry excess loads.