The Indian telecom industry has been facing several challenges over the past two years. Given the regulatory and policy uncertainty around 2G licences issued in 2008, most operators have put their growth plans on hold. The broadband wireless spectrum (BWA) auctions were conducted in 2010, but the industry is yet to witness any major development on the 4G front.

In March 2012, Bharti Airtel deployed the long term evolution-time division duplex (LTE-TDD) platform to introduce 4G services in Kolkata. The move, besides making Airtel the first Indian operator to commercially launch these services, marked the company’s entry into the exclusive LTE club worldwide. The operator later expanded its 4G coverage to Bengaluru and Pune. While other operators were also aiming to launch services in 2012, their plans did not materialise due to issues related to an underdeveloped 4G ecosystem, spectrum scarcity and the unfavourable regulatory environment.

However, the scenario is set to change in 2013, as most players have completed LTE-TDD trials and are preparing to launch services in select circles. Besides, government support through initiatives like the introduction of the unified licensing regime, which allows non-BWA spectrum holders to offer 4G services and BWA players to provide voice services, will drive LTE adoption in the country. The Department of Telecommunications has also approached its internal units – the Policy Group, and the Wireless Planning and Coordination Wing – to prepare a strategy for selling spectrum in the 700 MHz band for broadband services. This band is considered to be highly efficient as compared to the 2.3 GHz band, which is being currently used by service providers.

tele.net takes a look at the evolving 4G landscape, key growth drivers, operator plans and strategies, and the way forward...

Evolving 4G landscape and key drivers

According to “LTE Outlook”, a report published by Frost & Sullivan, LTE revenues in India are likely to witness a compound annual growth rate of 220.5 per cent between 2012 and 2017 to reach $11.88 billion. The technology offers higher bandwidth and superior service quality, which makes it an ideal platform for providing fast mobile broadband services. The adoption of 4G services will lead to a surge in the demand for data-intensive applications like mobile TV and videoconferencing, which will improve operator revenues.

Further, technologies like voice over LTE (VoLTE) are expected to encourage service uptake. The government has allowed internet service providers (who also hold BWA spectrum) to offer voice services using 4G frequencies. These players are required to pay an additional fee of up to Rs 16.58 billion for a pan-Indian licence.

The increase in the number of smartphones is also an indication of the market getting ready for higher data usage. According to the International Data Corporation, India will witness the shipment of 27.8 million smartphone units in 2013. This is expected to grow by 500 per cent to reach 155.6 million units by 2017, mostly on account of 3G/4G service uptake. However, the impact of 4G services on the smartphone market is not expected to be realised before 2015, as the industry expects LTE to be largely deployed through dongles and data cards at the initial stage.

Moreover, operators holding 3G spectrum are likely to adopt a complementary 3G-LTE strategy, instead of migration or leapfrogging. 3G spectrum is currently being used for both voice and data services; however, as operators face broadband congestion, they would turn to LTE to address capacity constraints. Tests conducted globally suggest that 3G can be a backup for LTE in areas where 4G signals are weak. LTE and 3G belong to the same family of 3GPP (3rd Generation Partnership Project) standards and leverage the same technological ecosystem. It is designed to work seamlessly with HSPA/HSPA+ and EVDO networks and is standardised with 3G interoperability. The technology works with existing 3G networks and enhances the end-user experience through high speed broadband data services by using multimode devices. For instance, Norway-based TeliaSonera offers its customers modems with a combined functionality for 2G, 3G and 4G. Therefore, subscribers can avail of mobile broadband network services through a single modem.

4G devices are likely to follow the 3G price trajectory, which implies expensive initial prices. In the long run, operators are likely to adopt the low-cost, high-volume strategy. Besides a well-developed ecosystem, which is a prerequisite for 4G service adoption, the key growth driver for LTE in India is the country’s low broadband penetration. The technology is expected to drive internet penetration in rural areas and address issues related to last mile connectivity. Further, high speed and bandwidth-intensive 4G applications are expected to provide benefits for industry verticals apart from telecom such as banking, health, education, and small and medium enterprises. Factors such as improved service quality, sophistication with regard to data management, and enhanced personalisation strengthen the business case for 4G as compared to other technologies.

Operator plans and strategies

During 2013, BWA spectrum holders are likely to undertake large-scale service roll-outs. While Bharti Airtel is all set to cover more cities, players such as Reliance Jio Infocomm (erstwhile Infotel Broadband), Tikona Digital Networks and Aircel are aiming to launch services in select circles. Meanwhile, Videocon Telecommunications Limited (VTL), which did not win BWA spectrum during 2010, intends to enter the 4G market, highlighting the growing demand for data services in the country.

Bharti Airtel

At present, Bharti Airtel has around 5,000 4G subscribers across Kolkata, Bengaluru and Pune. The company plans to extend its coverage to Chandigarh, Delhi and Mumbai in the near future. Airtel had won BWA spectrum in four telecom circles. In 2012, it acquired Qualcomm’s Indian business, which increased its number of licences to eight. As per the deal, Qualcomm has authorised Airtel to operate in all its circles – Delhi, Mumbai, Kerala and Haryana.

The company has partnered with several vendors to ensure a smooth network roll-out. It has awarded network deployment contracts to ZTE, Huawei Technologies, Nokia Siemens Networks (NSN) and Ericsson for Kolkata, Bengaluru, Pune and Chandigarh respectively.

To ensure device availability, Airtel has collaborated with Huawei Technologies for developing an LTE hand-held device, the Ascend P1 smartphone. Currently, the company is testing the device, which will be the first LTE-TDD-compatible 4G handset to be launched in India. Further, the operator is prepared to address the issue of providing voice services through the LTE platform. It has conducted trials on the circuit switched fallback (CSFB) technology, which uses the LTE network for ultra-fast data services, but transfers customers to the GSM platform while making and receiving voice calls, and accessing voicemails.

The company is likely to use this technology to launch voice services for 4G users in Pune. NSN will deploy the CSFB voice solution on the operator’s live LTE-TDD network in the city. With this, Airtel will become the first operator in India to combine voice with LTE services through a GSM network.

Reliance Jio Infocomm

Reliance Jio Infocomm, which is owned by Reliance Industries Limited, is the only player with a pan-Indian BWA licence. The company is set to launch 4G services in the country, starting with the metros, by July 2013. Initially, it will offer services in the top 40 cities and later move to Tier II and Tier III cities.

To ensure a successful 4G launch, the company has partnered with several vendors. It has tied up with Russia-based Spirit DSP to offer voice and video-over-IP services on its LTE-TDD networks. Reliance Jio Infocomm does not have 2G or 3G spectrum and is, therefore, evaluating the use of VoLTE to offer voice services to consumers. The government’s decision to allow this will support the operator’s plans.

The company is likely to buy equipment from Samsung, and has shortlisted the Infinera Corporation, Ciena Communications and Alcatel-Lucent for sourcing optical network transmission gear. It is laying fibre in the metros through a partnership with Himachal Futuristic Communications Limited. Reliance Jio Infocomm is expected to invest Rs 48 billion in its LTE network.

Aircel

The operator has BWA spectrum in eight circles and is expected to roll out 4G services in end-2013. By 2014, it plans to invest around $10 billion in service roll-out and network expansion. Aircel is currently finalising its device strategy, rolling out optic fibre and setting up LTE base transceiver stations on towers.

Tikona Digital Networks

Tikona Digital Networks has BWA licences in five circles and has been undertaking LTE-TDD trials with major vendors since 2012. It has reportedly selected Ericsson and ZTE for supplying network equipment. Tikona plans to invest over Rs 10 billion in 4G service launch and is exploring all fund options.

Further, the company is likely to provide voice services using BWA spectrum. This may involve an investment of Rs 2 billion across circles. Since Tikona is a pure-play data service company, it does not have 2G spectrum and, therefore, will have to go beyond traditional voice to provide these services. The company plans to launch 4G services by end-2013 or in early 2014. These services will be initially available in Gujarat and Rajasthan.

Augere Wireless

Augere Wireless, which is backed by France Telecom and private equity funds, was the first company to award an equipment contract for 4G services. In October 2011, it had selected Ericsson for network roll-out in the Madhya Pradesh and Chhattisgarh circle. While the company was aiming at a soft launch of 4G services under the ZOOSH brand in 2012, no activity has been witnessed on this front so far. Augere is reportedly looking for a prospective buyer for its BWA licence and is planning to exit the Indian market due to regulatory uncertainty.

VTL

Though VTL did not acquire spectrum during the 2010 BWA auctions, it is aiming at a mid-year service launch and has partnered with NSN for rolling out 4G LTE networks across the country.

VTL’s 2G licences were cancelled by the Supreme Court in February 2012. In November 2012, the company secured spectrum in the 1800 MHz band in six circles through auctions. This spectrum is liberalised in nature, and, therefore, VTL can utilise it to provide 4G services, apart from simple voice services. Further, VTL is likely to adopt the frequency division duplex (FDD) technology, which will provide it a competitive edge as LTE-FDD is considered to be more developed vis-à-vis LTE-TDD.

The way forward

The 4G market is expected to witness significant activity in the next 12 months. However, the technology will take time to mature in the Indian market, which is yet to witness the mass adoption of 3G services. In the long run, 4G promises to play a key role in catering to the country’s underserved broadband market. It will also help the government in meeting its objective of “Broadband for All” under the National Telecom Policy, 2012.