3G and BWA rollout to re-invigorate aggressive growth, says FICCI-KPMG report

• Rural market to drive next round of growth for voice-based services
• Data services to create the churn within maturing urban markets

A FICCI-KPMG report titled ‘Broadband for All’ reveals that telecom companies, whose operating margins are under pressure due to usage of multiple SIMs, tariff corrections and rising competition are keenly awaiting the roll-out of 3G and BWA to bolster the maturing urban markets and enhance margins.

The report was released here today by Kapil Sibal, Union Minister for Communications & IT, at the inaugural session of ‘India Telecom 2010’.

The FICCI-KPMG report points out that the broadband sector is expected to grow in the future as 650 million potential customers are waiting to be tapped. Rural India, the report states, is the key target market likely to drive the next round of growth for telcos, particularly for voice based services.

The report highlights the primary reasons for the nascent growth of broadband in India. It also tracks all the government efforts that are being made to achieve the growth of broadband and gives an overview of how the growth of broadband will actually contribute to the overall development of the economy.

India is ranked amongst the fastest growing telecommunications markets across the globe. The average monthly mobile subscriber growth over the past year has been 15-17 million customers. Currently, the mobile subscriber base is 800 million. The overall tele-density for India has already surpassed 60% and the market continues to exhibit unabated growth. In comparison to the mobile growth, the broadband penetration across India has been rather under tapped with approximately 10.08 million subscribers as of August, 2010. The contention ratio (number of subscribers accommodated in a given bandwidth) in India is high i.e. service providers provision an average 130 subscribers in 52 Kbps bandwidth, whereas internationally the same ratio is not more than 50.

Said Dr. Amit Mitra, Secretary General, FICCI, “The present phase is extremely exciting for the telecommunication industry which is looking forward to 3G and BWA rollout to help re-invigorate the aggressive growth that the industry has witnessed in the past two years.” Rapid swelling in the subscriber numbers has resulted in urban teledensity exceeding 100%. The rural market is expected to drive the next round of growth for the voice-based services, while data services will create the much needed churn within the maturing urban markets, he added.

According to Romal Shetty, head of telecom, KPMG India, improving broadband penetration in the country has emerged as the need of the hour. Strong government support coupled with key initiatives from the private operators will help ensure connectivity for the remotest parts of the country and will further the government's agenda of providing basic healthcare, banking and e-governance facilities to all, he opined.

The primary aim of the ‘Broadband for All’ movement is to ensure that all Indians are able to connect with the world and are able to remotely access basic facilities like health, education, banking, commerce, entertainment, utility and e-governance services to enhance their quality of life.

The report highlights the following aspects:

• Evolution of telecom industry and its initiatives over the last decade
• Importance of broadband and data services market in India
• Key ecosystem requirements and strategies that telcos may follow to achieve government targets of broadband subscriptions.
• Growing importance of broadband and how it has the potential to contribute to the overall socio-economic development of rural India and project it as a powerful economy
• Government initiatives to reach the rural population explore the idea to take optical fiber cables to 3.74 lakh villages having a population of 500 or more