IoT can reach 2 bn phone connections and unlock revenues of $11.1 bn: Study

India has potential to reach 2 bn mobile connections by 2022

About five new mobile connections per second are estimated to join the power of internet in India by 2022, Internet of Things (IoT) has the potential to reach 2  billion connections and unlock revenues of $11.1 billion by 2022, revealed a new Associated Chambers of Commerce and Industry of India (Assocham)-EY joint report.

While potential is huge, India, however, currently lags behind the US, China, and Korea in connectivity via optical fibre, states the study. A meagre 25 per cent of telecom towers in India carry optical fibre, whereas the share in the US, China, and Korea is about 65-80 per cent, adds the joint report, a concern also noted by CRISIL.

Fiberisation of towers is critical in India. Nearly 60 per cent of the towers will need to be fiberised by 2022, as outlined in the National Digital Communication Policy-2018. As demand for 4G and then 5G grows, networks will become denser and deeper, making fiberisation an imperative, noted the joint study on ‘Propelling India to a trillion-dollar digital economy’.

The emergence of new technologies is set to multiply the consumption of data, necessitating the need for installing more towers. Additionally, 100,000 telecom towers will be required to meet the growing demand for data across the country, noted the study.

 “While the report reveals potential of IoT to reach 2 billion connections, with revenues of $11.1 billion by 2022, it also proposes rationalisation of licence fees, taxes, and levies to promote investments and revive the financial health to harness emerging technologies. We believe that with the right mix of accelerators, including regulatory framework, government incentives, and industry collaboration, India can be propelled to a trillion-dollar digital economy by 2022,” said P Balaji, chairman of Assocham’s National Council on Telecommunications & Convergence. 
 

The study, however, notes there is a need to upgrade backhaul networks and fiberise minimum of 60 per cent of mobile towers to support 5G ecosystem that will drive this growth. Moreover, incentivizing tower deployment and availability of land and buildings as potential cell sites in government facilities, will expedite tower deployment.

Already top telcos have been leveraging funds to boost or balance their tower businesses. Last week, Reliance Industries’ board approved a scheme to hive off the fibre and tower businesses into separate companies as the capital expenditure intensity of their tower business rises. 

Rival Vodafone Idea said it planned to demerge its fibre infrastructure business, transferring such assets to a subsidiary Vodafone Towers. Bharti Airtel also announced plans to sell a further 32 per cent stake in its tower arm, Bharti Infratel, which is in the process of merging with Indus Towers.

The increasing need for high-speed fixed broadband access is likely to be the primary driver for fibre-to-the-home (FTTH) adoption in India. Going forward, FTTH is expected to account for a majority of the fixed broadband connections by 2022, helping to realise the government’s target of covering 50 per cent of households. The report comes within a months of Reliance Jio’s ambitious FTTH project roll-out, which is targeted to reach 50 million households.

According to a recent report by Chris Lane, analyst, Bernstein, the majority of total data (usage globally) growth will come from WiFi traffic over fixed connections. Emerging Asia is the exception, as poor fixed networks in India and Indonesia result in greater data growth over cellular networks. 

“Fibre-to-the-base station is transitioning from a ‘nice to have’ to a necessity. We believed this transition favours scale players, and integrated fixed/mobile network operators – particularly those operating in larger geographies such as China, India, Indonesia, Australia, and the US,” said the report.