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Telecom Operators to Focus on Small Towns
Context:
Indian telecom operators are set to enhance network coverage and capacity in small towns and rural areas in the coming year.
- This move is driven by the increasing availability of 5G services, which has led to higher data consumption in these regions compared to metropolitan areas
Key Drivers:
- Higher Data Consumption: Consumers in tier-II cities and small towns are using significantly more data than those in metros, with an average of 35-40 GB per capita per month. This is 15-20% higher than the data usage in metropolitan areas.
- 5G Penetration: The penetration of 5G services in tier-II cities is catching up with major cities, with cities like Jodhpur, Ranchi, and Lucknow seeing 35-40% 5G penetration. This is comparable to the 40-45% penetration in tier-I cities.
- Revenue Growth: Telecom companies have observed strong revenue growth in lower-tier markets, with a 15% year-on-year increase in revenues in C circles (small towns and rural areas), compared to a 7% growth in metros.
Initiatives and Policies:
- National Digital Communications Policy, 2018: Aims to unlock the transformative power of digital communications networks to achieve digital empowerment and improve the well-being of the people of India.
- It focuses on providing universal broadband coverage, enhancing digital infrastructure, and promoting fair competition in the telecom sector.
- BharatNet: One of the world’s largest rural broadband connectivity projects.
- It aims to provide broadband connectivity to all Gram Panchayats (village councils) in India, covering nearly 625,000 villages.
- The project is implemented in phases and involves laying optical fibre cables and setting up Wi-Fi hotspots to ensure last-mile connectivity.
- Telecommunications Act, 2023: It replaces the outdated Indian Telegraph Act of 1885 and aims to modernise India’s telecom regulatory framework.
- Key features include:
- Introduction of the Digital Bharat Nidhi, which replaces the Universal Service Obligation Fund, focusing on improving telecom services in rural and underserved areas.
- Provisions for user protection and right-of-way reforms, enhancing competition and innovation within the sector.
- Mandates for telecom operators to use verifiable biometric identification for new connections, aiming to enhance security and accountability.
- Key features include:
- Digital Bharat Nidhi: A fund established to support various digital initiatives, including the expansion of BharatNet. It aims to provide optical fibre connectivity to rural areas, extend internet access to underserved regions, and promote digital inclusion.
Strategic Endeavours:
- Network Expansion: Telecom operators are rolling out more sites to improve network coverage and capacity in small towns and rural areas. This expansion is expected to continue, with a focus on optimising existing deployments.
- Monetisation: The focus on lower-tier markets is driven by the higher monetisation potential in these areas. As data consumption increases, telecom operators are looking to capitalise on this trend by offering tailored services and packages.
- Technological Upgrades: Investments in 4G and 5G infrastructure are being made to enhance network performance and support the growing demand for high-speed internet in small towns.
