Telecom, which emerged as a sunrise industry in the late 1990s, has now become one of the mainstays of India’s economy. As the dust of time settles on the past quarter-century, the Indian telecom landscape stands as a testament to unprecedented growth and innovation. From humble beginnings to becoming the bedrock of economic advancement, the sector’s journey has been marked by monumental shifts, impactful policy changes and remarkable technological strides. As the country continues its journey to become a developed nation, telecom remains the cornerstone of the digital revolution in India.
A shifting horizon: Market dynamics
Telecom, once perceived as a luxury, has now cemented its position as a driving force behind the country’s economic progress. It has grown into a $125 billion industry, a vivid testament to the symbiotic relationship between policy evolution and socio-economic transformation. One of the most significant catalysts for this growth has been the gradual democratisation of data, propelled by government policies and market dynamics.
While 4G in India was the epicentre of the data revolution, 5G is likely to transform the digitalisation journey by offering solutions in areas such as smart factories, automation, transportation and immersive user experiences.
5G promises to deliver lightning-fast data speeds and usher in a paradigm shift in affordability. Predictions suggest that 5G will inject a substantial $12.5 billion into the industry’s coffers every three years, unlocking a world of untapped potential. As per estimates, 5G will also add $450 billion to the Indian GDP during 2023-40.
In the past 25 years, the Indian telecom sector has transcended expectations, evolving from an ancillary player to a fulcrum of socio-economic progress.
Mobile internet: The quantum leap
A retrospective glance reveals a remarkable trajectory in mobile internet penetration. In 2013, a mere 143.2 million users enjoyed the benefits of the mobile internet. Fast forward a decade, and this figure has surged to a staggering 900 million in 2023, marking an almost sixfold increase. I still recall a McKinsey article published in 2011 that questioned and doubted, but also hoped that India would transform from a digital laggard into a leader. The report quoted, “Yet India has an opportunity to lead the world once again by becoming the first truly mobile digital society. All the elements are in place: the cost of network access and handsets is going down, wireless networks are going up, and Indian consumers already display an insatiable appetite for digital services.” The prophecy has come true.
The transformation in consumption patterns is equally astonishing, with data usage soaring from a mere 500 MB per user per month in 2012 to a staggering 20 GB per month in 2022. This colossal 40-fold surge, when combined with the user base growth, has led to a 240-fold explosion in data consumption. This underscores the rapid transformation in how Indians perceive and engage with digital connectivity. No wonder the number of online video viewers has gone up to 550 million in India, and Nokia reported that pan-Indian mobile data usage has increased by four times in the last five years to 14.4 Exabytes per month.
Untangling the web: Fixed line fiberisation
While the mobile sector has witnessed remarkable advancements, the fixed line fiberisation landscape presents a more complex picture. Less than 35 per cent of towers in India are interconnected with fibre networks, a figure that pales compared to the over 70 per cent connectivity achieved in developed nations. The move from 3G to 4G was all about efficiency and better rationalisation of existing capacity, but 5G will demand a far denser network. Therefore, the pace of fiberisation must accelerate to meet these demands.
Policy pioneering: The driving forces
In the annals of the sector’s growth, two policy disruptions stand out as beacons of change. The paradigm shift from administrative allocation of spectrum to auctions marked a watershed moment. Although the initial 3G spectrum auction was met with eyebrow-raising pricing, it laid the foundation for a more accessible spectrum allocation process. The subsequent auctions marked a pivotal shift, allowing telecom operators more flexible access to spectrum, free from the constraints of stringent government criteria, supported by lowered spectrum usage charges. This era of spectrum auctions at a consistent pace offered a glimpse of a future where network capacity could be expanded seamlessly.
The second stride towards inclusivity was the ingenious integration of Aadhaar for customer onboarding. As Aadhaar itself evolved, leveraging the explosion of data applications, the telecom sector reaped the benefits by using it for instant user KYC. This policy innovation streamlined the onboarding process and contributed to the sector’s inclusivity and reach.
Government policies also augmented the digital delivery of government services through robust digital infrastructure, improving the ease of doing business. Whether it is GST, digital self-certification of documents or a dispute resolution mechanism, everything is now powered by digital infrastructure, ably supported by the telecom sector.
5G promises to deliver lightning-fast data speeds and usher in a paradigm shift in affordability. Predictions suggest that 5G will inject a substantial $12.5 billion into the industry’s coffers every three years, unlocking a world of untapped potential.
Catalyst of change: Driving India’s digital transformation
The connectivity provided by the telecom sector has been the cornerstone of the digital transformation that India is experiencing. It has provided the essential infrastructure for the thriving digital ecosystem. The telecom sector’s impact is experienced in two distinct ways: how India is engaged in commerce today (the growth of e-commerce) and how India makes payments (the take-off in UPI-based payments). This shift has transformed consumer behaviour and created countless opportunities for entrepreneurs to set up new businesses. Indian online commerce has gained 125 million shoppers in the past three years due to this enhanced connectivity, with another 80 million likely to be added by 2025 according to the India Brand Equity Foundation. The e-commerce market is expected to reach a size of $200 billion by 2026. The success story of UPI is now a global case study, which is also fuelled by telecom in the background, registering almost 10 billion transactions in July 2023.
The role of telecom in driving digital transformation extends to critical sectors such as education and healthcare. The education system, in particular, witnessed its significance during the Covid-19 lockdowns when telecom infrastructure so ably supported the online mode of education and remote learning. The availability of data bandwidth on mobile and fixed networks was the bedrock of how a complete generation of students for almost two years could continue their studies without compromise. E-learning platforms have further gained momentum, allowing students to access quality education regardless of location. Similarly, the healthcare industry has experienced a population-scale revolution. Whether it was the mass vaccination of the world’s second most populated country within two years, or revolutionary programmes like Ayushman Bharat — a unified digital health infrastructure that enabled seamless access to health records for patients and streamlined information sharing among healthcare providers robust telecom infrastructure played a key role in enhancing care coordination and patient outcomes.
India is now being celebrated as the next “start-up nation” with more than 99,000 recognised start-ups owing to the data penetration and digital transformation driven by the telecom sector. We have 108 unicorns and have attracted more than $85 billion of investments. Between 2015 and 2022, there has been a 15x increase in start-up funding, with a 9x increase in the number of investors. Telecom is making India a great place for data consumption and the deployment of capital.
The creator economy in India is also thriving in the wake of the data revolution. In addition to India being the top consumer of YouTube, “YouTubers” alone contributed Rs 100 billion to India’s GDP in 2021, equivalent to 750,000 full-time jobs. India is also a diverse country with so many languages and dialects. Internet penetration and data availability have opened new opportunities for media and content creators in local languages. No wonder there has been a rush to launch content in vernacular languages, as 73 per cent of Indian internet subscribers use vernacular languages to find information and entertainment on the internet. Telecom has made this impossible-sounding phenomenon possible and accessible.
Looking forward: The road ahead
The Indian telecom sector is looking at unprecedented innovation in the future, with the allure of 5G that promises speed, connectivity and disruption. The ongoing mission to expand fiberisation, bridging the rural-urban divide, promises a more comprehensive and inclusive digital landscape. Policy frameworks must evolve to embrace these technological leaps and pave the way for accessible, affordable and secure digital connectivity for every Indian.
In the past 25 years, the Indian telecom sector has transcended expectations, evolving from an ancillary player to a fulcrum of socio-economic progress. This journey witnessed collaboration between visionary policies and determined stakeholders, and the insatiable spirit of a nation marching towards a connected tomorrow.
The telecom sector’s impact on a country’s socio-economic development is significant. The penetration of mobile services and the spread of the internet are positively correlated with GDP growth. In the modern world, digital inclusion is crucial for social progress. It allows people to access public and private services, enhancing their digital access and literacy. The natural progression of any economy follows three steps, from being labour-oriented to becoming skill-oriented and ultimately becoming knowledge-oriented at the top of the pyramid. Access to data and digitalisation is the key to this progression and, as it has over the past 25 years, the Indian telecom sector is well positioned to lead the way for the next 25 years.
