With the telecom sector getting stabilised to a new normal after a period of consolidation, what would be the opportunities going forward?
With significant changes over time, the telecom industry has transformed into a sector dominated by a few large players. While we are currently going through a period of stabilization, the operators are leveraging different strategies to improve existing services and experience, or get the next 500M subscribers on a data plan, or to retain high-value subscribers with newer services as well as to manage profitability by lowering cost/bit through various strategies. Telecom operators also have a significant opportunity to tap into the enterprise market with industry specific solutions to enable collaboration, security and IoT.
Executing these requires significant changes in the organization across People, Process and Tools (IT & Network). All of these present enormous opportunities for Cisco to partner with telecom operators.
How do you see macroeconomic changes impacting the sector, and what measures should the industry be taking to address these impacts?
Telecom operators across the world including India have faced periodic disruptions due to rapid advancement in emerging technologies. The Indian telecom sector is one of the fastest-growing markets, seeing a rise of over 7% in the last decade, with GDP contribution estimated to reach 8.2% by 2020, which is why all smartphone makers set up base in the country. As the telecom industry continues to stabilize, there will be a need to renew strategy for talent acquisition efforts to focus on creating new roles, generating more jobs and getting more investment into the sector in the process.
Outdated infrastructure is not suited for the needs of the new dynamic, application-driven environment. Currently all operators in India have either deployed or working to gradually implementing a One IP architecture and getting their networks to be 5G ready. We expect investment in 5G could prove to be higher than what was invested by global wireless carriers for 4G deployment in 2010. This is because carriers need spectrum and deeper fiber networks, particularly in key urban markets, and substantially more cell towers to deliver the benefits of 5G. While the initial investments are high, we also believe there will be significant cost benefits from implementing the software-defined architecture, cloud virtualization and automation to help operators find newer revenue streams and provide improved customer experience.
Finally, a significant push is needed for the telecom industry to fiberize, which currently stands at only 20% penetration. It must be evenly carried out across the country, to avoid an increase in the rural urban digital divide. Favorable taxation policies are already under discussion for 5G spectrum allocation as well, which aims to create a balanced spectrum ecosystem.
How did the regulation and policy environment impact your business in 2018-19? Please list three key reforms that are essential to keep the telecom sector healthy in the future.
The need of the hour is to ensure that operators investing should have expectations of a reasonable return of investment while operating in a competitive marketplace. It is no secret that the sector has undergone intense stress followed by large-scale consolidation, creating a situation where we can boast of the lowest mobile and data rates in the world, but at the same time have an industry debt of over INR seven lakh crore. (source) To address this problem, the government is looking at making policy changes and help the sector and bringing the telecom sector back to health.
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