Wi-Fi may spoil mobile internet’s party

Increase in Wi-Fi infrastructure will cause a shift in data traffic to fixed lines, as mobile internet speeds are still not up to scratch in India despite sharp drop in prices
The proliferation of Wi-Fi infrastructure can reduce costs and increase internet speed significantly for a user, according to a Crisil Research report.

India’s data usage per subscriber grew about 80% annually between fiscal years 2012 and 2017, to around 1.25 gigabytes (GB) per month. But the next five years could see the pace of growth moderating to about 12% a year, and touch 2.0-2.5 GB by fiscal 2022, according to a new report by Crisil Research.
The researchers attributed the “stellar” growth largely to the increasing adoption of 3G-4G services and a sharp drop in data prices. Over the past year alone, data prices have dropped about 75%. Given the intense fight for market leadership between telcos, data prices could continue to decline over the medium term, but perhaps not as rapidly as in the recent past, the report notes.
With prices stabilizing, faster data growth is critical to profitability in times when two of the top three telcos posted losses in fiscal year 2017 and the trend is expected to continue in fiscal year 2018 as well. Yet, data is where the pitch could queer as Wi-Fi gains ground. A comparison of trends across countries shows higher data usage is strongly linked to higher speeds, whereas India’s current mobile data speeds on 4G are less than half that of, say, South Korea.
The proliferation of Wi-Fi infrastructure can reduce costs and increase speeds significantly for a user, even as investments continue to gradually improve mobile network quality. That’s why Crisil Research believes the increase in Wi-Fi infrastructure will cause a shift in data traffic to fixed lines. As per-person usage growth moderates, adoption of data services will become a critical point of monitoring for telcos to sustain growth, the report concludes.
Given the continued growth in data subscribers—expected to more than double to about 900 million – overall mobile data traffic could grow nearly four-fold. Though healthy, this would be significantly lower than the 75-fold jump seen over the past five fiscals. Overall penetration of data subscribers is expected to rise from the current 36% to 70% over the next five years. The faster adoption of data services would be the most crucial parameter for the growth of telcos, given stable pricing and lower per subscriber usage growth.
One reason for the slow pick-up in data services is low mobile broadband speed, which hampers the overall experience for the consumer. India’s data speeds are among the slowest in markets with 4G services.
Mobile traffic growth has sustained in spite of service levels well below international standards, and despite poor Wi-Fi infrastructure/hotspots. The time spent online through Wi-Fi is just 18% compared with 50% in the US.
Independent firms have started offering Wi-Fi services in India. Government initiatives such as Digital India, Bharat Net and Smart Cities will also help grow public Wi-Fi infrastructure and eventually push offtake of commercial Wi-Fi as well. Google, for one, is trying to make a payment model successful for public Wi-Fi infrastructure at railway stations.
The cost of offering internet services on Wi-Fi is significantly lower at about 2 paise per MB compared with about 15 paise (excluding the impact of Reliance Jio’s free offerings) on mobile.

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