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4G technology is broadly credited with introducing Indians to the internet's vast potential
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Reliance Jio and Bharti Airtel launched commercial 5G services in October 2022
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One reason for the low uptake of 5G services is the high cost of 5G smartphones
5G traffic contribution to the entire data traffic in India has increased from 1.7% in 2022 to 14.8% in 2023, according to the recent release of Nokia's Mobile Broadband Index (MBiT) report for 2023.
The top two Indian telcos, Reliance Jio and Bharti Airtel, launched commercial 5G services in October 2022. In metro areas, 5G's contribution to overall data traffic surged to 20%, followed by 17% in Category A circles (service areas), 12% in Category B circles, and 14% in Category C circles.*
The uptake of 5G services is subdued in India when compared with 4G's performance in the first year of its introduction. As per the Nokia MBiT 2018 report, 4G constituted 82% of data traffic in 2017, 4G's first complete year in India.
The high uptake of 4G in its first year was primarily due to the launch of Reliance Jio. Part of the Reliance Group, India's biggest business house, the company disrupted the market in 2016 by launching free 4G services in the first six months of its operations and offering 4G devices at highly subsidized rates. The 4G technology is broadly credited with introducing Indians to the internet's vast potential.
The lackluster uptake of 5G services in the first year is all the more evident, considering the top two telcos have yet to launch 5G tariffs and continue to offer 5G services at 4G rates. This is despite the fact that they have made significant investments in acquiring spectrum and deploying networks.
Both Reliance Jio and Bharti Airtel claim over 90% 5G coverage in the country. As per Nokia's report, India had around 131 million 5G users by the end of December 2023. India's third largest service provider, Vodafone Idea is yet to launch 5G services.
Device ecosystem evolves
A significant reason for the low uptake of 5G services is the high cost of 5G smartphones. "The 5G device ecosystem in India is rapidly evolving, with approximately 17 percent of active 4G devices, totaling 134 million out of 796 million, now being 5G capable," the press release states.
The low uptake of 5G services also highlights the 5G monetization issue that telcos face across geographies. Telcos are struggling to monetize 5G.
However, the potential of 5G fixed wireless access (FWA) provides hope to the telcos. Airtel and Jio launched FWA services last year.
Nokia believes that FWA users are expected to consume an estimated 2.5 times more data than average 5G users."
Even so, Nokia's report points out that 5G is leading to an increase in data consumption, which is likely to help with monetization.
"The average monthly data traffic per user also surged by 24 percent year-on-year in 2023, reaching 24.1 gigabytes per user per month," says the press release issued by Nokia. This was corroborated by Gopal Vittal, Airtel's managing director and chief executive officer, who mentioned last year that the company was experiencing a "data consumption spike because of 5G services."
Overall, India continues to record exponential increases in data consumption. "In 2023, users consumed 17.4 exabytes per month with a CAGR of 26 percent over the past five years," said the Nokia MBiT report. The Nokia MBiT 2024 report also points out Metaverse, AI/ML, cloud and Web 3.0 as the key technology themes in the years leading up to 2030.
* In India, the government has divided the service areas into four categories: Metros, Category A, Category B and Category C circles. This is based on revenue earning potential, with metros and Category A having the maximum potential.