Network deployment for 4G LTE is a complex and expensive task for telecom operators, especially in emerging economies such as India which have low average-revenue-per user (ARPU), Jon Penrose, a US-based telecom industry consultant at Teradata said.Deploying LTE networks in India and globally is a hugely complex and expensive task for mobile network operators. Enhanced capabilities and benefits like bandwidth-on-demand require complex go-to-market and customer management strategies, Penrose told ET.
Emerging competitive threats from Over-the-Top (OTT) applications and services threaten to further reduce already low ARPUs and continue to mount a sustained challenge to the long-term revenue generation potential of 4G services.
Penrose says that speed advantages are not very useful as a differentiating factor. "Network speeds cannot be guaranteed, and are usually temporary, highly regionalized, and easy for the competition to replicate and outside the operator's control".
Despite increasing hoopla around 4G, telcos are taking a very cautious approach as fully monetizing network investments involves launching compelling new applications and services while India lacks the ecosystem that include insufficiency of 4G-capable devices, experts say.
The prioritization of 4G-technology rollout would be towards the main metropolitan areas as it would be initially seen as a premium service.
Mukesh Ambani-owned Reliance Jio Infocomm and Sunil Mittal-driven Bharti Airtel are two serious 4G contenders in India.
Bharti Airtel has rolled out services based on TDD (Time-Division Duplex) LTE technology on 2,300 Mhz band in select cities. Jio, that got BWA spectrum in 2300MHz band in 2010, has said that it will commercially launch 4G services in 2015, a timeline which it needs to adhere to meet rollout obligations.
Penrose said that operators would be mindful of the significant role that pre-existing 2G and 3G technologies, particularly in areas where the limited return on investment opportunities make 4G rollout a less attractive proposition for the network operators.
"The availability of high-speed mobile data communication through 4G-LTE networks and capabilities will continue to be an essential enabler of India's ongoing economic development and growth," he added.
Many of the well-established 4G device providers are targeting lower-cost products specifically towards the Indian market as they seek to consolidate and expand their position within the rapidly developing space.
"Combined with the competition from Chinese and Taiwanese handset manufactures, and the rapidly developing market for home-grown 4G devices, it looks likely that the downward pressure on handset prices will continue for the foreseeable future," said Penrose.
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