Hyderabad; World Telecommunication Day and Information Society Day is marked on May 17 every year. It highlights the role of Information and Communication Technology in today’s world. This year theme is; Connect 2030: ICTs for the Sustainable Development Goals (SDGs). To coincide with this, day, let us understand how telecom industry has been coping up during COVID-19 pademic.
During this time of lockdown, time spent digitally is increasing be it over the video calls, work from home or watching programmes on various digital platforms. In order to provide us an uninterrupted services, role of telecom players/internet service providers gets highlighted. Data allowances for the users have been increased. Fast broadband speeds is what we experience. Various streaming platforms decided to decrease the video quality to leave more broad band for essential services.
Five ways the Coronavirus affects the connectivity and tech industry in 2020:-
- The clearest and most immediate business impact of the Coronavirus pandemic was a major disruption to supply chains.
- The spread of the Coronavirus caused several of the most important tech conferences to be canceled, likely resulting in numerous missed partnership opportunities. However some of the conferences and events went online.
- The growing need for remote interactions amid the Coronavirus pandemic has highlighted a need for 5G technology, potentially accelerating adoption in the long term.
- The Coronavirus could highlight possible use cases for virtual reality (VR) in enterprises, boosting the technology's uptake
- Investment in smart city solutions will continue to grow as the tech has proven to be a valuable tool in crisis management.
Also Read: Smart cities use latest technology for Covid-19 awareness and safety of people
Impact of the Lockdown Restrictions
The current COVID pandemic is testing the telecom/ICT industry in many ways, some of which are only just becoming apparent. Increased traffic demand has led the industry to adopt measures to keep services available to people at the time when they need them most. Operators have increased data allowances and broadband speeds and added capacity to their networks. While streaming platforms have decreased their video quality to leave more broadband for essential services.
In this times of uncertainty, telecommunication has emerged as a lifeline. The world is reliant on it to keep banks, utilities, eCommerce and other indispensable public services running. So far, organisations have been planning business continuity scenarios for limited outages, e.g. internet leased lines (ILL) and multi-protocol label switching (MPLS) connectivity.
Impact on Manufacturing of hardware and other systems
According to reports, handset and handset and network equipment manufacturers will be impacted to a certain extent as global disruption in supply chains can be observed. As a result, users may face increased costs or lack of availability. Under the MHA order dated May 1, 2020, manufacturing of IT hardware has been permitted even in red zones, however no such activities can be undertaken in areas designated as containment zones.
According to industry body Indian Cellular and Electronics Association (ICEA), manufacturers may incur losses to the tune of nearly INR 15,000 crore due to suspension of production.
So, how can this situation improve. As per the market analysts, easing taxes and levies and relaxing costs on financial aid may ease the burden on the manufacturing sector. This in turn may improve the scenario of telecom industry.
Impact on subscriptions
Given the movement restrictions during this lockdown, there has been a sharp dip in the number of customers purchasing new sim cards (including for migration to 4G networks). Cellular Operations of India (COAI) has indicated that during a regular month, the average net addition is 3 million subscribers, but due to COVID-19, the number in March may be below 1 million.
We are likely to see impact on revenues only in the first quarter of FY 2020-21. COAI has stated that it takes around 30-45 days for new subscriptions to impact revenue and therefore the impact of a dip in new subscriptions will be seen only around April end or early May.
Additionally, the lockdown is also likely to delay 5G spectrum auctions and its consequent rollout as network operators are currently focused on meeting increased demand without a dip in service quality. Due to restrictions on manufacturing and movement of goods, this will also limit the ability to roll out 5G enabled handsets.
Also Read: Scientists develop mobile indoor disinfection sprayer to combat COVID-19
Impact on tariffs
As compared globally, India has the lowest tariff rates even after the rates were hiked last year. However, this did not generate sustainable revenue for the telecom players. Reports indicate that there was yet an another hike due in April-June 2020.
However seeing the scenario of COVID-19 where spending ability of low income subscribers is getting reduced, the dip in subscriptions and the benefits (as mentioned earlier) which the telecom players were to get delays the tariff hike to second half 2020.
TRAI had floated a consultation paper on the need to set floor price (so as to ensure reasonable return on capital). However, COAI had demanded an open house discussion to floow pricing and this has also been differed until the current situation eases.
Subscriber Retention
In this challenging time, telecom companies have come up with offers and attractions to maintain the existing subscriber bases. Offers like; extended validity, additional talk time benefits, etc. have been given to the users.
Telecom Regulatory Authority of India, TRAI, raised concerns on the price price discrimination. It wrote on April 7, 2020 to various telecom players alleging that they were selectively increasing validity of prepaid users during the lockdown. In response to this allegation, the companies responded that they have provided benefits worth at least INR 600 crores to subscribers who are at the bottom of the pyramid to ensure connectivity during this time.
Power tariffs
Given the increased burden on the existing telecom infrastructure, the Tower and Infrastructure Providers Association (TAIPA), which includes Bharti Infratel, and Indus Towers as its members, have written to various states, seeking relief in power tariffs.
The Maharashtra State Electricity Regulatory Commission (MSERC) has proposed to reduce tariffs in the state by up to 10-15 percent.
TAIPA has stated that similar relief from other state authorities would support telecom infrastructure providers in the present situation.
Also Read: Ayush Sanjivani', mobile app launched by the Ministry of AYUSH & MEITY
