Indian Telecom Network Capacity Doubles in 2 Years

Wireless Network Capacity IndiaThe Indian Telecom network capacity is a function of multiple parameters like spectrum allocation, number of sites (base stations), number of components on each site (no. of antennae, their frequency range, TRxs, etc). Theoretical calculations also require assumptions on busy hour usage – which may differ for regions and services. Increasingly, the choice of technology (2G/3G/4G, etc.) also plays a role in determining the actual capacity.

Based on the network capacity model shows that with recent spectrum purchases and the subsequent surge in 3G/4G network rollouts, total installed capacity in the wireless industry has seen a sharp 90% increase in just the last two years

The number of base stations and spectrum allocation to industry are rising. Importantly, some spectrum that was earlier used for 2G is being refarmed and deployed in 3G/4G technologies. All of these hint that the overall capacity of Indian telecom networks is rising at a rapid pace. Further, with voice and data traffic becoming increasingly fungible on technology (most operators handle voice as IP calls in their core networks; VoLTE will become mainstream soon with RJio launch), at least from a business and investment perspective, we could argue that capacity measurements are becoming comparable / convertible across technologies too.

2G Capacity Falls Below 50%
In fact, with some of the earlier 2G spectrum now being deployed into 3G/4G networks (900MHz on 3G and 1800MHz on 4G), we have seen a drop in 2G capacity. Thus, interestingly, we now see that in FY16, for the first time, 2G network capacity has dropped below 50% share for the industry.

4G capacity already higher than 3G
With higher spectrum allocation, higher spectral efficiency and focused exclusive rollout by one operator (Jio), we find that the installed 4G capacity in the market at present is already higher than that of 3G – even with the number of 3G sites being 1.7x of 4G sites currently. Even ignoring the 2300MHz TD-LTE networks, the 4G capacity on lower band 1800/850 MHz networks is more than the 3G industry capacity.

While there has been a sharp rise in capacity recently, data volumes reported by Airtel & Idea have been slowing. We believe that network capacity utilisations have fallen quickly in FY16. Falling capacity utilisation with slowing growth shows the sector is ripe for sharp data tariff cuts. We wonder why the incumbents are not taking pre-emptive price cuts already, instead giving Reliance Jio Infocomm an opportunity to offer that as a differentiator to customers.

Leave a Reply

Your email address will not be published. Required fields are marked *