3G Roll Out Will Be Big Challenge

[Karthik R 246]

Will 2011 turn out to be a revolutionary new year for India's half a billion mobile subscribers? While telecom companies are already hyping the brave new world of 3G services, standards of basic telephony services continue to languish in the basement.

The nine leading telecom operators, including state-run BSNL and MTNL, who had burned their pockets to pay67,718.95 crore to acquire 3G spectrum, much to their dismay, are finding it difficult to sell-off these airwaves to those telecom operators or companies who had not bid for it.

Operators woes

• Paid heavily to buy 3G airwaves to free-up decongestion for voice calls
  
• Fear losing customers once MNP is rolled-out
  

State Of Affairs

• The nine leading operators, including BSNL & MTNL paid67,718.95 cr to acquire 3G spectrum
  
• But they are yet to find any potential client for selling-off 3G airwaves
  
• Heads of both had written to telecom minister for refunds of licence fee
  

Pricey Service

• Operators are wary of tariffs prior to launch of 3G, which makes their confusion apparent about fate of 3G
  

Stat speak

• Less than 20% of population uses services beyond voice calls
  
• India has the lowest mobile tariffs, with average usage of130/mo
  

The worries for these operators have compounded further as they have invested another whopping 20,000 crore and more to develop the 3G infrastructure, which they expect to roll out by early next year. "3G is not successful. The operators paid too much to buy the 3G airwaves to freeup congestion in voice calls. They also feared losing customers once the mobile number portability (MNP) is rolled-out.

Most of the newcomers have ample spectrum and they don't anticipate 3G requirement," said an industry expert. Despite the fact that state-run telecom operators BSNL and MTNL were given 3G airwaves two years back - private operators have got it in October this year - they have not been able to do much with their first-mover advantage in 3G. Both are now in the process of outsourcing their 3G networks.

But both MTNL as well as BSNL are yet to find any potential client for selling-off 3G airwaves. Heads of both the state-run BSNL and MTNL had written to the telecom minister for refund of licence fee paid for 3G and BWA spectrum.

However, operators like Bharti Airtel, who already have 3G services in many circles are in talks with operators who have got 3G for roaming pacts for ensuring a pan-India footprint. There have been speculations that Bharti could enter into strategic alliance with Idea and Vodafone for pan India 3G rollout. But other operators who do not have 3G airwaves have largely ignored the need for it in the near future.

For instance, Sistema Shyam TeleServices Ltd (SSTL), a joint venture (JV) between Sistema of Russia and the Shyam Group of India, which operates CDMA mobile services under the brand name MTS has already clarified that it does not need 3G services and that it has enough bandwidth to support faster data services and jam-free voice network. "We have adequate spectrum and we don't anticipate its need," said a top SSTL official.

Then there are worries whether the bruising tariff war currently on in 2G will continue into 3G. When Tata DoCoMo launched 3G services at 0.66 paise per second. Bharti Airtel said it had paid heavily for 3G spectrum and cannot afford a tariff war. Tata DoCoMo is keen on subscribing to 3G network to stay afloat in the Indian market. It does not have even start-up spectrum in certain circles.

Moreover, the industry experts have a view that 3G services will hardly matter for large number of subscribers. "I don't think 3G will make much of difference to most of the subscribers. We hardly have less than 20 per cent of them who use services beyond voice calls.

Over half of the subscribers are those who use nonvoice services," said Col S. N. Aggarwal, consumer activist and telecom expert. "3G is hyped. We have already told Trai (Telecom Regulatory Authority of India)that consumers first need to get better services rather than 3G services. We continue to get spam calls. There is no check on operators and telemarketers. The Trai, as a regulator, has become toothless. We need better regulations to govern the sector effectively," points out Randhir Verma, a telecom expert.

According to Rajan Mathews, the director general of Cellular Operators Association of India (COAI), the launch of 3G services will provide new valueadded service applications and also change the way we communicate. 3G would facilitate a new range of services, including high-speed data downloads and enable applications like Internet TV, video-on-demand, audio-video calls and highspeed data exchange.

India's telecom tele-density is 62.51 per cent, with 706.69 million phone connections, of which 1.9 crore new subscribers were added during October. India has the lowest mobile tariffs, with average usage of130 per month.

Courtesy : India Today

[ravi_patent 28]

another issue is the 4g launch of relianceinfotel in mid 2011 .doubt if these 3g operators can recover the huge amounts invested

Edited December 30, 2010 by ravi_patent

[inception 75]

Though 3G means a lot of services, people will like only mobile broadband. Video calls @Rs3/min - no one will take it. Mobile TV and VAS will have fewer takers. Data plans have to be priced affordably, otherwise most people will go for BSNL 3G. With few 3G takers, pvt telcos can not make profit! So a price war is coming for sure - survival of the cheapest!

[Karthik R 246]

If the situation gets nasty then I guess the telecos will protest and the Govt. will buckle to offer them rebate or wave off future spectrum fees. It is already being undertaken by BSNL and MTNL.

[csmart 472]

its high time that telcos look beyond conventional uses. they need to target VAS users who need constant data. if they can target that at reasonable price then they can earn more. here i am talking abt many cos that uses wired connection for remote offices. now network available practically everywhere, they can provide required bandwidth and earn. its easier for them. but as usual they dont think "out of the box" and run after normal user who is more price sensitive.

i also feel that India has made big mistake by going for 3G. it should have opted directly for 4G. its simple, with so much amt spend on auction, they cannot spend for at least another 5 years on any other technology, unless there is radical change in user pattern. so 3G in current scenario looks bad for both Telcos and users.

Edited December 31, 2010 by csmart

[kshah 452]

TELCO now making hue and cry? What their think tanks were doing while biddng? Data has a long long way to go in india. Does india has electricity prnetration as much as phones? If not how mobiles are charged? India has about 65% electricity penetration. So ideally cellular can not go beyond 65%

Urban area has 93% electricity penetration.

[Karthik R 246]

Other than Aircel, which emerged as the dark horse bagging 3G license for its strong hold areas and covers almost South and East region of the country, no other operator seem to have had a definte plan. Aircel has the same number of telecom circles for 3G services as Airtel (13) but at very lower financial outflow, it paid almost half the price that Airtel did.

[shashank 8]

^^But Aircel doesnot have Mumbai and Delhi circles which Airtel has. That itself is quite big deal!

They need to go for the Volumes by offering cheaper prices to make profits in 3G