3G/WiMAX Finally off-the-block in India

India appears all set to finally auction 3G spectrum after one false start too many. Over 9 incumbent and new entrant operators have applied for the bidding process. While the list has all the usual suspects, a few names sure make you wonder. Videocon, with operations reportedly in only one city currently, Etisalat DB with no operations on ground and S Tel, an operator with a professed interest in low-ARPU C circles of the country makes one wonder if the hype around the India mobile story still continues to be strong. While 3G definitely can act as a boost to low-ARPU hit telcos, however, it is not likely to be a magic pill that will help new entrants rapidly pose a credible threat to established market leaders. At least not with the limited amount of spectrum that is up for grabs. It is in this context the Telenor's response to stay away from the auctions appears a well-taken decision. Indeed, opportunities to gain a 3G presence will increasingly present them as an inevitable market shakeout looks more certain with every passing month.

Despite past expectations, global players that currently don't have a presence in the market have stayed away from the bidding process. While one can debate ad nauseam the benefits of entering or staying away from the Indian mobile market at this point in time, a little less competition might be just what the doctor ordered for this hyper-competitive market. And while we are at it, here's hoping that the 3G pricing, when it finally hits the market in Sept 2010, is more realistic than what we have seen.

Thanks to the delayed 3G spectrum auctions, the collateral damage is more visible on the broadband front. While mobile growth has been extremely strong in the last few years, the same cannot be said of broadband growth. With limited fixed-line network presence across the country, and lack of last-mile unbundling, broadband has been the biggest sufferer thanks to lack of wireless options thus far. Naturally, the auction process for Broadband Wireless Access, tied to the 3G auction process, has received more applications, 11 in all. It has also attracted the attention of technology majors such as Qualcomm who are hoping to queer the pitch for WiMAX proponents in the auction. However, that is unlikely to take away from strong bids from WiMAX operators who are looking to use the technology to reach an under-served audience. To me, these auctions are probably far more significant in terms of the impact that they can have on India.

Be it 3G or WiMAX, it is about time the Indian consumer gets to experience the benefits of technology advancements. Here's hoping that the auction process and the subsequent service launches finally see the light of the day.

3G in India-A Non Starter?

That India's 3G spectrum auctions have been jinxed right from the start has been more than clear, given the clear timeline of regulatory delays. The DoT and TRAI, aided by the finance ministry, have contributed more than their part in ensuring consumers in India are denied 3G services.   Nevertheless, operators have been patiently waiting for the spectrum matter to be cleared, and tap on to the data-starved Indian consumer. Indeed, some have even expressed the intent to enter the Indian market using the 3G route ! However, the acute spectrum crunch in most major cities of India, and consumer reticence towards using high-priced data services are very much likely to act as a dampener. Add to this, the fact that operators have not really encouraged consumer friendly tariff plans when it comes to data and you have a picture that is definitely not encouraging for uptake of 3G based services. Operators such as Reliance and Tata Teleservices recently launched their wireless broadband services based on EVDO revA (grey area when it comes to its classification/spectrum usage). And the prices belie any real interest in encouraging uptake. With prices hovering around Rs.1,200/- for an unlimited connection, and fair usage caps coming in at a paltry 10GB, uptake is quite likely to be muted. Given India's abysmal broadband penetration, and with limited visibility on local loop unbundling, one would have thought the mobile operators would have been a bit more aggressive on pricing their mobile broadband services. That ain't to be, sadly though ! 

The intriguing part is the pricing strategy adopted by the two state owned incumbents, BSNL and MTNL.  MTNL's pricing at Rs.5/MB and BSNL's Rs.3/MB on 3G spectrum that they have already been granted displays limited understanding of the potential and of their first-mover advantage of this space. By pricing next generation services out of reach of most potential consumers, operators continue to display their disconnect with the consumer on data services. While most operators have successfully demonstrated the demand that could be generated by offering affordable voice services, sadly, when it comes to data, they don't appear to be inclined to do so, atleast, as yet! It is probably no wonder, that reports in media suggest a very poor uptake for the 3G services that have already been launched by BSNL/MTNL. Operators need to appreciate the scale of the opportunity that delivering mobile broadband and data services offers in India. However, it appears very likely that operator focus will continue to remain on voice for the immediate future, given the galloping growth rates. Nevertheless, with voice pricing set to be commoditized pretty soon, operators would do well to start paying more attention to data services.