The Hindu Business Line : 3G policy: What’s in it for customer, investor?

The higher speed that 3G provides will enable subscribers to download data much more quickly such as gaming, video calling and downloading video clips etc. But that’s from the side of the consumers.

What does 3G hold for you, if you are an investor in telecom companies?

“While all this sounds hunky-dory, there are big questions that operators will have to face once they launch services. Since India has one of the lowest average revenues per user (ARPU) globally, the demand for such services may be quite limited,” cautions Mr Prashant Singhal, Telecom Industry Leader, Ernst & Young. However, he provides a silver lining.

Since the (subscriber) base is huge, even if 5 per cent of the current base adopts 3G, there will be 14 million users. It will also be an opportunity for rolling out mobile commerce applications across the country, he tells Business Line in an e-mail interaction. Read on…

What do you feel about the policy?

It’s finally here. A decade after Europe adopted 3G and 268 million users later, the Communications Ministry has come out with its 3G policy. Even tiny Bhutan launched 3G services earlier this year. It took the Ministry nearly two years after the Telecom Regulatory Authority of India (TRAI) came up with its recommendations in September 2006. But at the end of it, this is a very balanced policy.

What can we do with 3G?

3G is the next big step in mobile communications. The higher speed that 3G provides will enable subscribers to download data much more quickly. Among the possible services are gaming, video calling and downloading video clips. Among the most developed 3G markets are Japan and South Korea.

So, what does the coming of 3G mean to India?

First, now that the Department of Telecommunications (DoT) has cleared it, this is an opportunity for global telecom operators who missed the bus to get back onto the India telecom story. Second, it provides an opportunity for existing operators to leverage their strengths in the market. Third, it raises the level of competition. India has started off with five service providers. That matches what developed markets have today. Four, mobile operators will initially use the 3G spectrum to provide better quality voice services before getting into data services.

What about the costs and revenues?

3G could be an expensive proposition considering that the upfront costs are quite high. This is an opportunity for the Government to rake in enough revenues. Even at the base price of Rs 2,020 crore ($470 million), it means generating over $6.6 billion. In sharp contrast, the April 2000, the UK auctions generated £22.6 billion ($33.96 billion).

Which industries, besides telecom, can benefit from 3G?

This is an opportunity for the Indian software companies to join hands with service providers to develop applications that will meet the needs of the Indian mobile user. At a later stage, these could be rolled out into other emerging markets. So, be prepared for mobile banking, online gaming, m-shopping and other related applications. The fun has just begun for India’s evolved mobile consumers.

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