The Hindu Business Line : Consumer may vote for 3G

The buzz is all about 3G these days. The mobile phone user generally understands 3G technology as something that will offer him better quality, and faster, communication services, by way of voice, video and data, and Internet access.

eWorld sounded out industry players on how the action is likely to unfold in the 3G eco-system in India. Here goes:

Revenue boost

IT companies expect their telecom vertical revenues, about $5 billion at present, to increase by at least 10 to 20 per cent with the 3G rollout, says Tim Williams, Co-Founder and Executive Vice-President, Worldwide Sales, Flytnxt, a Netherlands-based IT provider for mobile marketing, with development centres in India.

There are at least 20 million 3G-enabled phones. This means India already has five times Singapore’s population as a potential 3G market and is tipped to have a 3G subscriber base of over 100 million by 2012 to 2013.

3G networks can incorporate high-speed Internet access and video telephony. The first benefit that mobile users will experience is an improvement in the quality of voice services, feels Sangeet Chowfla, Chief Strategy Officer, Bharti Telesoft.

While 3G rollout will help operators offer rich content, retaining existing subscribers becomes a challenge as the markets mature. Hence, it is essential to offer cost-efficient solutions, to capture the loyalty of the more sophisticated subscribers by offering new services such as mobile commerce, mobile music and mobile Internet services and loyalty schemes, he says.

Value added service

According to P. Balaji, Vice-President (Marketing and Strategy), Ericsson India Pvt Ltd, the value added services (VAS) market constitutes 9-10 per cent of the total revenue for telecom operators in India, with SMS alone accounting for 44 per cent of that share.

A host of services, such as updates on news, sports, stock market, music and entertainment, ring back tones, games, m-advertising and m-commerce, are expected to become popular as consumers increasingly subscribe to affordable 3G services, he says.

There are around 300 million mobile users. Of this, 80 million handsets are enabled for data usage, but only 10 million use features such as e-mail and Web, and another seven million for VAS such as audio song download.

With 3G, users will now slowly switch over to video, download a video song and use video conference (up to four persons), says K. Shekhar, Co-founder and Joint Managing Director of the Chennai-based Bay Talkitec.

Globally, 3G has not had a breakthrough differentiation in revenues. But due to 3G, a big fillip in data and multimedia-related activity should increase the ARPU (average rate per user) levels.

The real business case for 3G could evolve in the next three years at least, feels Rajesh Razdan, Director and Co-Founder, mCarbon.

VAS currently is a service-led model with many of the services being offered outside the network of the operator (hosted and otherwise). There is a good mix of small niche firms. A few will consolidate and re-model themselves once more regulation comes into this sector, he says.

Slow data transfer and speed problem will, by and large, be alleviated by the 3G network. Short messaging service (SMS), Interactive Voice Response (IVR), music download, Internet applications/search, which have a huge potential in the Indian market, will see an upsurge, says Nitish Mittersain, CEO, Nazara Technologies.

The key growth drivers of VAS will be product and content innovation. Also, ease of use, higher awareness and flexible pricing for data offering will increase the VAS user base and user experience, he points out.

Value added services in 3G will prove advantageous, feels Pratapa Bernard, Head – Marketing & Products, OnMobile Global Ltd.

Operators will be able to offer the full suite of product features of existing 3G-ready data products that have been currently pared down, because the current 2.5G network is unable to handle the load.

Rural India

Rural India could be a key market for 3G rollout, according to Chowfla of Birla Telesoft.

Once 3G services are launched and the challenges linked to prices and right-priced devices are addressed, the opportunities are huge.

Areas of application, such as tele-medicine (doctors in district hospitals examining patients in remote villages visually over video call and prescribing medicine) and citizen journalism (consumers uploading video clips live of events/places) will bring in education and entertainment.

Eventually, rural social networks will change lifestyles for the better, says Vijay Shekhar Sharma of One97 Communications.

Handsets

It is estimated that 5-7 per cent of mobile handsets would be 3G devices by 2010-2011. This is a large opportunity for all participants in the 3G area.

3G services call for large Capex, content and application development, stresses V.S. Sriram, Head of Indian Geography Operations Solutions, Tanla Software Solutions.

It is expected that in the first couple of years, 3G services will be mainly adopted by corporates, professionals and the affluent population in top cities and towns.

The cost of entry-level 3G handsets in the range of $250 is still perceived to be high, he says.

3G will provide a good opportunity in Network rollouts and deployment. From an R&D perspective, 3G deployments will also prove to be a shot in the arm for some of the tier 1 equipment manufacturers. Operators in India have the advantage of leapfrogging to High Speed Packet Access (HSPA) services, says Raghavan Setlur, General Manager, Strategy, Sasken Communication Technologies Ltd.

Vertical growth

The advent of 3G will be instrumental in augmenting vertical growth in business sectors such as education, video streaming and music industry, feels Vijay Shekhar Sharma, Managing Director, One97 Communciations.

3G will make services such as mobile advertising more real. It is likely that mobile advertisements would show faster growth than the existing Internet advertising, he says. User experience has different manifestations.

At the operator level it is about managing the entire customer lifecycle and working towards ARPU enhancement. At the user level it entails offering services relevant to the customers, which are easy to use, he points out.

VC view

Harish Gandhi, Canaan Partners, bullish on 3G, says it will lead to a few new services in the area of video (video streaming, video calling, video ring back tones). Content and entertainment-oriented mobile services will see a boost from 3G.

Since WAP and mobile Internet will be a much better experience, more mobile-oriented sites are being created – this will also lead to the growth of m-commerce and m-advertising. However much of these benefits will take time to kick in — 18-24 months from launch.

For budding entrepreneurs in the 3G space, his advice is that 3G will take time to become mainstream for several reasons — the technology will be rolled out in the metros first before moving into second and third tier towns.

Also, the handset requirement would have to be met.

Moreover, operators may want to replace SIMs to take advantage of SIM resident applications. All this means slower adoption, so business cases will have to reflect this.

Challenges

While the opportunity is promising, there are, equally, challenges in 3G implementation.

A significant spectrum for 3G might go into providing better voice services. Therefore, 3G will not only be used to provide data services but also better voice quality. The high 3G spectrum and licence cost may make it a more expensive service for the consumer, says Chowfla of Bharti Telesoft. This will, in turn, curb 3G’s reach.

Another point is that 3G services will have to first incorporate local content, he sums up.

raja@thehindu.co.in

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