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3G mobile connections were supposed to be the biggest leap for a nation hungry for faster data downloads and video calls. It promised all that more at speeds of nearly 3Mbps and more. But instead what subscribers experienced were frequent call drops; ‘pixelated' or slow downloads and buffering of videos (at 500 kbps).
Except the launch of 3G services, mobile operators — which spent nearly Rs 68,000 crore to buy spectrum across 22 telecom circles in India and a few hundred crore on ad spends to market the same — have very little to cheer for in 2011.
Despite claims of a pan-India roll out, services have been restricted to niche markets only.
When contacted, mobile service provider Vodafone — the second largest Indian operator with a subscriber base of 14.6 crore — with spectrum licences in nine circles, told Business Line in an e-mailed response: “Every new technology or service requires a gestation period for it to establish. The biggest challenge is to first get the consumer to experience 3G.”
Airtel said that it was expecting 3G and LTE (long-term evolution) solutions to co-exist in the coming days.
Market Yet to subscribe
The market, after the initial disappointment (with poor coverage), is yet to subscribe to this hype.
According to, Mr. Hemant Joshi, Partner, Deloitte Haskins & Sells, said that while adaptability of a new technology is indeed a matter, uncertainty in government regulations was another stumbling block
With no telco having a pan-India licence across all 22 circles, operators were banking heavily on an inter-circle roaming agreements to enter into spectrum sharing agreements across different circles and overcome infrastructure issues. Vodafone, Airtel and Idea entered into these intra-circle roaming agreements but now this is under cloud with the Department of Telecom saying that such arrangements are illegal.
“The industry is banking on the National Telecom Policy to come clear on mergers and acquisitions and spectrum sharing issues,” Mr. Joshi said.
High pay outs to the government through licence fees and taxation have left little or no savings for the telcos, he adds.
Infrastructure
Another issue for operators was poor infrastructure that includes lack of base stations and improper coverage. Even the intra-city coverage of 3G services of some operators has not been at par with expectations. Fresh investments in infrastructure have dried up from operators who paid “sky high” spectrum prices.
Mr Rajan Mathews, Director General, Cellular Operators Association of India (COAI), pointed out to a liquidity crunch that has put telcos on the back foot in terms of fresh investments in infrastructure.
“Operators are not in a position to borrow afresh from banks. FDI flows have slowed down substantially. Payouts are high. Neither can operators invest in infrastructure nor are their savings so substantial that it can be passed on as pricing benefits to the consumer,” Mr Mathews added.
Hype and Ecosystem
Interestingly, the very hype (through marketing) created by operators (about 3G services) has led to their undoing. Price differentiation amongst operators was absent and services have been restricted primarily to niche markets among upscale urban youths.
“There were too many expectations from 3G and that too without an eco-system being in place. It takes sometime for a new technology to stabilise. 3G is yet to get to that stage where it is for the masses,” Mr Kunal Bajaj, Partner and Director — India at telecom analysis firm, Analysis Mason, said.
He added that 3G services in developed and developing economies such as US or China took nearly four years to mature and ensure stability.
“In India, 85 per cent of the demand is still voice-driven and not data-driven. People need to understand the importance of mobile services and the applications first. The market has to mature before 3G becomes popular,” Ms Kasturi Bhattacharya, Director (telecom consulting leader) PWC, said adding that people on EDGE (enhanced data rates for global evolution) services have hardly found any difference between it and 3G in terms of speed of data download.
Idea Cellular too admits the same. “3G services will get a boost with an improvement of the ecosystem that include coverage; availability of affordable smart-phones; and introduction of relevant services that users can access including localised content,” a company spokesperson said.
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