Fourth generation (4G) broadband services will remain a premium service for at least 2-3 years, according to analysts.
The reason - high cost of devices in the market and lack of relevant content.
“You are looking at 4G being a premium service because dongles are not less than $150-200 in the global market and operators cannot subsidise it. But there is enough market who is willing to pay a premium for the high speed experience,” said Mr Prashant Singhal, Partner (Telecom), Ernst & Young.
“When the LTE ecosystem develops to over 100 countries we may see some kind of price drop. This could happen over a 2-3 year time frame before 4G becomes mass market,” he said.
Apart from the high device price, there is also the lack of availability of relevant content and localised applications. So will 4G be a damp squib? Mr Sanjay Kapoor, Chief Executive Officer, Bharti Airtel, doesn't think so. “We get enquiries from many subscribers who are looking for high speed broadband services. There is demand.”
No mobility
Airtel has adopted a cluster approach whereby it is rolling out 4G network in top data consuming areas. In Kolkata, for instance, it has services in 20-25 clusters. This will essentially cater to consumers looking for high speed broadband in fixed locations and not those who want mobility. “Those who want data access on the move have the option to get 3G or EDGE,” said Mr Kapoor.
Analysts believe that 4G will initially be an alternative to fixed line broadband. “Last mile wire line has not been able to achieve the demand for broadband services. 4G is being seen as something as to leapfrog India into the digital age,” said Mr Kamlesh Bhatia, Research Director at Gartner.
Reliance to launch soon
According to market watchers, other players such as Reliance Industries start rolling out 4G services, the market is expected to become mass market. “4G seems to be niche as of now but as economies of scale kick into the business at that point time it may get better,” says Mr Bhatia.
While Reliance Industries has kept its roll out plans under wraps, it is expected to launch its services with a big bang going by the past experience in mobile services.
In addition, the Government is planning to auction more spectrum for 4G services this year.
“Competition will change pricing. But the operators have to change their mindset on this issue and learn from the 3G experience where prohibitive tariffs have prevented the service from becoming mass,” said Mr Alok Shende, Principal Analyst, Ascentius Consulting.
Read also >All you wanted to know about 4G