India on Edge Over 3G
That's the big question in the wireless industry here, as India's tremendous appetite for mobile bandwidth is starting to strain its wireless networks. A further 6.7 million new subscribers were added in January this year to take the country's total to nearly 149 million, according to research house TelecomWatch , yet there is still no sign of valuable new mobile spectrum arriving.
Months after the Telecom Regulatory Authority of India (TRAI) made recommendations about how India should approach the allocation of 3G licenses, the country's mobile operators, and their equipment suppliers, are still waiting for a decision to emerge from the Department of Telecommunications .
In late 2006, the TRAI made detailed suggestions to the Department of Telecommunications (DOT) about the 3G spectrum that should be made available, and how the licenses should be awarded. (See India Prepares for 3G Rollout.)
A decision from the DOT was expected by the end of March, but no one here is expecting anything to happen soon.
"Some carriers have almost given up on 3G, because they are always being told they will know what is happening next month," said one executive here at the telecom event in New Delhi.
The DOT's line is that it is working hard to resolve what it says is a sensitive issue. DOT executive, H.K. Gupta, speaking here, said "we hope that the spectrum issue will be settled shortly, hopefully in the next few months. It's a very sensitive issue as it involves different government groups. The wireless team is working overnight to deal with this issue."
Analysts at Lehman Brothers believe there could be some sort of announcement from the DOT as early as April. "We expect the DOT to announce details of how 3G spectrum will be made available and when (likely mid this year)," note the Lehman team. "Investments in 3G could conceivably start as early as Q3."
When the licenses are finally awarded, the equipment vendors are ready to pitch their wares. Bo Ribbing, general manager and head of the 3G program for Ericsson AB (Nasdaq: ERIC) in India, has been preparing for the license awards for two years. He doesn't expect any decisions to be made until late this year, or perhaps early 2008. And there are still a lot of unknowns, he adds, such as the number of licenses to be awarded, how much spectrum will be made available, and whether they will be auctioned or awarded in a "beauty contest" manner.
Ribbing says the issue is delicate because it involves the redistribution of spectrum that is currently being used by the Indian military and the finance sector.
But the spoils for the vendors will, in time, be worth billions of dollars. Bharat Sanchar Nigam Ltd. (BSNL) , for example, has already stated that about 25 percent of its planned $4.5 billion network expansion expenditure will be on 3G equipment. And Reliance Communications Ltd. (RCom) is also including 3G rollout as part of its planned $7 billion mobile network investment. (See Ericsson, Nokia Bid Low for BSNL, Court Delays Cost BSNL Millions, and Reliance Plans $7B GSM Build-Out.)
The Lehman team, though, believes the spending will not be frenzied. "We would expect to see a pragmatic build out of WCDMA networks in urban centers, with rural areas still mainly served by GSM, GPRS and perhaps EDGE in some cases," say the analysts in a research note.
But the longer the decision is delayed, the more likelihood there is that other technologies will be deployed in 3G's place. While at least one wireless mesh network is being deployed, in the major city of Mumbai, WiMax has been a major topic at this week's event in New Delhi, with vendors such as Alcatel-Lucent (NYSE: ALU) and Motorola Inc. (NYSE: MOT) pushing the technology hard. (See Google Earth Mash-Up Helps Mesh Mumbai.)
And many here believe WiMax will be deployed to help meet the government's targets of providing communications services to the country's rural areas, and to help reach the goal of having 20 million broadband users in 2010 from little more than 2 million currently.
"I don't know if 3G or WiMax is going to win," said Shri Shrikant Sharma, chief general manager for BSNL in the northern region of Himachal Pradesh, during a presentation here this week. He also noted that the availability of affordable 3G handsets would be an issue in India, especially in the rural areas.
The BSNL man is also concerned that further complications will arise as a wider range of wireless technologies get deployed. "Security and manageability are going to be big issues as multiple types of wireless networks and equipment from multiple vendors is deployed," he said, before noting in a rather disgruntled tone that "the hype for 4G has already started."
— Ray Le Maistre, International News Editor, Light Reading