India's 3G Players Ready for Swift Launch
Seven privately owned carriers, including Reliance Communications, Aircel Ltd. , Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Idea Cellular Ltd. , Tata Teleservices Ltd. , and Vodafone India , won 3G spectrum in the April auction, and will be handed their new airwaves in September. (See India's 3G Auction Ends, Raises $14.6B.)
That will enable them to compete with the two state-owned carriers -- Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) -- that were handed their 3G spectrum in 2008, and which launched their 3G services more than 18 months ago.
Currently, MTNL offers its 3G services in New Delhi and Mumbai, the two major markets in which it is licensed to operate, while BSNL, which operates in, and has 3G spectrum for, the rest of the country, has launched its service in about 450 towns and cities.
Mukherjee said Reliance Communications and other major operators have the underlying passive and transport infrastructure ready to deploy 3G, which will involve a relatively painless overlay. "It will be rolled out very quickly... the electronics will come fairly quickly from China," stated the Reliance Communications president, who is obviously confident that the current barriers to sourcing network technology from Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) will soon be broken down. (See No Respite for Chinese Vendors and BSNL Blocks Huawei, ZTE Bids.)
"The speculation is that the leading operators will roll out their first-phase 3G services any time between September and December. The rollout and service launch won't take much time," added Mukherjee.
He believes there is an addressable broadband services market of 850 million people in India, so current broadband penetration, with only around 10 million fixed (mostly DSL) and wireless (mostly BSNL and MTNL's initial 3G) broadband users, is very low.
That can change, though, as more broadband services -- fixed, 3G, and broadband wireless access (BWA) -- become available, device prices fall further, the Indian population becomes even younger and more affluent, the urban population continues to grow, and online content becomes more relevant and available in local languages.
Reliance Communications expects India's broadband subscriber numbers to grow to more than 40 million by 2014, with the majority of those (around 70 percent) being connected by 3G.
Clearly, the Indian government is hoping the market will pick up a lot quicker than that. (See WiMax, 3G to Dominate India's Broadband Future.)
That Reliance Communications sees 3G as the main enabler of broadband growth is not surprising: The company landed 3G spectrum in 13 of India's 22 circles (service areas), but it walked away from the BWA spectrum auction empty-handed. (See India's BWA Auction Ends in $8.2B Drama.)
And Mukherjee believes that, once multiple 3G services are available to India's population and device prices make entry-level handsets affordable, "the operators will aim for volume" in terms of building a 3G subscriber base. And he doesn't expect any of them to use 3G as a way to hike voice tariffs, which have plummeted in India during the past two years. "Don't expect any premium voice pricing," he added.
— Ray Le Maistre, International Managing Editor, Light Reading