Welcome to ZenUnwired; a blog dedicated to tracking developments in technology and strategy, and to deciphering the impact of these developments on wired and wireless ISP's, device manufacturers, OS and application developers, and most importantly - you.

Monday, March 22, 2010

The State of the Indian Mobile Industry - 3G/4G

The deadline for submitting interest in India’s upcoming 3G & BWA (Broadband Wireless Access) spectrum auctions finally closed on Friday last week.  India's Department of Telecommunications (DoT) said on its website that it received applications from 9 firms to participate in the 3G spectrum auction and 11 firms to participate in the separate BWA spectrum auction.

India has put on the block three 3G slots in most of its 22 telecoms service areas, while two slots per service area are up for grabs for BWA radio airwaves. India hopes to raise INR350 billion ($7.61 billion) through the auctions and will use the proceeds to bridge the fiscal deficit that is estimated to be 5.5% of gross domestic product in the year which begins April 1.

The DoT will publish a list of pre-qualified bidders on March 30 and mock auctions are slated for April 5 and 6, with the final 3G auctions on April 9 and BWA auctions two days after the close of 3G auctions. The successful bidders would be allowed to offer 3G services on a commercial basis from Sept. 1, 2010.

Following is the list of applicants for the auctions.

  1.  Aircel Ltd
  2.  Bharti Airtel Ltd
  3.  Etisalat DB Telecom India Pvt Ltd
  4.  Idea Cellular Ltd
  5.  Reliance Telecom Ltd
  6.  S Tel Pvt Ltd BTEL.BH
  7.  Tata Teleservices Ltd
  8.  Vodafone Essar Ltd
  9.  Videocon Telecommunications Ltd

  1. Aircel Ltd
  2. Augere (Mauritius) Ltd
  3. Bharti AirteL Ltd
  4. Idea Cellular Ltd
  5. Infotel Broadband Services Pvt Ltd
  6. Qualcomm Inc
  7. Reliance WiMax Ltd
  8. Spice Internet Service Provider Pvt Ltd
  9. Tata Communications Internet Services Ltd
  10. Tikona Digital Networks Pvt Ltd
  11. Vodafone Essar Ltd

While it looks like the applicant list is primarily filled with the usual suspects, there are a few new names in the mix that warrant some interest. Some of the names that caught my attention are: Videocon Telecommunications Ltd (earlier known as Datacom Solutions Pvt. Ltd., Videocon is a new telecom operator holding licenses to offer services across India's 22 service areas), Augere (Mauritius) Ltd (a Mauritius-based fixed WiMAX services provider with no known operations in India), Infotel Broadband Services Pvt Ltd (a part of the HFCL (Himachal Futuristic Communications Ltd) Group, manufacturer of indigenous telecom equipment in India), Qualcomm Inc (a US-based wireless chip-maker and developer of the CDMA standard with no known wireless operations in India), and Tikona Digital Networks Pvt Ltd (India based fixed WI-BRO services provider).

While these developments are definitely good news in the sense that things are finally moving ahead in the wireless space in India, it is to be seen whether the successful bidders will be able to recoup their massive outlays in a reasonable length of time. With only 7% of Indian mobile subscribers owning 3G enabled phones, I have argued in an earlier post that it might take a while for 3G services to catch on in India. The saving grace however is that these days, most new devices hitting the market are 3G enabled. So as customers upgrade to the wide array of devices available, they can begin to enjoy the full benefits of 3G services. Also, the 7% of subs who already own 3G phones, can begin experiencing 3G as early as September 1 (depending on the buildout).

The case for 4G/WiMAX however, is still blurry. The reasons for my belief are:
  • Those of us who lived in India in the early part of this decade have all witnessed the optic-fiber buildout in India (remember all those dug-up roads?). So when residential customers (in most major cities) can get high-speed broadband over optic-fiber cables at speeds (and possibly, prices) that 4G/WiMAX cannot match, will customers opt for 4G/WiMAX broadband services?
  • India's 2010 Internet penetration is expected to be around 100 Million – or about 10% of the population. Most of these users are tethered users, and include both broadband and narrowband users. Will these users value ‘mobility’ over ‘speed’, especially in light of (a) above (remember, Indians are a cost-conscious set)?
  • From a wireless perspective, 4G/LTE/WiMAX phones are still early in their evolution, so we can’t expect to see many of these devices soon. So with USB dongles being the default device for 4G services, it is pertinent to ask – ‘what is the size of the addressable market for USB dongles’?

To the above complications, throw in additional considerations like ‘Mobile Number Portability’, ‘Price Wars’, ‘App store conflicts’, etc. and it looks like the Indian wireless market is ripe for some ‘Bollywood’ style drama over the next few months. The only thing that is crystal clear in all of this: the Indian wireless customer is set for some exciting times ahead.