INDIA--Introduced by private telcos nearly 10 months ago, 3G
services in the country have failed to garner adoption amid customer
complaints about slow speeds and patchy connectivity.
Udayan Bhatt, a manager with an IT firm in Mumbai and Airtel
subscriber, signed up for 3G services but expressed his disappointment
about the weak voice signal.
He told ZDNet Asia in a phone interview that he has yet to experience
faster speed while browsing the Web on his mobile. "It's almost as good
or bad as the GPRS [on 2G]," Bhatt said.
He noted, however, that the experience improves when watching videos.
"And I do see better download speed when I am downloading apps on my
phone," he said.
Kamlesh Bhatia, research director at Gartner, said in a phone
interview: "Most consumers have found the 3G coverage to be patchy and
the 3G experience, [especially with regard to entertainment and
infotainment], to be inconsistent,".
Subscribers have also noted that lack of 3G coverage in some pockets
within the city, even after 10 months since 3G services were introduced.
The installation process has yet to be completed, with many major towns still lacking 3G network coverage.
According to CyberMedia Research (CMR) estimates, as of Jun. 30,
2011, the number of 3G subscribers in India was approximately 10
million.
"It's a sluggish start, but is expected to improve in the coming
quarters as 3G services are rolled out by operators in new cities and
towns," Naveen Mishra, CMR's lead telecoms analyst, told ZDNet Asia.
Stats from the Telecom Regulatory Authority of India revealed there
were 851.7 million mobile subscribers in the country in June 2011.
Operators paid a whopping US$14.6 billion in May last year to secure 3G spectrum.
"This has constrained operators' ability to invest in upgrading their
networks," Mishra said in an e-mail, adding that this has resulted in
low speeds, poor network quality and high pricing, and led to the slow
takeoff of 3G services.
"In fact, some subscribers have reportedly moved back to 2G services
due to the poor experience on 3G networks," he said. Other irritants
slowing down 3G adoption include frequent call drops, the lack of
network coverage in smaller cities and towns, low penetration of
smartphones and fast battery drainout, the analyst added.
Cautious rollout over limited spectrum
According to Bhatia, the 3G auction last year had helped create
curiosity about the technology. "Everyone was curious to know whether it
can usher in a new experience to the user or not," he said.
Most of the operators
started by offering free service subscription and starter packs to
their subscribers.
Simultaneously, they rolled out their networks,
carried out testing and optimization on the network.
They also adopted phased implementation, for instance, calling Delhi a
3G-enabled area. However, doing so did not necessarily mean every
corner of the Indian city would have access to 3G services. "Such an
experience is detrimental to the value proposition of 3G," Bhatia noted.
More importantly, spectrum remains very limited in India, he added.
"That's why operators have been cautious in rolling out value-added
services," Bhatia said.
Romal Shetty, executive director and head of telecom at KPMG, told
ZDNet Asia in a phone interview: "In India, the networks are getting
choked so the operators are first focusing on voice."
He added that curiosity over 3G could only help telecom companies to a
certain point. "The consumers see their signals change from 3G to EDGE
network. They are not getting a consistent experience. Therefore, the
excitement has not been there," he said.
Poor data traffic
To drive 3G usage, operators need to encourage more intensive data
consumption, Shetty said. However, even in the case of 2G services, the
ratio for subscriber consumption between data and voice is 8:92.
"Content never really picked up in India," he added.
In comparison, the split between data and voice is nearly 60:40 in
Europe, 35:65 in the US, and 40:60 in Japan and Korea, he noted.
Shetty believes India's data-voice ratio can reach 20:80, adding that
this will help improve the margins of operators. "But here, we are
[still] trying to implement 3G while giving 2G services," he said.
In addition, the industry has not really developed any killer app for
3G, the Gartner analyst said, urging operators to partner relevant
content developers to introduce new mobile apps.
"In my view, 3G will pick up after two to three years," Shetty said,
noting that worldwide, 3G service is also not known to fetch high
returns for operators.
Mishra concurred: "Although a good number of apps are available, it
will take some more time for a full range of value-added services to
become available in India."
According to the CMR analyst, operators and content providers would
do well to develop apps for video-driven content based on specific
religious, socio-cultural and sporting events, which are very popular
among large sections of Indian society.
And while the country's adoption of smartphones
is currently low, Mishra said when demand does pick up, it will drive
3G usage which would further feed the development of new apps. "[This]
leads to a virtuous cycle of increased adoption, higher usage and new
apps in the medium to long term," he said.
However, Shetty noted that such innovations have yet to take place
because there is little incentive for content providers to do so. "In
Europe, the content provider gets 70 percent of the revenue from
value-added services and mobile content, while the operator gets 30
percent.
"In India, the operator gets to keep 80 percent of the revenue, while
20 percent goes to the content firm. In some cases, the content
provider gets only 12.5 percent," he revealed.
Uncertainty over network investment
The bigger question concerning Indian operators involves investment.
3G is a capital-intensive business that requires incremental
investments, but operators here are unsure whether they should first
roll out 3G service nationwide or wait for subscribers to come onboard.
As such, many have adopted the phased approach and the low service
adoption has resulted in disillusionment among the early birds.
"The fear of broadband wireless access
(BWA) lurks large over 3G operators," Bhatia said, noting that there
has been talk of unified licensing in this market segment. The
government may also allow voice over BWA in future, he added.
"Under such circumstances, can 3G compete with BWA?" Bhatia posed.
Ultimately, though, India's networks are clogged and operators need
to make the investments, even when they remain skeptical about pumping
further investments as their profits are slumping.
Shetty said: "There is pressure from the shareholders to reverse that trend."
India's largest mobile operator, Bharti Airtel, last month announced a
28 percent fall in net profit, in its April-July 2011 quarter results,
to US$252.8 million from US$349 million in the previous year. It
attributed the drop to investments in 3G services and costs incurred in
the acquisition of Africa's Zain Telecom.
"There is a lot of uncertainty in the market," Shetty said, noting
that voice-over-IP today remains illegal in India. "If voice-over-BWA is
allowed, everyone will be affected."
The country needs to overcome 2G scams and other regulatory
uncertainties, and work toward a new telecom policy that eases
merger-and-acquisition regulations for telcos, he added.
Concurred Bhatia: "We need more clarity on regulations."