Express Computers
Monday, April 11, 2005
With third generation cellular technology, service providers will increase their average revenue per user while customers will benefit from high-speed connectivity.
If you are planning to buy a smart phone, check whether it is 3G compatible as many smart-phone capabilities are network dependent. High bandwidth facilitates many things on a mobile network. 3G technology gives service providers the ability to stream audio-visual content and offer faster downloads of Java applications. That’s not all. The technology leads to increased network capacity and high bandwidth for voice calls, data and multimedia services. The migration towards a richer set of IMS (IP Multimedia Subsystem) – based services could eventually lower cost per subscriber on the infrastructure side.
Capital Intensive
Unleashing 3G’s potential requires substantial investments, and, eventually, the rebuilding of network infrastructure. Kankkunen comments, “2.5G and 3G can exist side-by-side and support the same types of services. This means that operators can maximize returns from their 2.5G investments and gradually migrate to a full 3G infrastructure. It is expected that in rural areas 2.5G may be a long term solution while 3G is rapidly rolled out in densely populated areas. Any service that requires multi megabit data bit rates is only possible on 3G infrastructure.”
Ramakrishna Dutt , Managing Director, Quasar Innovations says, “To start with 3G adoption will be greater in urban areas as the bandwidth-intensive applications such as news clips, live stock exchange information and video downloads will be more in demand there. The average revenue per user (ARPU) for mobile service providers is expected to double with the coming up of new service in 3G domain.”
Of late, ARPUs of private GSM operators have dropped by 17 percent in 2003-04 from Rs. 523 per subscriber in the first quarter to Rs. 432 in the last. Pundits say that 3G can help service providers double their ARPU. (source: Cellular Operators Association of India – COAI).
It’s in the licencing
While India is expected to follow European and Japanese markets where 3G has been widely adopted, the key issue will be licencing. Licencing 3G in India will become possible by end-2005. It is expected once 3G licencing is introduced, it will take 12-18 months to implement 3G networks. Globally, operators such as NTT DoCoMo in Japan and Hutchison in the UK have deployed 3G services. While consumers will benefit from high-speed mobile connectivity, 3G is expected to give a fillip to the operator’s falling ARPU owing to the decreasing cost of voice tariffs. Globally, there are already 20 million customers who have migrated to 3G handsets (the figure was around six million last June) from GSM (Global System for Mobile, or 2G).
Industry experts are of the view that around 10 percent of the existing 40 million mobile subscribers in India (as of February 2005, according to COAI) will move to 3G once it is introduced. It is likely that voice will be an important application for 3G for quite some time. 3G and 2.5G services are expected to complement each other with 3G being used in densely populated areas and 2.5G in rural pockets.
Mahanagar Telephone Nigam Limited (MTNL) has kick-started India’s 3G story by issuing a Rs. 1,000-crore draft tender for laying four million lines in Delhi and Mumbai (these will include 2G and 3G). MTNL is the first GSM-based cellular service provider to take a decisive step towards migrating to 3G. Private GSM operators such as Bharti, Hutch and Idea have expressed their willingness to move into the 3G domain and have already applied for radio frequency spectrum. To meet the demand for handsets and showcase its range, LG Electronics India has launched a range of 3G handsets.
MTNL’s move comes even as the government is yet to spell out its policy with respect to 3G services. While the Telecom Regulatory Authority of India is grappling with the contentious issue of spectrum allocation on the 1900 MHz band, the government is considering whether to allow direct migration for existing operators to 3G services or to conduct a fresh auction of spectrum.
While it is not clear what we can expect after 3G, one thing is certain – cellular networks are going to get faster and telcos are hoping that users will start using the features that they plan to offer on 3G networks.
