Youth will drive 3G market in India

BANGALORE, INDIA: As the differences over the 3G spectrum auction reserve price between the the Department of Telecom and the Finance Ministry is being sorted out to push the bidding in a faster pace, a few companies are planning for different strategies to win the auction.

It is common to see big players bidding for the latest service but we didn't have a chance to know about the companies who work closely with the service providers in the area of 3G.

ValueLabs, a company that has been in the mobile space for the last eight years, is actively involved in the telecom sector building Intellectual Property (IP) in the areas of mobile video streaming, data services and other value-added services in 2.5G and 3G environments.

In an interaction with Abhigna N G of CIOL, Kiran Kuchimanchi, senior vice president, Global Delivery, ValueLabs talked about the 3G in India and how recession is going to affect the 3G bidding processes in India. Excerpts:

CIOL: What is the sort of work ValueLabs is doing in 3G area? Are you working with any service providers or equipment manufacturers?

Kiran Kuchimanchi: ValueLabs has been in the mobile space for the last eight years and has built strong Intellectual Property (IP) in the areas of mobile video streaming, data services and other value-added services in 2.5G and 3G environments.

We work with service providers for providing value-added services such as mobile streaming services, applications with integrations to social networks and circuit-switch based applications.

CIOL: In your opinion is India ready for 3G? Is the technology worth the hype?

KK: Yes, from a technology and market adoption point of view, India is ready for 3G, especially in the urban market. India is still one of the largest and fastest growing mobile markets in the world and 3G services will only see an upsurge.

The Indian mobile market is still voice intensive and the operators’ major source of revenue. In this context, voice-based 3G services will see greater acceptance and adaptation by the domestic consumers. Nevertheless, much of its success will depend on the pricing and service strategies adopted by the service providers in India.

3G does promise a lot compared to what is possible using 2.5G and is a proven technology. In India, people love talking over the phone rather than interacting using SMS or other means. Therefore, if one is able to provide compelling services such as video calls at affordable prices, it will be a huge hit.

CIOL: Many analysts contend that India is late to 3G and as such should leapfrog to 4G? Is this assessment correct?

KK: The 4G technology is still at a very conceptual stage and its commercialization anywhere in the world is still a long way off.

CIOL: Has India already missed the 3G bus? Will the delay have any impact?

KK: We have moved to the mobile bandwagon late compared to the rest of the world. For that matter even the US is far behind others in terms of mobile adoption. But we are the fastest and one of the most competitively priced markets in the world. Therefore, 3G will have its relevance in India.

CIOL: How do you see the preparedness of operators in India to offer 3G and what are the challenges? Apart from MTNL and BSNL, the operators are still yet to get spectrum. Once they get that how well they are prepared to roll out 3G services in country?

KK: The operators in India are prepared and are keen to start off the 3G services. They have made the necessary technology investments and have prepared the service delivery models. They only require the license and necessary spectrum allotted to initiate operations.

CIOL: What will drive 3G in India? Which applications and user groups will help 3G gain traction in country?

KK: Any application that allows greater interaction among users like video calling etc will be successful. Content related to sports, entertainment, human interest etc will be a hit, and enhanced with audio or video content either on-demand or real-time will drive the 3G market in India.

The youth in India is extremely mobile savvy and will be the early adopters of the 3G services.

CIOL: The availability of 3G-ready handsets seems to be a deterrent in India. What would be its impact like, in the adoption of 3G services in India?

KK: It is definitely a deterrent. However, major OEM manufacturers are readying themselves for 3G by coming out with low-cost devices. Most of the high-end phones are already 3G compatible and their sales have already picked up. For example iPhone 3G is already available in India and is seeing a delayed success in adoption. These trends indicate that 3G will be successful in India.

CIOL: What will be the marketing strategy for selling 3G services in India? What will be the business model, and do you see any scope for 3G in rural markets or will it be restricted to urban areas only? Does 3G have any case for rural markets. If yes how?

KK: The early adopters would be urban young adults. Initially, it will be primarily an urban market. Rural market will still be voice intensive and 3G adoption will depend on the kind of customized / innovative services offered.

CIOL: How do you react to the assessment that 3G will be restricted to a data only service, not a voice-centric one?

KK: India has been a different market in terms of mobile adoption. As mentioned earlier, in India voice is still a majority revenue generator. As 3G is basically a technology that one can use for data as well as voice, operators can use it to their advantage by providing innovative services for customers.

CIOL: Do you feel that recession is going to affect the 3G bidding processes in India? How much will it hamper the progress?

KK: India has an insatiable appetite for telecom services. There is a huge untapped market in India for 3G services. In that sense the current economic conditions provide operators a great opportunity to offer 3G services as a real value differentiator for customers.

So the recession is unlikely to act as a dampener for 3G bidding in India. Already, there is a lot of competition for 3G licenses and that is good news for consumers.

CIOL: How would you rate the threat of WiMAX to 3G in the Indian context?

KK: Large-scale implementations of WiMAX are not yet available in the world although significant technology enhancements have been made. In addition, WiMAX operates on unregulated frequencies and that could be an issue. However, given the availability of proven large scale implementation of 3G services, WiMAX has some way to go before it can compete with 3G.

CIOL: How do you see 3G impacting the growth of VAS in India?

KK: VAS will undergo transformation post 3G. Within the context of VAS services, 3G will emerge as a significant revenue generator within a short span of time.

CIOL: Do you expect mobile and data tariffs crash further with 3G?

KK: Mobile and data tariffs in India are already the lowest in the world. The introduction of 3G might not lead to any drastic change in this trend. This is because tariffs and the launch of 3G services are fairly exclusive with some dependencies.

In fact, the mobile number portability (MNP) will have a greater impact in driving down mobile tariffs than the emergence of 3G.

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