3G/HSPA can help bridge urban-rural digital divide

3G/HSPA can help bridge urban-rural digital divide

3G/HSPA will also provide a platform to meet the future demands for mobile broadband services, that will also help India meet its committed broadband targets for 2010, says P.Balaji, VP, Marketing & Strategy, Ericsson India

Idhries Ahmad

Thursday, March 19, 2009

NEW DELHI, INDIA: Ericsson is among the very few vendors in India who has been very vocal for the speedy rollout of the 3G networks in India for some years now. The company following, the successful completion of Gramjyoti Rural Broadband Project, believes 3G HSPA technology will substantially accelerate the process of bridging the digital divide in the country.

Ericsson's Gramjyoti Rural Broadband Project is India’s first HSPA-powered rural broadband demo network that delivered the benefits of 3G across 18 villages and 15 towns in Tamil Nadu

In an interaction with Idhries Ahmad of CIOL. P. Balaji, Vice President, Marketing & Strategy, Ericsson India talks in detail the need of 3G services in India. He also discusses the business models that operators will employ to push 3G services in country.

Balaji also talks in length about the preparedness of operators in India to offer 3G services and imminent challenges they will face during rollout He also tries to put an end to the perennial argument between 3G and WiMax and also explains the applications and user groups that will help 3G gain traction in the country.

Excerpts:

CIOL: There has been lot of hype around 3G. Does India need 3g and is country ready for 3G?

Balaji: Globally, 3G or WCDMA/HSPA has already been commercially deployed in more than 240 networks around the world in more than 110 countries serving almost 300 million subscribers. By 2013, Ericsson anticipates there will be two billion mobile broadband subscriptions, with 80 percent being served by HSPA networks.

And with nearly 2000 available 3G devices, WCDMA/HSPA technology offers undisputed advantage of time along with unmatched economies of scale that make it the world's most widely deployed 3G mobile broadband technology.

Apart from the above mentioned rapidly rising global numbers, China – a huge telecom market, has also initiated the 3G rollout process further adding to the growth and volume of 3G subscriptions. In view of this, it makes definite sense for India to benefit from the immense scale of movement from 2G to 3G/HSPA.

Lastly, with nearly 80 percent of the investment having already been made (while rolling out 2G services) towards setting up infrastructure such as towers and shelters, service providers will have to only bear the incremental cost of electronics and marketing of 3G services. Hence, infrastructure cost will be minimal.

3G/HSPA can help in bridging the urban-rural digital divide as demonstrated for the first time by our Gramjyoti project conducted across 18 villages and 15 towns in Tamil Nadu in 2007 . The project demonstrated the benefits of mobile broadband using WCDMA/HSPA technology for rural India using applications such as m-governance, m-learning and m-health, by connecting communities to high-speed internet services for the first time.

3G/HSPA will also provide a platform to meet the future demands for mobile broadband services, that will also help India meet its committed broadband targets for 2010.

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

Balaji: It is important to realize that with a larger penetration of mobile than PCs in the country, India will experience internet and broadband through the mobile.

From a roll out standpoint, India has already started rolling out 3G/HSPA services – with the Government allocating spectrum to the state-owned operators including BSNL and MTNL. In fact, Ericsson is helping BSNL roll out 3G services such as video telephony, mobile broadband, mobile TV and video on demand.

Certain others such as downloads, video tones, instant messaging, on line gaming, and bill payment services will be offered subsequently.

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

Balaji: World-over, operators have used 3G for voice, data and video services. India is not likely to be an exception.

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

Balaji: The world is witnessing a global recession which is not specific to telecom. In India, the telecom growth story has been largely intact with nearly 10-12 million subscribers being added every month.

A host of large players including many foreign ones have made significant investments in the sector. So we hope that the 3G bidding process will go through smoothly.

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

Balaji: As mentioned earlier, with a commercial deployment in over 110 countries and an ecosystem of nearly 2000 devices with unrivalled breadth and depth, WCDMA/HSPA already offers today the advantage of time as well as unmatched economies of scale that benefit all the players from consumer to operator.

Going forward, LTE is the preferred technology choice of the global telecom industry with clear advantages of scale and superior performance. And economies of scale matter to be able to bring affordable services to the mass market.

It is predicted that by 2012, 3GPP technologies including WCDMA/HSPA/LTE will support more than 1 billion subscribers which is several times larger than any other technology.

We expect other technologies to be deployed as niche technology

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

Balaji: The onset of 3G services will have a positive influence on the growth of the VAS industry. A host of opportunities for VAS players are expected to open up as 3G services are rolled out creating opportunities for improving quality and user experience

The VAS market, currently constitutes about 9-10% of the total revenue for telecom operators in India, with SMS alone accounting for 44% of that share. With the 3G services to be rolled out by next year, the VAS industry is expected to increase its share substantially in the operator revenue contribution.

A host of services including updates on news, sports, stock market, music and entertainment, ring back tones, games, m-advertising, m-commerce as well as other utilitarian services are expected to become popular as consumers increasingly look for subscribing to affordable 3G services. In fact, as per estimates, 3G services are expected to help increase the overall VAS share to about 23% of operator revenues by 2013.

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

Balaji: We cannot comment on operator strategy.

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 rollout 3G services in country. Also a word on BSNL, MTNL on how good is their preparation in rolling out 3G services in India.

Balaji: While we cannot comment on the operator plans for offering 3G services, certain published reports indicate that operators may be preparing for it.

While infrastructure investments for rolling out 3G/HSPA services are only marginal – as nearly 70-80 percent of the cost has already been incurred in rolling out 2G/2.5G services via shelters, towers etc – challenges still remain, specifically in the areas of network optimization – with multiple generations of technologies being available, delivery of end-user services as well as in terms of sharing of infrastructure.

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

Balaji: India has a far larger penetration of mobile devices than PCs or even landlines. It is therefore important to realize that the India will experience broadband through the mobile.

With a young and growing population that is increasingly net savvy and likes to connect and communicate – chatting, social networking, blogs etc – mobile broadband or 3G/HSPA uptake is expected to only increase, complimented by the availability of affordable 3G handsets and services.

Some of the applications currently being offered by operators include video telephony, mobile broadband, mobile TV and video on demand. There are plans by operators to offer others such as downloads, video tones, instant messaging, on line gaming, bill payment along with m-learning, m-governance and m-health subsequently.

CIOL: How much deterrent will be availability of 3G ready handsets will have in the adoption of 3G services in India?

Balaji: As we understand from handset vendors, currently 15 million of India’s more than 300 million mobile subscribers already have 3G-enabled handsets and during the next few years, nearly 30 percent of all future handsets are expected to have 3G capabilities. The numbers are expected to grow significantly once 3G/HSPA services are actually rolled out.

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

Balaji: I’m afraid, we cannot comment on the operator marketing strategies.

However, in order to drive penetration of 3G services, applications such as video telephony, mobile broadband, mobile TV and video on demand will need to be affordable and rightly priced to enable operators to leverage huge volumes in an untapped market.

Certain others will require setting up of partner ecosystems in order to become viable. For example in the VAS space, such ecosystems of content providers, aggregators, developers, technology enablers and operators already exist. However for other large-scale applications such as m-learning, m-health and m-governance – capable of catalyzing socio-economic changes in society – specialized ecosystems need to be set up.

An example of one such exercise was Ericsson’s Gramjyoti Rural Broadband project in which Ericsson worked in partnership with Apollo Hospitals, Hand in Hand (a local NGO), Edurite, One97, CNN and Cartoon Network to showcase the benefits delivered by mobile broadband through a range of life-changing applications including m-health, m-learning and m-governance in rural India in 2007. For more information, please visit www.gramjyoti.in

CIOL: To conclude, how is Ericsson geared to deliver 3G equipment to operators in India?

Balaji: Ericsson is a global leader in 3G mobile technologies with more than 50% share of the worldwide 3G deployments. From that perspective, we have already built up resources and competencies to roll out 3G/HSPA networks in the country.

Rollout of 3G/HSPA telecom networks in India will open a new revenue stream for the operators, enabling them offer an array of voice and data services to both rural and urban subscribers, reduce costs, and connect millions who have had no access to broadband. In addition, the ‘roaming’ community – the extra number of subscribers who move in / out of a network constantly will make that revenue stream further inviting.

With almost 15 million 3G-enabled phones currently available in India, we expect that nearly 30 percent of all future handsets sold in the country that will be 3G enabled. Hence, by 2012, we foresee about 60-80 million mobile subscribers (in India) who will be 3G-enabled.

In India, Ericsson has started the commercial roll out of the 3G network for BSNL across over 400+ cities in the North and East zones in Phase I.

©CIOL Bureau