NEW DELHI, INDIA:The roll out of 3G it seems going nowhere. With the auction bid getting delayed time and again and recession playing bad sport, analysts are concerned that unnecessary delays are robbing consumers of the benefits of 3G technology.

“3G is quite relevant for India but we can’t delay the process of spectrum allocations beyond a quarter and the roll outs have to be done very aggressively, The ability for India to launch commercial 3G service in the next 2-3 quarters is critical. It is not yet ‘late’, the subscriber growth is still healthy. The 2G spectrum congestions in urban locations is a concern", , says C P Murli, Senior Vice President, Aricent.

In an detailed interaction with Idhries Ahmad of CIOL, Murli delves in detail the need of 3G services in india. He also talks in length about the preparedness of operators in India to offer 3G and challenges faced by them.

Murli also discusses the business models that operators will employ to push 3G services in country and also explains how much of deterrent will be availability of 3G ready handsets will have on the adoption of 3G services in India?

CIOL: There has been lot of hype around 3G. Is India ready for 3G?

C P Murli: In a nutshell yes. The sheer size of the market and the potential implies there is a business case for 3G in India. The prolific growth of mobile subscriber and penchant of Indian subscriber for content (VAS) implies more content will be consumed by subscriber once the user experience of the network improves.

However, there are challenges. There is no short term “make money quick” case considering infrastructure investments and price sensitivity of India market. There are also regulatory hurdles and spectrum auction delays which is pushing the market out.

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

CP: The ability for India to launch commercial 3G service in the next 2-3 quarters is critical. It is not yet ‘late’, the subscriber growth is still healthy. The 2G spectrum congestions in urban locations is a concern. 3G is required to push high ARPU group to better class of service and free up the 2G service spectrum to tap a wider base of users at the lower end of the ARPU spectrum.

3G is quite relevant for India but we can’t delay the process of spectrum allocations beyond a quarter and the roll outs have to be done very aggressively. Thankfully, 3G technology is robust and stable and proven in several operators world wide so rolling out 3G (unlike 4G) even nationwide will not be a inordinate challenge. However, the business case for rolling out nationwide 3G has to be evaluated by operators in India.

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

CP: The logic behind this thought is understandable but a deployable nationwide 4G technology is still 2 if not 3 years away. Verizon is the most aggressive LTE(4G) adopter and even there, only a few markets are planed to go live with 4G by end of this year. India market cannot wait for 3 years to move on to “wireless broadband”.

Our perspective is, certainly 3G should be adopted by India and possibly go for HSPA+ and leverage the 3G investments for significantly more duration.

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.

CP: As mentioned above, 3G technology offering from OEMs are very robust and stable and India will enjoy the benefit of second generation of optimized equipments which have been tweaked after 3-4 years of field deployment of the 3G gear. Also Indian operators will get advantage of extensive 3G roll out and operations in other networks world wide and take lessons to avoid pitfalls in planning and service of 3G.

This positions most operators (at least the big ones in India) on a comfortable position of being able to roll out 3G very quickly post license availability. Most of them have been testing 3G equipments from prospective vendors and doing trial on actual data rates that can be sustained on rich media services.

However, a pan-India network will happen as part of business case validation by operators in Indian context and by the demand for growing data services as well as increasing pressure from lower ARPU users in the 2G spectrum subscriber base.

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

CP: The data capability of 3G has to and will drive 3G adoption. There are application classes which appeal to various user groups.

Corporate and Enterprise user segment is possibly the first target of 3G service. Enterprise application which is data rich (video conf, CRM, intra enterprise web applications, e-mail etc.) would be launched by the operators at corporate price rates assuring revenue volumes would be marketed.

Then a wider base would be targeted by the operator marketing which would include the Mobile Web 2.0 service on 3G. This would target the Urban high income group youth segment. This segment has the potential for high ARPU and very high affinity to rich media and content. Besides, the extensive and ready availability of 3G handsets that appeal to the youth with rich multimedia capability and “cool” factor would possibly drive the adoption in this group.

Finally, the Government is also a target for driving 3G. The “wireless broadband” capabilities of 3G makes it possible for Government to promote the “e-governance” needs and the availability of significant government funds allocated towards penetration of Internet based service in rural segment also helps.

However, there is an element of technology competition from WiMAX in this space since Rural Broadband market needs has WiMAX as a contender with Intel and others pushing the technology along strongly.

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

CP: 3G ready handsets are quite widespread in the market. This technology has been in place for a while and already several devices in Indian market are 3G capable. With launch of 3G it is expected that devices with HSDPA and HSPA would  also grow. 

The mass availability of 4G devices is a concern and another factor which makes 3G more amenable for immediate adoption in India.

CIOL: 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?

CP: At the moment it would appear that 3G business cases are centered around major urban locations. There could be a rural play with e-Governance and the set of services under this segment such as telemedicine, weather and rural commodity market news and updates, public-government interface for service etc.

However as noted earlier WiMAX technology is also a good contender since WiMAX plans on the rural segment has been in the Indian market for a while.

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

CP:Data will be the differentiator and the pull factor on the service. It will cause the adoption or “switch over” of 2G subscribers. A voice centric 3G service will not be the plan and marketing strategy of any operator.

However, voice will be a need and will have to be offered, particularly in the full mobile service to ensure subscriber are able to adopt the 3G service and not have to keep a 2G phone for Voice and a 3G Modem for their laptops to get data. So, it seems 3G will not be a data only service.

Though some bundling and packaging could be done by operators and a 3G modem package for data service could be used by them to introduce the service however, it is not foreseen that operators would be restricted to such a model only.

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

CP:Not really, besides with foreign interest in Indian telecom market which is posting 15Million subscriber growth per quarter even in these times will ensure 3G bidding remains healthy and significantly lucrative for the Government. However, the revenue premium realization from the auction will not be as exorbitant as in the UK or some western European markets at the turn of the century.

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

CP: WiMAX appears to be a targeted niche. There is a rural broadband market which seems to be WiMAX forte. The government liaisoning for promoting WiMAX as the technology for bridging the “digital divide” seems to be stronger particularly with Intel supporting the cause of WiMAX.

However a general broadband mobile service with data and voice is very much a 3G advantage. Further, ready 3G device availability from all major OEMS and the network equipment from OEMs, puts 3G at an advantage from roll out and deployment readiness perspective.

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

CP: The availability of higher bandwidth per user and better QoS over the air for Streaming, makeS VAS service growth significantly possible. The SMS/text based services and some WAP based services of today will expand immensely into richer experience and service such as Mobile Web 2.0, Widget, Live Streaming type of applications.

There would be a growth of VAS application providers delivering next generation/genre of VAS applications. The improved user experience of rich media like video, multimedia would create innovation in VAS application. Higher data rates may make Mobile Advertisement more innovative and attract more attention from brand to push their ad on the mobile channel.

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

CP: This may happen eventually and a flat rate “fat pipe” service may be adopted by operators to promote 3G usage. The price sensitivity of Indian markets would create pressure on operators to reduce the tariffs sooner rather than later but the infrastructure investment of the operator may not make it easy for them to drop the price.

There is a critical mass of adoption by higher ARPU potential target segment which would need to be reached before operators can do a price crash to target volume growths in 3G.

Thus, it seems likely that the real returns to operators from 3G would be a more protracted period of 3-5 years and not short term profitability. Government regulations and infrastructure growth SOPs to 3G operators can help wider penetration of 3G by reducing prices and launching in wider market bases with more services.