Mobile Broadband: Driving inclusive growth for India

BANGALORE, INDIA: That broadband can spur inclusive growth is well acknowledged by the global industry.

In India, while the Government and industry have helped achieve a stupendous growth in the number of mobile subscribers – now numbering well over 400 million – broadband connectivity remains an unfinished agenda. With less than 40million fixed or wireline connections, it is clear that broadband uptake will largely be mobile in nature.

To make that possible, India needs to migrate to the next generation of telecommunications technology, called Third Generation or 3G. While countries with much lesser subscribers are reaping the benefits of next generation (3G) connectivity, India remains a voice driven 2G (second generation) market. Factors that have made 2G a huge success in India are a combination of the lowest tariffs in the world, competition with many players, availability of low cost and affordable end user devices or handsets, and a rapid network rollouts. In fact, mobile networks now cover nearly 70 percent of India’s land mass and nearly 80 percent of our population.

But then, what stops India from replicating the 2G success in the 3G domain? With 3G rolled out successfully in hundreds of networks across the world, India can ride the mobile broadband bandwagon with ease by quickly embracing global standards. The key however is the ‘availability of spectrum’. Till desired spectrum is made available and auctioned quickly and transparently, inclusive growth and development for communities and society at large will not happen.

With quicker auctions however, groundwork for which has already been done during the last year, operators can rapidly roll out 3G networks using their existing network such as towers and other infrastructure to achieve nationwide coverage. Mobile broadband over 3G will help enable access of basic yet, much needed services such as health, education, and governance to the country’s citizens especially the millions residing in rural areas.

3G: Bridging the digital divide

3G is a mature technology - with over 300 million subscribers across 116 countries being supported on over 275 commercially deployed networks – with an unrivalled ecosystem of over 1500 end user devices including handsets.

3G enables wireless or mobile broadband (MBB), which has the capacity to drive substantial productivity growth across economies. According to studies carried out in the USA, mobile wireless broadband services in 2005 generated productivity gains to the U.S. economy worth $28 billion per year. More recently, at this year’s Mobile World Congress, leading telecom leaders pointed about how the wider roll out and adoption of mobile broadband services can stimulate growth and even help the world recover early from the current economic crisis.

Better access to communications can boost a country’s economy by empowering citizens and providing new revenue-creating opportunities. Studies have shown that even a small increase in mobile penetration can have a positive effect on a country’s gross domestic product as mobile communications boosts economic activity at a macro level. In fact, a World Bank report about the impact of broadband on growth in 120 countries from 1980 to 2006 reveals a 1.21% increase in per capita GDP growth in developed countries, and a 1.38% increase in developing countries, for every 10% growth in broadband penetration.

Rolling out MBB services and applications boosts entrepreneurship and has far greater positive impact for small businesses and enterprises. MBB enabled networks also create jobs, encourage new businesses across the value chain, improve productivity and boost consumer spending, impacting the GDP positively. A report from Professor Leonard Waverman from the London Business School and the GSMA shows that the release of new spectrum for MBB services in 2009 could contribute as much as the equivalent of $211 billion and $95 billion each to China's and India’s GDP.

This is because provision and quick availability of information works like a magnet and draws people by itself to participate and contribute to development, becoming change agents in the process. In fact, access to information about government and non-government development programmes, employment opportunities, schooling and healthcare options, political and economic developments…the possibilities resulting from community inclusion in development due to spread of MBB are endless. For India, MBB can thus spearhead development, driving ‘inclusion’ and active participation from citizens and communities in nation building and simultaneously help bridge the urban-rural digital divide.

It was with the perspective of helping bridge the ‘digital divide’ that Ericsson conceived Gramjyoti – a joint initiative with a host of partners across 18 villages and 15 towns in Tamil Nadu which successfully demonstrated that access to hi-speed internet or broadband can catalyse socio-economic development and improve health and lives of the rural masses. Using MBB, villagers, who had little access to amenities we take for granted in urban India, found themselves experiencing the benefits of hi-speed connectivity in real time. People felt empowered to be able to access education services, participate in governance, get medical advice and be entertained using applications such as e-learning, e-governance and tele-medicine.

Setting the stage for mobile broadband

From the above facts, it is critical that we make the correct technology choice today for deriving maximum benefit from the MBB paradigm in the times to come. An equally important need is for the Government to provide a stable regulatory environment and adopt policies that will create and encourage more investment in mobile services and networks, lowering the costs of rollout and stimulating broadband adoption by the Indian masses

The chosen 3G technology should be mature, well tested and cost effective for deployment and roll out in order to ensure its success and adoption by the masses. And while there exist several technology options recommended by the International Telecommunications Union (ITU) for Broadband Wireless Access (BWA), the most mature of them is called Wideband CDMA (WCDMA) or High Speed Packet Access (HSPA).

As the world’s most widely deployed 3G technology - with undisputed advantage of time along with unmatched economies of scale - WCDMA/HSPA offers wireless broadband with comparative ease and with tremendous cost savings by leveraging pre-deployed infrastructure or investments that telecom operators have already made in the existing GSM technology. It lowers CAPEX and OPEX for operators, making 3G cost effective and services affordable. Lower costs will aid penetration and rapid service uptake in the country’s interiors. Some analysts have projected that 80% of nearly  two billion mobile broadband subscriptions globally will be served by HSPA networks by 2013.

But technology cannot work in isolation. For it deliver assured results, it is important that the Government harmonises spectrum allocation for 3G as per global recommendations. Harmonisation will allow the same devices to be used across multiple countries and enable manufacturers to achieve economies of scale and lower prices for end users, once again, stimulating adoption of MBB services.

The Indian government took the right steps by announcing the 3G policy last year to help drive growth of mobile broadband. However announcement of the policy is just the beginning, which now needs to be supplemented with fair and transparent auctions to enable proliferation of MBB in India.

On the device front, an increasing number of 3G-enabled phones are now being sold and device prices are fast becoming competitive boosting further uptake. It is believed that currently nearly 15 million of India's mobile subscribers already possess 3G-enabled handsets and during the next few years, nearly 30 percent of all future handsets are expected to have 3G capabilities. These numbers should grow significantly once 3G/HSPA services gets actually rolled out.

India projects to have 20 million broadband subscribers by 2010 and that can only happen with WCDMA/3G enabled wireless broadband.

Adapting to newer paradigms

Globally, mobile broadband users in 2008 grew 80% over 2007 numbers. A broadband enabled economy will alter industry dynamics and traditional business models leading to closer cooperation between various players and consumers.

Innovations and new ways of business are bringing diverse industries closer. For example, IT and telecom with health, education, governance and commerce. It is now time for ecosystems  of market players in these verticals to collaborate in order to speed up innovation and reduce time-to-market for business.

Broadband has emerged as the most successful service in the history of telecommunications, with an uptake even faster than that of mobile phones. It is affecting everything, from the way we socialize to how we communicate and lead our lives. With the projected growth and availability of mobile broadband, growth in Internet usage is expected to be exponential. Broadband with anytime, anywhere connectivity on any device has the potential of enabling a true, well connected society, both in emerging as well as mature markets.

So, here’s hoping that this time next year, we have multiple 3G networks in India that would energize the market and trigger “inclusive growth”.

The author is VP-Marketing and Strategy, Ericsson India Pvt Ltd.