Indian 3G operators can learn from Japan, China

GURGAON, INDIA: Similarities among the telecom markets of China, Japan and India are almost the same. There is a dwindling ARPU. But future is bright with data revenue looking up. China and India are moving towards rural areas and this is one of the main reasons for declining ARPU.

Japan's DoCoMo's is expecting sharp increase in data revenue, while most of Indian service providers expect to double revenue from data services.

How can India learn from China? China has made inroads into 3G space recently with an overall investment of RMB 160.9 billion in network expansion and upgrading in 2009. Indian operators should not delay their roll outs. They should start spending money once they receive spectrum. By the time they get spectrum, global economies will revive. Indian customers will be in a position to consume more.

China Mobile's ARPU rose to 77 yuan in the year 2009 as compared with 75 yuan for January-September. The rise in ARPU was mainly due to growth from VAS, with revenue jumping 16 per cent from 2008 to contribute about 29 per cent of China Mobile's total operating revenue. 3G will boost VAS revenue in India.

Indian users are just awaiting the 3G speeds.

The number of subscribers in China increased following the introduction of 3G services. Total 3G users in China touched 13.25 million in 2009. Increasing competition and low mobile penetration in rural markets supported the industry. Reduced tariff charges and falling handset prices added fuel to the growth.

Chinese operators did not wait till the revival of global economy. They did not face spectrum crunch. They went on investing in 3G. Usually, operators take 8-10 months to deploy network. But there was a remarkable increase in the number of 3G subscribers in China in 2009. Indian operators need this kind of aggression.

China Mobile is banking on its information based services (including M2M and mobile e-commerce) offered to enterprises. Besides, the booming market for mobile Internet and the emerging opportunity from mobile payments are expected to drive future growth. Indian operators are yet to tap this in a big way. The RBI hurdles on the mobile payments space are yet to be removed.

China Mobile's mobile VAS continues to grow with revenues increasing 16 per cent to $19 billion. The carrier's on-line mobile application store Mobile Market is a key contributor. Usage fee revenues grew 9.8 per cent to $42 billion accounting for 63 per cent of total revenues. Indian operators can do more in this area. 3G will bring more speed to the speed hungry population of India.

Using the home-grown TD-SCDMA standard, China Mobile covered 238 Chinese cities, representing 70 per cent penetration. China Mobile had 3.4 million 3G users and 87,000 3G base stations. It has invested roughly $12 billion for its 3G network. It will build more than 80,000 3G base stations in 2010 to cover all Chinese regions with its 3G TD-SCDMA network. The carrier plans to complete the nationwide deployment of its 3G network in 2010 instead of 2011.

China Mobile plans to launch up to 30 new TD-SCDMA smartphones (named Ophones) in 2010. The company has partnered with leading handset vendors such as Motorola, LG, Samsung, HTC and Dell for its Ophone project. Indian operators rely on handset makers in European / US. We need to learn from the Chinese operators.

What is Japan offering to Indian operators? Data communication will surge in Japan. India's 3G operators cost effective packages to its consumers. Though DoCoMo projects a Y200 billion drop in revenue from phone calls this fiscal, it expects a Y110 billion growth in data communication revenue.

Japan's cell phone operators have been fighting for customers. As people spend less time and money on phone calls, carriers are struggling to find ways to enhance data communication revenue, and are pinning their hopes on smart phones. If entry barriers for Smart phones can be removed in India, 3G will find its own way.

Japan's number three player Softbank Corp, that sells Apple Inc's iPhone in Japan, saw its ARPU rise to Y3,890 in the January-March quarter from Y3,830 a year earlier as the iPhone generated strong data communication revenue.
Indian operators have the backing of finance. They are ambitious. Indian operators will do better than Japan and China as they can learn from the latters' mistakes too.