Towards affordable 3G in India

BANGALORE, INDIA: Delivery of broadband over 3G is an expensive proposition. The 3G spectrum auctions took place in 2010 in India with great fanfare. Several operators spent billions of dollars to acquire spectrum license.

Then they spent 'a whole lot of money' to deploy the network equipment before service could be rolled out. In reality, the 'whole lot of money' was spent to roll out the 3G network, however, it was spent by equipment vendors.

Many of the 3G network deployment in India was carried out on the basis of what is popularly known as managed services model. In this model, the equipment vendor deploys and maintains the network and meets certain SLAs that are mutually agreed with the operator. Equipment vendor receives payment over a period of time and amount of payment is based on number of subscribers on the network.

In India, two years after the auction, only three-four per cent of the total subscribers have signed up for the 3G service; subscribers have been complaining about lack of connectivity and coverage; and, equipment vendors have been collecting paltry sum from their managed services contracts.

In other words, in 3G land no one appears to be happy. How did we get here and more importantly how do we get out of this?

3G networks are capable of higher data throughput compared to 2G networks. However, for 3G services to be successful (read profitable), it must have excellent coverage and it must be priced competitively against other broadband services.

The 3G ecosystem largely comprises of operators, equipment vendors and subscribers. There is an important role being played by the regulators, app developers, mobile device manufacturers and technology innovators, however, we will focus on the three main parties to highlight the bigger issues with 3G deployment.

The operators have spent huge sums to acquire the spectrum. Because of the rules of spectrum auction, none of the operators have spectrum for pan India 3G service offering. They depend on roaming agreement with other operators to make the service contiguous on a nationwide basis.

The equipment vendors have deployed quite a bit of equipment for initial roll-out, however, there are significant service coverage gaps. Based on current managed services model, equipment vendors are reluctant to invest more in network deployment unless there is significant increase in 3G subscriptions.

Subscribers are concerned about coverage, roaming and pricing. To complicate matters, regulations related to roaming have become clouded due to regulatory stagnation.

Recently, several operators have reduced pricing plan for the 3G data service by as much as 50—70 per cent. This is a step in the right direction. In addition, coverage must be improved without which subscribers are not going to make a beeline to sign up for 3G. Operators can improve coverage significantly, by investing in Wifi hotspots to augment the coverage area.

Radio resource manager in the client device may be reprogrammed to provide persistent service across 3G and Wifi access networks. Such a deployment will be relatively inexpensive. This approach will significantly enhance ability of the subscriber to get broadband service (3G or Wifi) and be concerned about connectivity/ coverage problems.

Combination of price reduction and coverage enhancement will address the subscriber concerns and bring larger number of 2G subscribers over to 3G.

With increase in subscriber count, it will be easy for equipment vendors to support their managed services obligation and further growth will follow. Operators have already taken first step towards increasing subscriber interest in 3G through price reduction. Step two, i.e. deployment of Wifi hotspots, is critical for 3G subscriber growth.