Go Rural, 3G Shows the Way

Though 3G technologies like EVDO, HSDPA, and WCDMA have created waves across

the globe, 3G's yet to make a success story in India. Because, when it comes to

introducing a new technology in our country, rather than taking steps for its

fast deployment, time is lost in needless discussions. And, by the time the

technology is ready to be used, it would most probably have become obsolete in

other countries. Something similar appears to be happening with the deployment

of 3G in India. For the last many months, this technology has been a point of

discussion in India, even as developed countries deploy 3.5G and are already

considering 4G.

Advanced wireless technologies like 3G are expected to drive broadband growth

in the country. 3G technology could be used to make broadband available to the

masses in India as each subscriber would automatically become a broadband

enabled subscriber. It is a well-known fact that broadband penetration is very

low in India and that the rollout of wired broadband will entail humongous cost.

Under these circumstances, 3G is the most cost effective route to deliver mobile

broadband to the masses. However, efforts by the government for deploying 3G

services in India are not satisfactory.

The regulatory and pricing policies depend on the availability of spectrum.

The government should make sure that the required spectrum, which is currently

held by the defense sector, is released and that sufficient spectrum is

available for the quick roll out of services. The successful rollout of 3G

services depends on a host of variables that include licensing terms, spectrum

allocation, competitive pricing, market players and access networks, and the

government should concentrate on addressing these issues.

Paving a Way with 3G



Rural India is yet to see a surge in computers, and Internet access is still

a dream. However, with mobile penetration fairly high even in rural India, it

seems 3G services on mobile handsets will bring Internet access to rural India,

thus paving the way to bridge the digital divide.

3G is the best option in rural areas, especially because of a path

loss exponent greater than 4.2 and it is economically viable. In rural areas, 3G

will cater to e-agriculture, e-Governance, e-health, and e-education so that

these services can be included while formulating policies. But, the broader

picture still reveals that 3G rollout is focused in metros. 3G technologies can

be deployed on a large scale only if handsets are affordable. Initiatives such

as e-education, e-medicine, and e-Governance will boost rollout. Also, the

content for such information should be in local languages.

Ericsson has launched the Gramjyoti Rural Broadband Project, an initiative to

introduce benefits of the WCDMA/HSPA technology in rural India and connect

communities to high-speed Internet services for the first time. Initial

subsidies for 3G handsets, amiable spectrum pricing, a killer application, and

rapid influx of 3G content providers can play a vital role in pushing the 3G

technology in rural areas. Building an efficient and affordable WCDMA/HSPA rural

broadband can help serve as a blueprint for the widespread introduction of

Internet and broadband connectivity in the future.

	Parag Kar, senior director, Government Affairs, Qualcomm India and SAARC
“The fundamental value proposition of 3G CDMA is voice efficiency and the ability to simultaneously support voice and broadband services”

Players' Feedback



Operators in India are waiting for government approval to rollout 3G mobile

services. A number of operators are keen to begin 3G services once the

government is ready to offer 3G spectrum.

Parag Kar, senior director, Government Affairs, Qualcomm India and SAARC

says, “3G CDMA technologies are time-tested, well positioned to provide

broadband Internet access to the Indian rural market. The fundamental value

proposition of 3G CDMA is voice efficiency and the ability to simultaneously

support voice and broadband services.”

3G CDMA can be deployed at an incremental cost to existing deployments and

can leverage existing technology investments of operators with lower cost and

time. “The 3G CDMA ecosystem enables greater diversity and economies of scale

which potentially brings socio-economic benefits to local communities,” Kar

says.

Ajay Ranjan Mishra, head, Business Development, New Growth Markets, Nokia

Siemens Networks, says, “We strongly believe that WCDMA/HSPA and WiMax are not

competing technologies-they actually complement each other. No one technology is

superior and it's only the environment, application, and business case that are

the key deciding factors for choosing the appropriate technology.”

“For example, operators who are already committed to SM/EDGE/WCDMA/HSPA/LTE

(3GPP Evolution) by having deployed GSM/EDGE networks may find it most efficient

to offer broadband access and higher voice capacity through WCDMA/HSPA/LTE.

Moreover, this would be very advantageous for end-users as the majority of

high-end terminals in the market already support WCDMA/HSPA,” says Mishra.

Some of the Chinese operators are in the process of introducing 3G aimed at

the masses. China Unicom, which now operates a CDMA2000-1X network, is ready to

rollout services based on CDMA2000-1X EV-DO, which offers much faster data speed

than its current network. Indian operators, Reliance Communications and Tata

Teleservices, are also waiting for the go ahead to rollout 3G services based on

EV-DO. Indian telecom operators see good business sense in 3G investments as

long as the RoI is realized.

Eamonn Kearns, VP, Sales, Asia Pacific, Dialogic, says, “Mobile operators in

China are in the process of conducting 3G trial runs. They may address the mass

market, and the likely launch of 3G services would happen during the Beijing

Olympics. Since Chinese customers have disposable income, it would be a major

breakthrough in China.”

The 3G technology is the natural evolution of 2G services as it will

facilitate higher speed and data throughputs enabling the delivery of a wide

range of multimedia services such as video streaming, movie downloads, and

mobile TV. It offers 4-5 times the voice capacity of a 2G spectrum, and thus 3G

is a cost effective tool to deliver voice.

The Global Scene



The global environment with respect to 3G is presently not too encouraging

due to bulky investments made by service providers coupled with poor revenue

visibility for their telecom operations. 3G take-up has been modest but slow

across continents. In Japan and South Korea, 3G was introduced in 2002 and was

fully functional by 2005. Mobile operators in Europe spent $129 bn to buy

licenses for 3G networks, but still people still continue to use their mobile

phones just as they did in 2000.

The failure of 3G in European countries is attributable to the very high cost

of spectrum. In Germany and the UK, the astronomical price of 3G spectrum

resulted in little money remaining for the infrastructure that then needed to be

built. As of July 31, 2007, there are reportedly 522 mn 3G CDMA subscribers.

China is fast adapting to changing politics and technology. A telecom law and 3G

can unleash the market for value-added services and rural telephony. 3G

continues to be a focal point of the industry as the two fixed line carriers are

expected to enter into the mobile market via 3G licensing and industry

restructuring.

	Eamonn Kearns, VP, Sales, Asia Pacific, Dialogic
“The likely launch of 3G services would happen during the Beijing Olympics. Since Chinese customers have disposable income, it would be a major breakthrough in China”

Indian Roadblocks



Policy Issues: In India, just over 30% of the population is exposed to

cellular mobile signals. So, the first priority will be to cover the remaining

70% with cellular services and then look for a 3G market. Availability of

sufficient spectrum is a major issue for 3G technology to grow. The regulatory

and pricing policies depend on the availability of spectrum. Entrepreneurs will

have to take decisions on a variety of technologies with regard to the nature of

demand in India, possibility of rural coverage, cost of available handsets,

interconnection and regulatory issues. The regulators should not adopt a

fragmented approach for framing policies. Similarly, the licensor should keep

spectrum charges to a minimum, so that the new technology will help in expanding

to rural areas.

TRAI'S latest recommendations suggest a minimum of 5 MHz radio frequency for

3G services, apart from an additional spectrum in the 1800 MHz, 900 MHz and 800

MHz for both GSM and CDMA operators. TRAI has also suggested opening up the 450

MHz band for use in semi-urban and rural areas.

Handset Price: Indian consumers are highly price sensitive. The problem is

that 3G devices and services are typically part of the premium (high-price)

services in developed countries, while they have to be offered at very

affordable prices if they are to take off in rural areas. The cost of handsets

has traditionally been a major deterrent in easy adoption of 3G. In a

price-sensitive market like India, it becomes even more relevant and should be

considered before rolling out ambitious 3G plans. A mere 10% of handsets in

India are 3G compatible. Though few handsets are starting at Rs 4,000, there are

currently no products available in the sub Rs 4,000 range. People, especially in

rural areas, cannot afford such expensive handsets.

LG Electronics offers low-cost handsets for 3G mobile phone networks. The

handset will cost around $100, breaking through an important price barrier which

is expected to boost sales of 3G phones. Most 3G phones are currently much more

expensive. Slow sales of devices have held back usage of 3G network services

such as mobile Internet, email, and video. There are already more than 120

different HSPA handsets available worldwide and that figure is set to rise

dramatically as operators rollout new models for the peak Christmas season in

Europe and the US. Vodafone, for example, has announced that it will add ten new

HSPA models to its handset range. Globally, prices of 3G handsets are declining

and by 2008 the prices of 3G compatible handsets are expected to be half.

The Way Ahead



3G may be an attractive proposition in revenue generating urban areas, but

if it fails to tap the rural market, it cannot be the way of the future, given

that the largest part of our population lives in these areas. The most

propitious benefit of 3G would be bridging the digital divide between urban and

rural India. WCDMA/HSPA technology can be a major catalyst for social and

economic empowerment in the developing region, helping to bridge the digital

divide and increase productivity and quality of life.

Arpita Prem



arpitap@cybermedia.co.in