3G : Filling the Gap

With the launch of the much-awaited 3G policy in India, huge investments are
being planned by almost all major telcos in the country. Significant
opportunities exist for 3G terminal, and network infrastructure providers,
handset manufacturers, technology solution providers and content developers.
Enabling 3G will bring in a major technological shift in India, which would thus
catapult broadband growth in the country.

Telecom majors are ready with their aggressive roll-out plans. Initially, the
operators are likely to launch 3G services in select cities where they expect a
high demand for 3G services, and then gradually expand to other cities and
towns. But the big challenge for operators is to expand the third generation
services to untapped rural India. The general industry perception is that 3G
will bring the next mobile revolution in India as well as bring major changes
for people living in Indian villages.

3G represents the next step in the evolution of mobile telephony, offering
enhanced capacity and efficiency compared to the current 2G technology. For a
country with a population that exceeds a billion, opportunities for 3G services
are immense. India's mobile subscribers base is growing at a rate comparable to
the population of a small country every month, making it one of the world's most
significant mobile markets.

According to Setumadhvan Srinivasan, deputy director, network strategy and
marketing, Huawei, Asia Pacific, "Especially in rural areas, though voice
remains the key application, applications such as e-medicine, e-weather, etc,
have the potential to drive the "village bar" concept, due to the lack of
broadband infrastructure. And this could be served using 3G."

Access to communications technologies encourages social inclusion and
contributes to progress socially, economically as well as addresses
environmental issues. It enables new ideas and innovations to spread more
quickly and efficiently. Today it is widely acknowledged that mobile services
hold great potential to bridge the digital divide. This is mainly because mobile
devices, networks, and services are playing a crucial role in bringing mobility
services and broadband to more and more people-to even those who live and work
in the most isolated parts of the country.

Ajay Ranjan Mishra, Global head, Business development, Nokia Siemens network
says, "To address the growing information demand of urban and rural India, 3G
has a solid foundation and has emerged as a mobile broadband technology. 3G
WCDMA increases network capacity for both voice and data, and mobile and
broadband capabilities. This evolution has increased data speeds significantly
and made the 3G network far more efficient by addressing key aspects of
capacity, power consumption and coverage of far-flung areas of the country."

The opportunities lie in using the latest technologies and adopting a
different approach to deliver affordability and accessibility to rural
subscribers. Service providers can attract a substantial number of new
subscribers and achieve healthy profits by contributing to low total cost of
ownership for their customers.

The 3G Advantage

There are now a number of 3G terminals with advanced functionalities in the
market. With 3G networks, consumers will have access to mobile Internet, faster
browsing, streaming and downloading and business functionalities. Due to the
fact that voice is still going to be the key application for 3G, early rollout
of 3G in rural India is possible.

In a rapidly globalizing economy, broadband networks are essential basic
infrastructure, as vital to economic and social development as networks like
transport, water and power. According to Bharat Bhatia, regional director,
India, SAARC and South East Asia, Motorola, "Users in cities, towns as well as
rural areas are struggling to access information via dial-up connections, and
are already locked out of the full online experience. Without faster access, it
may not be long before they find themselves locked out of the modern world
altogether. This is where wireless technologies such as 3G play a major role in
bridging the digital divide."

"3G will also be in the foreground as far as e-governance is concerned, and
help specific applications for farmers, fishermen and small traders. However,
this is subject to the availability of applications at competitive prices, since
the cost per hertz for 3G is expected to be higher than 2G, and so will be 3G
services," he adds.

Talking about the services likely to be offered in rural areas through 3G,
Rajesh Chandel, deputy general manager, marketing and business development,
Alcatel Lucent India says, "Top on the list will be voice and mobile Internet.
High-speed networks like 3G will also facilitate utility or G2C applications on
the lines of e-gov, telemedicine, etc. There is huge potential for entertainment
services in rural areas based on TV, Bollywood and cricket content."

3G will see a wave of utility options in marketing and distribution of
agricultural produce, as it would result in having access to the nearest
markets, real time updates of market prices, and elimination of middlemen and
thereby rendering their business commercially more viable.

"Wireless broadband by way of smart click Internet café, village bars, and
smart click vans may become the delivery mechanism for e-education, e-health,
etc. In terms of e-weather forecast, stakeholders are able to receive real time
updates on weather conditions, accompanied by useful tips from experts on how to
manage the produce for the coming weeks," says Srinivasan of Huawei Asia
Pacific.

In the emerging markets, the need is at two different levels: the urban
level, where consumers are evolving as mobile user experience by using more data
services; and the rural level, where there is need to reduce the overall total
cost of ownership to drive adoption. 3G technology is evolved to address both
these needs simultaneously.

Commenting on the same, Mishra of Nokia Siemens Network says, "Driving a
holistic 3G evolution, we are trying to ensure that radio evolution improves a
consumer's service experience in multiple ways. The key benefits of 3G are
enhanced voice capabilities; higher data speeds which will enable faster
delivery of richer services; a decrease in power consumption for data
applications leading to lower network power costs; increased battery life in
handsets; and lower latency leading to improved data rates and greater
efficiency."

Major Bottlenecks

The next mobile revolution will primarily be in the rural segment, and hence
it is important to ensure that the user experience is simplified in terms of
services, tariffs, and content. 3G network rollout will undoubtedly enhance data
service offerings of the operators, but this is required to be clubbed with an
innovative model to ensure adoption of services.

Explaining the challenges associated with taking 3G services to rural India,
Chandel says, "The rural market poses a big challenge because of low user
spends. Localized content offering at a nominal price is one of the key factors
for 3G services adoption. Initiatives like e-gov can only be made successful if
relevant content and applications are made available."

As coverage will be a major issue in rural areas, usage of lower frequency
bands could be a better value propositions for operators, though these spectrum
bands are still not available or released by the government for the ensuing 3G
auction process which shall be around the 2100 MHz band.

According to Setumadhvan Srinivasan of Huawei, "Alternative sources of energy
and their viability is a key challenge to tackle the power shortage issue.
Besides, other key challenges in terms of low ARPU, adoption of new technology,
detailed counseling, servicing of networks and terminals and timely revenue
realization are some major points to ponder."

Nokia Siemens Networks is working toward increasing rural connectivity in the
country. The company's energy efficient solution based on flexi-base station is
reducing energy consumption of a base station site, and total cost of ownership,
to make rural telephony a reality.

Deployment and rollout of 3G services in India may not change many things in
one go. There will be teething issues and it will be a while before the dream of
a connected rural India, where farmers use mobile broadband to see weather
forecasts in their region, comes true.

Though a surge in mobile and Internet connections in rural India is
necessary, the fact that mobile penetration is fairly high will make adoption of
3G applications easier.

Arpita Prem

arpitap@cybermedia.co.in