Defining The Road Ahead

Stakeholders of the telecom industry discuss issues relating to policy,
global success stories, India strategy, and content at the fourth CEO Conclave
2005

The
unprecedented boom in telecom services in past couple of years can be attributed
to the tremendous growth in mobile services. As the market matures, telecom
operators face new challenges, as sustaining current high level of growth may
not always be easy. On the other hand, customer expectations and demand for
services including data services and other bandwidth hungry applications such as
video clip, mobile TV etc are increasing. There is an immediate need of ensuring
the availability of additional spectrum for the growth of mobile services. Thus
it is time that the Indian telecom players start considering 3G as a potential
technology for future telecommunication. VOICE&DATA took up this issue in
its fourth CEO Conclave, which was held in New Delhi on December 1, 2005.

Representatives from
various segments of the industry came together to discuss major regulatory and
commercial issues related to 3G technology.

Dr DPS Seth, member (Technology and Services), TRAI

The conclave began
with a keynote address by Dr DPS Seth, member (Technology and Services), TRAI.
He raised important issues related to the impediments in the process of
introducing 3G in India and cause of its success internationally. Shedding light
on the Indian mobile market, he said, “In India just over 30% of the
population is exposed to cellular mobile signal, so first priority will be to
cover the remaining 70% with cellular services, then look for 3G market
there.”

He compared the demand
of data centric services in rural and urban India and reiterated that rural
areas were a potential market for data services provided they are offered at
reasonable prices.

Defining the role of
the government and regulator, he stated that in India presence of a number of
parallel or competitive technologies has led to lot of uncertainty in choice of
technology for applications. “The role of the government or the regulator is
to ensure that regulatory and licensing policies should be technology
independent and leave the choice of the technology to the entrepreneur”, he
said.

Availability of
sufficient spectrum is the major issue for 3G technology to grow. The regulatory
policy, pricing policy all depend on the availability of spectrum. He said,
“Availability of spectrum is important as the policies that we adopt will
depend on it, if we have plenty of spectrum, the policies can be very liberal
and in opposite case the choice of service provider and pricing will have to be
decided carefully.”

He emphasized on the
importance of the next few years for the entrepreneurs and the government, with
respect to 3G technology. “The next few years are important for the
entrepreneurs because they will have to take decision on a variety of choices of
technology in lieu of the nature of evolving demand in India, possibility of
rural coverage, still maturing technology in 3G area, the cost of available
handsets. Interconnection and regulatory issues etc. They are important for
government because wrong policy decisions can lead to not adequate pickup on 3G
technologies,” he said

Session I: Regulatory
Impediments

In the first session, the panel discussed issues such as regulatory
direction related to 3G, allocations of 3G spectrum, availability of spectrum
for operators, spectrum allocation versus revenue share, market creation for new
technologies, issues pending with regulators, and global regulation.RN Agarwal member, Radio Regulations Board, ITU gave a
historical background on 3G technologies and the bands identified in the radio
regulations. He said, “A single frequency band which could be globally
harmonized could not be identified in WPC 2000 thus a solution of three
frequency bands with the flexibility of usage to administrations was devised.”

TV Ramachandran,
director general, COAI stated that in seeking regulatory directions we should
learn what went wrong in other countries. The learning for India will come from
2G policies, which needs to be replicated. New players should not be allowed
without catering to the needs of existing players. The existing players should
be given free entry, which will lead to growth in the market and decrease in
tariffs as in 2G. He said, “Giving license to existing players will lead to
seamless transition from 2G to 3G services.” The requirement of globally
harmonized bands, which will increase the bargaining power of vendors for
equipment, was emphasized. The rural areas bandwidth should be utilized as data
services and demand is high there and BPO companies also hold a potential for 3G
technology. He said, “3G is relevant to India now and it's a chance for us
to beat China.”

JP
Garg, principal advisor, Telecom Nokia India, discussed the drivers and
enablers, which are changing the communication scenario such as growing customer
expectations, convergence of networks and services, and growth of rural economy.
He said, “Interconnectivity and interoperability are the issues that have
taken up our time in 2G and 2.5G and they are expected to pose much serious
problems in 3G.” The importance of IPR, security, privacy, and legal aspects
were discussed.

Success Stories:3G has made a comeback despite being written off (L to R) Delphine Reffet, business program manager, SGBU, HP; Sanjay Singh, VP engineering & GM, Dilithium Networks; Prof V Sridhar, dean research and consulting and professor, Information Management, MDI; Swami Krishnan, chief marketing officer, Sasken Communication Technologies; Deepak Maheshwari, secretary, ISPAI

Parag Kar, director
(Government Affairs), Qualcomm, defined 3G and elaborated the mindsets of the
international bodies with respect to this issue. 3G is a business enabling
technology and the regulator should allow 3G to help businesses get rid of
constraints impeding business growths. He said, “We have spectrum constraints,
constraints of teledensity and providing business services.” For consumers to
get benefits of the technology, level-playing conditions should be ensured to
create a competitive environment in the market place. The regulators should not
to take fragmented approach for framing policies.

Rakesh Mehrotra, chief
officer, Corporate Regulatory Affairs, Tata Teleservices, indicated the advent
of convergence and questioned the logic of issuing new licenses when existing
licenses allow voice and data. Distinction can be drawn between in band and
out-band services, which require different allocation of spectrum. He said,
“Frequency allocation should be done in a band where equipment and handsets
are easily available.” He expressed the view that vacation of spectrum is
important but not at the cost of national security. Content availability was a
major issue and numbering and portability also will come and play around.

Biswapati Choudhary,
director, WMO, Government of India and chairman, ITU- Working Party on spectrum
Management Methodologies, raised the question, “How we look forward?” He
said, “Harmonization is not being done today. A spectrum manager must look to
accommodate all the technology and service. Management positions should also be
changed according to availability of spectrum. Problem areas should be
identified and classified and rules should be framed accordingly.”

Rajat Mukarjee, vice
president Corporate Affairs, Idea Cellular, said it was a long way to reach the
objective of government to achieve 250 mn subscribers wireline and wireless by
2007. He said, “Whatever policy changes need to be made should ensure addition
of subscribers on a month-on-month basis. The present users have to be asked to
vacate the spectrum and it has to be made available for the areas where it is
required.” The cost structure around the industry, which make-up a heavy cost
base-needs review. Interconnection points have to be developed in a faster way.
He said, “All players must be treated equally. We are still at the mercy of
the incumbent for virtually everything.”

Session II: Global Success
Stories

The panel dwelled upon the issues such as learning from global
regulations, opportunities in voice and data, various business models, market
creation for new technologies and successful case stories.

On the issue whether
3G would flourish in India as it did abroad, Sanjay Singh, VP engineering and
GM, Dilithium Software Technologies India, stated that 3G had made a comeback
last year, after people had already given up on it.

mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA">Strategies: Availability of spectrum is important for 3G (L to R) Rajiv Gupta, CEO, Oxigen; BM Khanna, ex-CMD, MTNL; SD Saxena, director (Finance), BSNL; CS Rao, CEO, Lucent Technologies; Don Price, CTO and director, Bharti Cellular

He said, “The main
drivers for 3G technology are converged devices such as camera phones, fixed
broadband prevalence, need for anywhere anytime content, adoption by youth, and
availability of enabling technology.”

Swami Krishnan, CMO,
Sasken Communication Technologies, talked about the pricing of the 3G services.
He stated, “DoCoMo gets around $1000 over three years. This is the base
required for good coverage, good ecosystem, handling pre-specification
fragmentation and content delivery.” Thus in India, the mix of both flat rates
and premium for VAS is required.

Deepak Maheshwari,
secretary of ISP Association of India, reiterated the need of getting more
spectrum allocated by vacating the existing users. He said, “Worldwide the 3G
experience is very basic, as the operator wants high ramp up and the customer
expectations are very high as they pay higher prices for the services.”

Delphine Reffet,
business program manager, SGBU, HP, emphasized the need of creating an
ecosystem. She said, “Nobody is sure which service would be successful thus
they need to be designed as per the market. Branding too is interesting; as the
consumer has to be educated first for the technology and then brands play will
come in.” She also emphasized that cost is an important factor.

Session III: 3G Strategies
for Indian Service Providers

The third session deliberated on aspects such as business models and
successful strategies, technology roadmap and road blocks, integration and
interoperability issues, the convergence game plans, growth strategies,
reinventing capex cost structure, roll out and cost factor for services and
handsets.

BM
Khanna, ex- CMD, MTNL, said 3G is here to stay. CDMA 2000 and GSM-based
3G services will grow in India. He raised the issue of constraint of bandwidth
and how to manage it. He said, “The CDMA 2000 based 3G services as per IMT
report had 150 mn subscribers mostly in US, Japan and Korea and GSM based
service has only 90 mn”

In the rural scenario,
3G will cater to e-agriculture, e-governance, e-health and e-education so these
services can be included in the plans while formulating the policies. The need
to have a time bound plan for vacation of spectrum by defense for 3G to be
introduced in India was also emphasized.

Don Price, CTO and
director, Bharti Cellular, said that the need was to stay in globally harmonized
IMT 2000 band. Service providers are comfortable in today's regulatory
environment, as it appears to be a level playing field. He said, “We have
surpassed the benchmark for extra spectrum and at some point the quality of
service may suffer. Customers are demanding higher data services and we remain
very bullish on 3G.” Introduction of 3G networks by March 2007 should be
realistic, he stated.

CS Rao, CEO Lucent
Technologies mentioned that to exploit the technology capability of 3G with the
highest spectrum efficiency, we need to achieve the higher teledensity in the
metro areas and concurrently achieve the growth from the tertiary areas of the
country. “Additional application to be delivered at affordable prices is
another model operator need to be addressed,” he said.

He also raised certain
important points such as, affordability of 3G handsets. Concurrent growth of
cheap voice, evolution of a common IP core is important for adoption for 3G
services. Affordability of technology is important in capex sensitive country
like India.

Rajiv Gupta, CEO,
Oxigen Infovision, highlighted the consumer standpoint on 3G. The 3G devices are
going to be high end. Thus the target consumers need to be chosen carefully. He
said “The whole idea of 3G is great, because the capability of the service is
going to be data one has to think with a data and not voice mindset.”

SD Saxena, director
(Finance), BSNL, talked about the challenges faced by BSNL in expansion of GSM
including 3G.

He said, “We'll
use spectrum freely as we are not charging from customers, the tariffs are
touching rock bottom in India and the 3G networks should not be auctioned.”

Session IV:
Content-Enablers and Opportunities

The fourth panel discussed issues related to content enablers and
opportunities.

Putting forth the
content developers' view, Sukanta Dey, director (Telecom), Times Internet
said, “With the mobile screen, we could move anywhere and get voice, data and
entertainment anytime. He explained the relevance of 3G or 4G technologies, as
they will bring to life what we see on the mobile.”

mso-fareast-font-family:"Times New Roman";mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA">Content: Entertainment is the DNA of 3G (L to R) Sukanta Dey, director (Telecom), Times Internet; Vivek Kumar, Jt DDG, New Services, BSNL; Taron Mohan, CEO, Phoneytunes; Ibrahim Ahmad, Editor VOICE&DATA Eric D Collins, VP Sales, Marketing, Business Development, AOL Mobile; Sanjay Goyal, CEO ACL Wireless

Voice portals have
also become a big success. With 3G the rich voice delivery will be cheaper.
According to him, “Games have high usage but low penetration, the killer
application for 3G would be the two ends of the spectrum dominated by
entertainment. Music will be the biggest driver at one end and enterprise
solutions at other.”

He was of the view
that consumers will buy branded products and the developer will have to build a
B2C brand. Freshness of content has to be maintained and formats need to be
developed. Moreover 3G will enable better products at relatively lower cost.
According to him, “Voice is going to be almost free so bundling of voice with
was will be done by the operators.”

Taron Mohan, CEO
Phoneytunes.com believed that 3G would enable convergence of TV and handsets. He
said, “Content for 3G has to be mobile specific and not a reproduction of
TV.”

Eric Collins,
executive VP Sales, Marketing, and Business Development, AOL Mobile, stated that
developers are not keen on pushing content into the mobile space as the chunk of
the revenue goes to mobile operator. He stated, “It's more favourable to
work as an enabler of content and support the applications.” The challenge is
also to create a profitable business model for content providers.

Sanjay Goyal, CEO, ACL
Wireless stated that the most important thing is that 3G provides the right
environment to deliver the kind of user experience the end user might like to
see. He pointed out, “We are not sure that we will be able to extract more
revenue from the end user more that we do now. New applications and content need
to be developed for 3G.”

Vivek Kumar, Jt DDG,
New Services, BSNL put forth the operators perspective that 3G will bring some
challenges for operators and content developers. He said, “The challenge for
the operators would be to make the service affordable and for content developers
is to come up with applications which would address the needs of the
subscribers.”

The panel was of the
view that until a Business model for 3G content is developed, making money
through content is difficult. “The telcos are marginalizing the developers,
the lions share goes to the service provider, said Mohan. Dey reiterated that
content developers are getting squeezed between operators and IPR.

Kumar on the other
hand said, “The content remains crucial but the owners are loosing control
over it. The content provide should come up with applications which are a
natural progression to what are available in 2G or 2.5G.” He was of the view,
“ The content developers should consider both the sides as even if that they
get less revenue share they can thrive on volume.”

On the issue of killer
applications, the panel was of the view that consumers were excited about chat
and dating. According to Goyal, “We have learnt a couple of things from 2 G
and 2.5 G that music works along with cricket, chat and dating. User generated
content model is what can really bring tremendous volumes for the service
provider and developer.” Video down loads, full track music downloads, sports
and other highlights, news and tragedy, gaming will also gain popularity.

The CEO conclave was
successful in bringing together all industry stakeholders and provided enough
food for thought on 3G: the technology of the future.

Sonia Sharma


sonias@cybermedia.co.in