Why wireless broadband will be a game changer for India

And so broadband wireless access (BWA) was a footnote, a dull sequel in June
of the high-profile 3G spectrum auction that had brought nearly $15 bn into the
government's kitty in May.

But the bigger story is that wireless broadband will finally happen. And it
will be a game changer for India.

Unlike 3G data, this isn't just for mobile executives. It will drive rapid
penetration of fixed-line broadband in areas outside wire-line reach. Broadband
will ramp up in the year ahead-up fivefold from its abysmal one percent
penetration in India.

BWA, using technologies like LTE ("3.9G") and WiMAX (4G), allows high-speed
internet access, IP telephony, TV and other multimedia services. Unlike cellular
telephony, it is not designed for high mobility, though it can support it. What
it gives you is broadband access where there is no suitable wire-line.

Despite our over 50% mobile penetration, India is really challenged on
wireless data. Wi-fi spans the world, excluding India. There are few public hot
spots outside our offices and hotels (which fleece you, contrary to the global
trend of free wi-fi). Mobile users had to use snail-pace data cards, now
replaced with 3G data modems.

For those who came in late: After picking up nearly $15 bn for the 3G
spectrum auction in May, India closed part two of the auction-for wireless
broadband, at Rs 38,300 crore ($8.5 bn). Bidding for two slots of 20 MHz each of
spectrum across India were the usual suspects: Airtel, Reliance, Idea Cellular,
Aircel, Vodafone and Tata. Anil Ambani's Reliance Infocom mysteriously withdrew.
Vodafone dropped out when the prices "went beyond rational levels".

Poor broadband penetration has held back India. Wireless can help fill the gap

The highlight was the unknown 'Infotel Broadband Services', which picked up
the sole pan-India license of all 22 circles. The ADAG withdrawal mystery was
solved when Mukesh Ambani's Reliance Industries announced its $1 bn buyout of
Infotel. How sweet, said everyone: Anil withdrew to give Mukesh a chance...

Aircel won eight circles, and Airtel and Qualcomm got just four each. Mumbai
and Delhi got the highest amounts, of over Rs 2,200 crore each. With 3G and
broadband, the spectrum auction license fees added up to nearly $23.5 bn for the
government. As with 3G, the government-run BSNL and MTNL had got broadband
wireless access (BWA) spectrum well ahead of the private sector operators, and
they'd have to match the winning bid in each service area.

Cheap Broadband

Now how will the players recover the license fees, along with equipment and
rollout costs? That is the genius expected of Indian operators: In this low-ARPU
market, they have to do it, and still keep their services competitive. India's
short mobile history, since 1995, has shown that they can.

What does all this mean for the Indian citizen?

From the investments, you'd guess: overpriced services. But that can't work.
Offerings have to be competitive with wire-line broadband, so we're looking at
some very long break-even periods. The good thing is that the sole pan-India
player is now backed by deep pockets.

So, by end-2010, we'll see wide availability of true broadband across towns.
Today, even Delhi does not have good broadband everywhere. That will change. And
the bar will move up to 1 Mbps unlimited as the minimum. Airtel's already
selling 4 Mbps unlimited wire-line broadband for Rs 1,399, and others have even
cheaper plans. Wireless broadband has to match those prices. (BSNL now has a Rs
99 rural offer, linked to the USO obligations.)

By end-2010, increased competition and availability will force prices down to
the Rs 299 level for 1 Mbps unlimited broadband, wire-line or wireless. That
will take affordable high-speed broadband beyond the cities.

Poor broadband penetration has held back India's education, government
services, citizen empowerment, and the true progress of democracy. We don't have
the wire-line network to make the big leap. Fiber to the home isn't happening in
the near future, for nine-tenths of India. Wireless can help us jump across that
last mile.

Cheap broadband alone will not drive penetration (just as broadband alone
can't engender democracy, as China has proved so well). It's already there in
major cities and penetration is still low there. We need applications. But I'm
optimistic about the ramp-up, driven by a host of apps, from government services
to entertainment. It's all gradually coming together now.

Prasanto K Roy

pkr@cybermedia.co.in

Chief editor at CyberMedia (publishers of Voice&Data) can be found at www.pkr.in
and twitter.com/prasanto