3G to boost communication ecosystem in India

India has witnessed the highest growth rate of mobile subscribers, registering 49 per cent growth in the period 2009-2010, and with the advent of 3G, the telecom industry and mobile services are only expected to see an upsurge. The 3G and BWA spectrum and the advent of WiMax and LTE based 4G technologies will play a crucial role in shaping the Broadband industry in India. The Indian mobile market is still voice intensive and is the major source of revenue for operators. In this context, voice based 3G services will see greater acceptance.
According to Anand Rangachary, managing director, Frost & Sullivan, South Asia, Middle East and North Africa, “The pricing wars in India have put pressure on ARPUs. This coupled with high churn rates and falling voice tariffs means that a wireless data strategy will be essential for operators going forward.”
A successful 3G business model would require a portfolio approach to 3G services. It would involve expanding the set of applications and services, exploiting new trends that expand the addressable market and ARPU potential, and adopting a clean-slate approach to avoid repeating the mistakes of other developed market operators. The ability to provide a richer portfolio of applications and services will enable improvement in data ARPUs.
Introduction of 3G/BWA has opened a huge market for equipment vendors, content providers and smartphone providers. Smartphones are changing consumer behavior like never before by enabling consumers to access the internet via mobile devices. The smartphone volume for 2009 was 2.4 million units; growing at a CAGR of 39.20 per cent for the period financial year 2010-2016.
The success of the smartphone as a consumer device has fundamentally improved the ease of use and access of 3G services. The 3G opportunity increases with the options of handsets, dongles and other devices.
Emergence of third-party application stores that provide a greater revenue share to developers and enable consumers to access a greater variety of applications would be a crucial tipping point.
Operators are evaluating partnerships, and outsourcing opportunities to roll out their network and services, and this provides a tremendous opportunity to equipment providers.
The VAS market for 3G in India is expected to be $1,260 million (more than Rs 5,860 crore); and will grow at a CAGR of 21.70 per cent during the financial year 2010 – 2016. Applications that enable video conferencing, gaming, social networking, instant messaging, mobile TV and convergent communications, which are consumer centric services, would show increased traction. The adoption would be evident even amongst enterprises.
Enterprise mobility is one such area, especially since enterprises are becoming increasingly aware of the mobility advantage to their organisation in terms of increasing productivity and decreasing operational cycles. Operators who have data centric state of the art 3G networks will be best positioned to capitalise on this emerging growth segment.
Another potential area is mobile marketing and advertising; though it is not very effective yet, marketers are anticipated to spend increasing amounts of money on marketing through the mobile medium.
The delay in allotment of 3G spectrum to operators was a major hurdle to the rollout of services in the country. Also, the Information and Broadcast (IB) ministry has asked all telecom operators to demonstrate that 3G services can be monitored, intercepted and blocked, before they roll out services.
Besides, the Government of India’s recent stance on the network security threats and the halt on fresh orders, has affected the sales of not only the Chinese equipment manufacturers but also those of Western vendors. While there are roadblocks in rolling out 3G, the fact remains that 3G will bring the next wave of revolution in telecommunication and will strengthen India’s economy in the near future.
The above stated conclusions were drawn from the recently concluded 2nd Annual GIL 2010: India – The Global Community of Growth, Innovation and Leadership, organised at The Leela Palace, Bangalore by Frost & Sullivan.
The Congress, besides focusing on various chief executive officers’ perspective on telecom growth, had specific industry think tank sessions and several panel discussions that were held in parallel. The Information and Communication Technologies think tank focused on 3G – Transforming the Communication Ecosystem.