3G mobile bills may be too hot to handle
For those of you pinning hopes on 3G for downloading movie content and making video calls, here’s a party pooper. The third generation (3G) mobile services may not be an easy experience.
By Rashmi Pratap, TNN |
MUMBAI: For those of you pinning hopes on 3G for downloading movie content and making video calls, here’s a party pooper. The third generation (3G) mobile services may not be an easy experience.
The prices will be steep enough to discourage most 3G enthusiasts and it could well be a three-four-year wait before it becomes affordable and successful in India, analysts warn.
3G refers to the communication procedures and devices that will improve the speed and quality of services on mobiles. 3G-compatible handsets combine the functionality of a mobile with that of a PC and a personal organiser/PDA.
According to Nick Ingelbrecht, research director, Gartner, 3G is unlikely to be a success in India at least initially. “Assuming commercial launches in ’07-08, we envisage 12-15% of the subscriber base will be connected to W-CDMA services (a 3G standard) by ’10-end only,” he told ET.
The high pricing of 3G-enabled handsets will be a major deterrent even after the services are rolled out because India is a price sensitive market, said Rekha Jain, telecom expert and coordinator at the Centre for Telecom Policy Studies, IIM, Ahmedabad.
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As for services, Mr Ingelbrecht said it was a competitive issue. “We do not expect video telephony and premium data services to drive mainstream adoption in the mid-term,” he added.Data (GPRS) services contribute around 1% of Indian operators’ total revenues, questioning the viability of a full-fledged 3G launch in the country. Voice telephony remains the key application for mobiles and 3G usage is growing also more for enhanced voice capacity than data applications.
According to Alok Shende, director (technology), Frost & Sullivan, Asia is still largely a 2G market. China has not moved to 3G despite witnessing fast growth in telecom.
Only markets with high mobile penetration have launched 3G. In Hong Kong, where mobile penetration is more than one per person (113%), 3G players are making losses. In Japan, which is only on 3G, penetration is 69%, while in India, it is just around 10%.
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Also, in countries like the UK, Sweden and Germany, 3G subsidies are as high as 90%. It will be very difficult to replicate these kinds of subsidies in India, making 3G a non-starter. Of the 28 3G-enabled handset models presently available in India, the lowest priced mobile comes for around Rs 12,000. Pankaj Mahindroo, national president, Indian Cellular Association, said, “We are terribly confused about 3G. What you see as 3G handsets are mobiles laden with great software and applications. However, people will be willing to pay significantly higher prices for 3G services only if it suits their requirements.”
Burdened with high spectrum charges, in case the government adopts the auction route, operators will be forced to pass on the cost to users. This will make 3G costlier and less popular.
“The competitive dynamics will determine when and how those costs are passed on to end users, but inevitably they have to be recovered or the operator will go out of business,” Mr Ingelbrecht added.
Also, the auction of spectrum led to the telecom meltdown of ’01-02 in Europe. India could well witness the same if it proceeds with 3G without caution, say analysts.
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