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3G Services : Is it really here ?

That India's telecom industry is among the fastest growing in the world is no secret. To add to it, as Indians, we enjoy the lowest telephone tariffs in the world. Attesting the significance of telecommunications in emerging India, the recently concluded 3G spectrum auction boosted the exchequer by approximately Rs. 67,719 crores ($15.12 billion). What consumers don't realize readily is that this $15 billion will be recovered indirectly in the form of access fee, and primarily tariffs. If your mobile operator paid Rs. 1o,ooo crore to be able to give you 3G services, there's no way it would be able to let you stream video and have video call conferences with the cheapest tariffs in the world.

In early 2010, Sunil Mittal, Chairman, Bharti Airtel, had commented, "Take the example of Delhi itself, or Mumbai. The amount for spectrum that has been charged is close to Rs. 3,500 crore each ... just to recover license fees and input cost, it works out to be Rs. 700-900 per month," Rs. 700-900 per month doesn't really sound cheap by Indian standards. We're price conscious! However, while unveiling Airtel's new logo late in November 2010, all he had to say was that Airtel would ensure that 3G services are "affordable" (with no further elaboration).

It must be quite a night-mare for telcos that have paid large premiums to be able to be eligible to operate 3G services in a few circles. A tricky scenario is that owing to complications and rising costs, no single operator has been able to bag a nationwide license. Only three operators (Airtel, Vodafone and Reliance Communications) have bagged licenses in the most number of circles - 13. In case you didn't know, the state of India is divided into nearly 24 telecom circles. A direct implication of this is that in case you are critically dependent on 3G for voice-data convergent communications, while on the move your operator needs to have significant tie-ups with fellow operators for roaming.

The only operators to effectively execute this synergy between the urban and rural divide in India are state-owned operators MTNL and BSNL. Where they do take a beating is customer service. As far service availability is concerned, you should go on a road trip through the highways across the nation and experience BSNL's vast and deeply penetrated cellular network. Not very long ago, BSNL used to be 7th largest telecom operator in the world. If you are an existing 2G subscriber with any of the remaining private operators you wouldn't have access to this wide network in rural India. Also given that no operator has a pan- India license, your 3G license will not be seamless when on roaming. Comparatively, GPRS and EDGE services are available in networks across the country.

First hand experience

State-owned operators MTNL and BSNL were the first to launch 3G services. In Mumbai, MTNL has been offering 3G services for over a year, yet the response has been mixed. To get a feel of user experience, we asked our readers about GSM 3G services.

We wanted to know for sure, so we got ourselves an MTNL SIM card. All said and done, we had our share of hiccups in the beginning. It began with the initial recharge. When we called up customer care to activate 3G, we got an announcement that said, "the number you have dialed does not exist." May be that was not the exact start we were looking forward to!

When we sent the required message, we waited for a couple of hours to receive the necessary setting, but nothing happened.

Similarly, Tech Guru community member Prasanna Vathanan adds, ''I'm using BSNL 3G services on my HTC Hero. I'm able to view all mails easily and attachments and downloading is fast. It saves me time as I can view and respond to customer queries instantly, which is painful even on an EDGE network. I tried video calling, but it has a major dis-advantage as you need to keep the phone in front of you and talk with everyone around able to hear you. There's no privacy in video calls. BSNL customer support and data plans are very bad. So waiting for private players to jump-in."

Even our own experience with MTNL seemed to invoke the very same sentiments shared by Vathanan. We would like the Quality of Service to improve drastically, or at least be offered better services by other providers that are waiting to make an entry in this vast market.

The whole nation is watching over this one sector that eased our fiscal deficit by the revenue it generated earlier in the year. It should have been an out-of-this-world experience with video calling and video streaming. We began using 3G services with enthusiasm that was soon washed away as we got used to the technology. We tried asking operators about their plans and tariffs. Surprisingly, 3G announcements were not on their priority. If you'd take a closer look at all developments in the 3G space, it's primarily the same old story - the most you'll get to hear is bragging about winning licenses in x,y, z circles across India.

So far, DoCoMo is the only operator that has gone ahead, launched its services and also announced tariffs that will follow a pay-per-use model. The rest of them seem to be waiting and gauging the market before commenting or even making announcements. They better be worried for once, so that we as consumers could benefit in the long run. There were other events, or plans that seemed far more important. Seems like they're all apprehensive about your reaction to their pricing and it turns out that all operators are following a wait and watch policy. Certainly, if you are one of those that don't mind opting for an operator that doesn't let you connect to customer care when you need it the most (and if you get through to someone who can't really answer your queries) then MTNL is your safe bet.

We spoke to DPS Seth, Member, Telecom Regulatory Authority of India (TRAI) to get a feel of what lies ahead with all the hype surrounding 3G

Q. Tell us about number portability. Will it be a game changer with customers switching operators to get better 3G deals?

A. The general trend the world over is that when you introduce number portability, there is usually a lot of enthusiasm and substantial shift, which later settles down. When that is happening there has to be something which will promote the desire in the heart of the consumer to change. The change itself can also be something that makes the subscriber unhappy about the quality of service. On this front, all operators are in poor shape and on equal footing.

You can expect users to go in for 3G services because these networks will be relatively new networks that are recently installed and will not be congested. Also in order to use 3G services, subscribers will have to procure newer handsets. High-end customers will definitely migrate to 3G, resulting in higher average revenue per user (ARPU). This is something even operators would want, so that they can create some space in the 2G network ¬enabling them to add more customers or ensure better quality of service.

Q. What kind of 3G tariffs do you expect?

A. I do not expect 3G tariffs to be more than the existing 2G tariffs, for the simple reason that at least for the next couple of years, the traffic on existing 3G networks will essentially be voice traffic. As data applications develop, only then will the add-on data charges really contribute towards the ARPU for 3G, over and above the voice contributing component. Essentially, if it's going to be voice- based traffic, tariffs can't be higher than 2G. Otherwise there won't be any incentive for anyone to go in for 3G services. In fact, we have a parallel in the UK. An English telecom operator had begun 3G services with tariffs lower than existing 2G tariffs to popularize 3G services.

Q. Practically, how long do you think it would take for a pan-India implementation of 3G services?

A. The telecom sector is a highly capital-intensive sector. Therefore, operators need to generate revenues and in turn invest capital in further geographical expansions. At least for the next couple of years, operators would be busy with the implementation of3G across states. But, there needs to be some incentive for widespread adoption of 3G, especially in rural areas because there is a dearth of disposable income available for spending on telecom.

Q. Have we taken long to switch to 3G? On a global scale, how would you place India as far as 3G is concerned?

A. "Have we taken long enough" is an understatement. The transition should have happened long ago. We should have migrated to 3G at least four to five years ago.

Q. Several other countries are now moving beyond 3G, by upgrading the data component to HSPA+. Where do you see India going forward? How long do you think India would stay with 3G before moving on to LTE or 4G?

A. It is really not a question of one or the other. The general thinking now is that 3G and LTE will be complementing each other. Both technologies are good for certain purposes. First of all, LTE is not 4G. It is rather 3G+ or 4G- (anything but 4G). The trend is moving towards IP capabilities with focus on data networks. While HSPA networks are optimized for voice, LTE networks are more suitable for data. Unless, there are reasons for users to use exceptionally large bandwidths, there is still a long way to go. What we would eventually witness is a scenario where 3G would handle the voice segment while LTE would handle the data segment. There could really be a harmony or sorts.

How does Spectrum Affect Us ?

A spectrum is a range of electromagnetic frequencies that your mobile company needs to own to be able to beam the network to your handset. This is similar to the FM frequency owned by radio companies. Owning a frequency involves payments of hefty amounts and thereby involves humungous investments even before implementation of costly infra-structure required to begin operations. Given the critical and strategic commercial significance of allotting spectrum, increasingly governments around the globe prefer auctions rather than an apply-and-allocate approach and install time.

The Future ?

Around the end of 2009, Sweden's Telia-Sonera implemented 48 networks in Oslo and Stockholm. With current 8SM networks, you can download at a maximum of 236.8 kbps. Migrating to 38, you'd get a boost to a maximum of 2 Mbps. With 48, it's a mammoth 100 Mbps on your device. That's close to a ten-fold increase than your best mobile experience ever.