3G is coming, sort of

If you catch a flight from India and head east for five or six hours, you will find yourself in countries where people do very strange things with their mobile devices. Even though Steve Jobs hypes up the iPhone 3G in the US, such a device would be seen as ancient in Japan and Korea, the two most hyper-evolved mobile markets in the world.

But then, others argue that those two countries use different communication systems. So, a bit closer to home, one can travel to Hong Kong where the Global System for Mobile (GSM) communication is the dominant standard.

And here, 3G has dramatically changed the environment. People can easily watch streaming television on their mobile phones, thanks to the city’s mobile operators installing High-Speed Downlink Packet Access (HSDPA) networks. Data-cards, which one can attach to the USB port of a computer, can receive high-definition streaming movies that users can pause and restart anytime.

So, will all this also happen in India? It’s unlikely, at least in the immediate future. Mobile operators admit that the first spurt of 3G usage will come from “power users”, subscribers who already own HSDPAcapable handsets such as the Nokia N96 and iPhone 3G and subscribe to existing data networks. However, unlimited data subscription plans already cost upwards of Rs 500 per month on all mobile networks. With the government hoping to milk the 3G auctions for all that they are worth, such data plans on 3G systems can easily cost in excess of Rs 1,500 per month.

How will the 3G auctions work? Everything you wanted to know but didn’t know who to ask. Only companies that already hold a Universal Access Service Licence (UASL) can take part. New entrants can participate in the 3G auction only if they fork out Rs 1,650 crore for a UASL. Government will auction four licences in 20 of the country’s 22 telecom circles; the fifth licence will go to BSNL. In Delhi and Mumbai, there are only three 3G slots each; one will go to MTNL. Reserve price for an all-India auction set at Rs 2,200 crore. Spectrum is scarce, particularly in Delhi and Mumbai; so bids for an all-India licence may cross Rs 10,000 crore.

Data-cards will also be a major driver of 3G penetration at least in the early months, but prices are expected to be fairly high. Their appeal, thus, will be limited to only a small sliver of the potential market. Mobile operators unanimously agree that the biggest driver for 3G in India will not be data, but voice. Networks that run on HSDPA technology are approximately 10 times more efficient than existing 2G networks that operate on Enhanced Data rates for GSM Evolution (EDGE) technology in cities like Delhi and Mumbai.

“3G devices are already available at the $25-30 (Rs 1,075-1,290) price point; this should help 3G penetration,” says a spokesperson for Airtel, the country’s largest mobile operator.

The evolutionary chart for mobile technology, which is looking at Long-Term Evolution (LTE) networks, will be several times more efficient than HSDPA networks. The reason why data will not be a killer application in India just yet is not because people do not want to use data, but a clear lack of useful and easy-to-use applications. There are several applications in the mobile payments space in India right now, but most of them can be painful to use. Data from TRAI indicates that more and more people are accessing the worldwide web from their mobile devices in India, but still only visit a small number of websites.

Both applications and mobile devices will need to evolve if 3G is to take-off in India. There are contentions that Mobile TV will be one potential killer application on 3G, but streaming TV is a wasteful use of painfully scarce 3G bandwidth and radio frequencies.

There is also the issue of royalty payments and the deployment of a return path system, which will allow users to interact with TV on the mobile. However, if Mobile TV does take off, it will spawn a whole new generation of Mobile TV film-makers. “Mobile data consumption will spawn a whole host of new and innovative services. It will be fascinating to watch,” says Google India Managing Director, Shailesh Rao.

—Kushan Mitra