29 thoughts on “India Getting Ready For 3G Wireless Broadband”

  1. This post warrants a second look. I have always gotten the impression that competition is good from your view point. Reading this, there is a mixed message — “is DOT killing the golden goose” — whats up with that? Low prices and proliferation of mobile services will benefit the consumer, the flow of information and hopefully the society at large.

    May I suggest you pick a stance and stick with it. Trying to play it both ways does not suit you.

  2. Om, nice post. Thanks for sharing.

    Could you elaborate on the “killing the golden goose” piece please. Do you mean the gov’t is losing a source of future revenue by licensing all the spectrum in one shot? I get that.

    If there was another meaning please tell.

  3. “by introducing so many players in the market, is DOT killing the golden goose?”

    I don’t think so . on the contrary DoT is trying very hard to ensure that there is enough competition in telecoms space here. Problem is that its such an capital intensive business that without very deep pocket its practically impossible to sustain.
    Thanks to little smart phone penetration [ No Subsidized handset here ] Only avenue for Growth for telcos is in voice that too in bottom of pyramid [rural market] and here also much of the growth is in terms of customer acquisition not ARPU. So this is not a game for faint hearted .

    all this chatter about recently issued additional license is a bit misleading . because eventually most of these guys will sell /lease their spectrum/ Nw to the Big Guy . market will eventually consolidate to 3 or 4 Telcos only .

    with election round the corner it make sense to start making noise about 3G .it create a impression of progress and feel good . Plus its a good hook from a fund raising perspective as well .

  4. I think you hit the nail on the head. How can so many players be profitable in such a low ARPU marker. I think there will be a shakeout sooner rather than leter. Old entrenched players like Bharti Airtel, Vodafone, Reliance etc will survive. They will also have an inherent advantage in faster rollouts because of existing network. The newer players will be bought by existing players only of they allow spectrum to be transferred. But that is also a regulatory hurdle to buyouts. Lets hope that they atleast have a 3G policy and start releasing spectrum for 3G. This policy change abouts have been going on for 2 long. Lets keep our fingers crossed for 3G in India

  5. Om, where did you get the information about the “profits even lower” bit? If you will check, you will see that prices are low not because margins are, but because of extremely low capex and low spectrum prices. From http://www.telecomasia.net/article.php?id_article=7527, “…even as ARPU is low, EBITDA margins are high”

    Prices are low, but what consumers get is even less. Ever wondered why simple reselling is disallowed, and value added Internet services such as VoIP so heavily restricted? Indian telecom regulations are friendly towards large private players and seek (almost solely) to uphold their margins. Cronyism is creating oligarchies in India, most of all in telecom. Please dont forget that the largest ministerial scams of the past decade all involve telecom ministers.

    By joining the chorus of the Indian telecom establishment, you do a disservice to Indian consumers and to probity in India.

  6. What makes you think no one is making money? Four of the top 6 players are listed (Vodafone in the UK) and we know they are making seriously good money (EBITDAs in excess of 40%).

  7. @bunty you are very write about the profits. Om the EBITDA margins of the big operators are very high. Airtel has quarterly profits of almost half billion dollars with ARPUS of less than $9. Their EBIDTA margins are also very high. But they have the first mover advantage. Infact BSNL (government owned) and Airtel are the only 2 operators with licenses in all circles. Even Vodafone, Idea and Reliance have good margins. Maybe in Dollar terms their profits dont match up to Verizon / AT&T but they have solid margins and huge growth also.

  8. Om,
    Shyam Telecom won a license that covers almost all states. They are believed to be building a CDMA infrastructure. As you may know CDMA is the most efficient use of spectrum. I will not be surprised if AT&T or France Telecom buys Bharti. If that happens during Randall’s reign – it will be syonara for him

  9. Om,
    India has atleast 6 deep pocket players of which atleast 4 are making big profits. If any comp goes in trouble there is always M&A. So I believe in long run having 10 players will be a smart move.

  10. @WhiteEagle

    Explain why having 10 players is going to be a smart move?

    @Bunty, your comment “the chorus of the Indian telecom establishment, you do a disservice to Indian consumers and to probity in India.” Dude what the hell are you talking about? If anything I am challenging the establishment going too far. Six players might be nice – not 12-or-15.

  11. A MVNO such as Voce in the US could actually work in India – Voce offered high end phones, and concierge services at prestige pricing (this strategy later changed and they then went bankrupt) – as labor is dirt cheap in India the MVNO could become a one-stop-shop for all services and offer users phones other than the typical Nokias that now flood the market and hence give users a unique experience…

  12. Hey Sar, iPhone 3G is going to be launched in India on the 22nd August 2008 and would cost Rs.24000($570).

    Om, if 3G happens in India by this year end, iPhone would become a runaway hit all over India.

    We all have been waiting for 3G to happen this year, provided DOT allows it.

  13. The only MVNO that would work in India is a prepaid one. Voce would be a total disaster. There is cheap labor all over the world (e.g. LATAM, China), yet none of these so-called premium MVNOs have launched successfully. If you’re a wealthy Indian, you’d want the best technology, and that is most definitely an iPhone tethered to a 3G network. A prepaid MVNO geared towards the youth market would make a lot of sense.

  14. CBE: prepaid is how Virgin began in the UK. And the youth market is what they are after in partnership with Tata. But curiously it is not labelled as an MVNO apparently, in India.

  15. yep,virgin is the ‘youth brand’ of TTSL apparently (calls its ‘brand franchise’).
    MVNO wasnt allowed or regulations were not clear enough.

  16. @Leo: can’t understand why TTSL would pay Virgin for ‘brand franchise’; ought to be the reverse! Virgin has just around 4 million users in the UK.

  17. HI,

    I don’t see why there is so much uproar about this issue. Being an IT hub, it is quite obvious that India needs a 3g spectrum desperately, any delays being nothing less than detrimental. TO OM, about a year back, a report mentioned that the Govt was in a fix over the wimax vs 3g issue, which was the sole reason of the delay. Your views on this issue and Wimax as an alternative please.

  18. I bought an apple iPhone-3g recently. But I would like to share – without 3G spectrum available for users in India nothing much can be used out of it specially in case of using the self tracking system and nevigation.

    New I saw that India is all set to launch the 3G spectrum through various market players. Again it is a matter of worry that how this service will be priced specially in a case when market players are depicted to be 4 or 5 in Delhi/Bombay or in any particular circle.

  19. Hello Malik,

    Sorry about my english. I read your comment and need some help about getting internet during my trip in India (from décember, Bombay and south, goa, kerala..).
    I have a laptop 4 years old with wifi inside. Means that i can browse internet with wireless connexion from tourim offices, McDonalds for example. But what about in India ? How should i do in order to surf the internet overthere ? I thought about a kind of a 3g network with a usb key i would buy there, but i am not too much into latest technologies…So if you have any ideas, it would be kind from you if you could send me some links.

    Best regard, Olivier.

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