India's 3G auction, which kicked off on April 9 after a delay of over a year, is more than just incomprehensible numbers and tech jargon. Beyond added features on your mobile phone, the 3G story carries the potential to impact more citizens socially and economically than any other single policy move in India's telecom history. The exercise has huge implications for the public purse, for telecom operators and for policymakers. Being a high stakes game - with a revenue target of up to Rs 50, 000 crore set by telecom minister A Raja - the developments are also laced with political intrigue and high backroom drama.
For starters, 3G is the third generation of wireless mobile technology - a revolutionary step ahead of the existing 2G services we are used to. It essentially pushes broadband growth helping in the proliferation of information and vital communication services. In 132 countries across the world, it is enabling the convergence of mobile communications, computing and consumer electronics. Now it is set to introduce Indians to the cellular world of rich voice, super-fast connectivity, customised infotainment and high-resolution videos.
And you won't have to break the bank for all this - competitive market forces will ensure that the price of 3G services is pegged at par with prevailing 2G tariffs for voice and SMS. "If operators launch 3G services at high prices, they will be saddled with empty networks. It is in their interest to promote usage though lower prices. This will also compensate consumers for higher costs of 3G handsets, " says Kunal Bajaj, director of Analysys Mason, a global telecom consulting firm.
There are other significant aspects of the arrival of next-gen telephony in India. Within four years, mobile handsets will connect nearly 800 million Indians, making it the largest connected group of humans anywhere in the world. The experience and benefits of 24x7 superfast connectivity will change the world of millions of Indians.
Even as high-speed data access makes urban office-goers more productive, the experience will be far more life-altering for rural consumers. Telecom operators will be forced to roll out networks in yet unserved territories to recover additional 3G spectrum costs. The technology is expected to bridge the urban-rural digital divide. Access to 3G mobility will address policy concerns by delivering essential services like financial, healthcare and education.
"2G networks are already playing a vital role in expanding access to essentially voice and valueadded SMS services. India's adoption of 3G will further improve the level of tele-density, especially broadband penetration. This, in turn, leads to enhanced GDP and job creation opportunities, " says B K Syngal, senior principal at Dua Consulting and former VSNL chairman.
Several studies, including one by the International Telecommunications Union (ITU), indicate that every 1 per cent increase in the country's broadband internet penetration increases GDP by about 10 per cent, while a similar increase in mobile penetration increases GDP by roughly 5 per cent.
HEALTH, MONEY, ENTERTAINMENT
The reason why 3G networks are seen as India's best bet to address its extremely low penetration of broadband services is because it has the advantage of being backward-compatible with existing 2G networks. It also provides increased capacity network and other efficiency elements that enable operators to deliver more competitive mobile broadband services, while ultimately reducing their investments.
Two big advantages of 3G for India would be in the areas of healthcare and m-commerce. In a country where basic medical provisioning has had difficulties reaching people in isolated locations, the technology could be a much-needed shot in the arm. Services ranging from medication reminders to remote diagnostics and monitoring services have the potential to improve and extend life. The wireless health industry is only just gaining critical mass around the world, but by eliminating barriers to care and driving down costs, 3G could spell a turnaround for India's beleaguered healthcare system.
Meanwhile, financial services and mobile commerce using 3G have already reached a new level of convenience, visibility and safety around the world and are just getting off the ground in India. 3G can make banking and payment solutions convenient and secure. It could be the beginning of the 'm-cash era' - where money transfer on the move and mobile wallet services will be the way to do business.
Even businesses in India will benefit. Mobile broadband will allow Indian employees real time access to remote desktop enterprise solutions and increasing a company's response time to customers, leading to increased productivity, while high data rates and optimised quality of service would increase the country's competitiveness.
India also seems to be a big market for entertainment services with elements of social networking. In such a movie-crazy nation, citizens could take to 3G for watching films and serials like fish to water. In fact, most 3G handset operators consider entertainment as potentially India's biggest revenue spinner driven by 3G services.
POWER TO THE PEOPLE
Free flow of information and communications is a fundamental pillar of social progress. Wireless technologies, especially 3G, are viewed globally as an essential element for advancing socio-economic development in this decade. As India moves towards higher tele-density, 500 million citizens who were once in a rural cocoon will experience the power of being in touch with each other, with the bureaucracy and politicians.
As the asymmetry of information declines, it will put serious pressure on politicians and bureaucracy to deliver on governance and development objectives. Logically, this implies that there will be very few information black holes left in the country by the time elections are held in 2019.
To use this to engineer an unparalleled human revolution, the 3G auctions should actually become the pivot point for re-engaging consumers, investors, service providers, government and civil society to debate the impact of a mobile telephony-led revolution that will rapidly unfold over the next five years. The information revolution will ensure that citizens know more, expect more and, hopefully, demand more. This engagement has the potential of pushing development to the forefront as a key election plank over caste and regional issues, which have dominated India's electoral process since Independence.
THE ROAD AHEAD
The competitive telecom landscape will also witness serious changes by 2011. Operators hold 5. 7 MHz of 2G spectrum in India - a third of the international average. At present, 12 to 13 operators compete for customers in each of the 22 telecom circles. The 3G auctions will give five of these 13 access to additional spectrum as there is only provision for four 3G operators, taking their average to slightly over 10 MHz of spectrum (2G plus 3G) while the rest will continue to struggle for spectrum.
Unless the government releases more 3G spectrum quickly, which it will be constrained to do, this will force rapid consolidation between 3G spectrum haves and have-nots. New operators who entered India's telecom market in 2008 with merely 4. 4 MHz of 2G spectrum can hardly compete with large established operators, three of whom have already crossed the 100 million subscribers threshold with some others likely to follow over the next year or so. This implies another policy reversal is on the cards. The same government that fragmented spectrum and the industry in 2008 to create an average of 13 operators per circle, will be forcing consolidation barely two years on, on grounds of spectrum scarcity.
The 3G auctions will also ensure that spectrum pricing undergoes a permanent change. For the first time since 2001, market-based pricing will be used, though it is debatable whether the government's intervention to decide the number of slots, reserve price and qualifying criteria really leaves the market to play its full role in determining the price.
Despite this, there are upsides: India will have at least four private operators providing advanced 3G services to urban subscribers by the end of 2010 with more coverage for rural subscribers by mid-2011. But none of this can be taken for granted considering that India over the last 15 years has quietly endured the most cruel digital divide possible. To ensure equal distribution of the benefits of mobile technology and penetration, a national debate involving all stakeholders is essential. Hopefully, 3G will not be yet another missed opportunity.
A WIREFREE WORLD
At last count, nearly 132 countries had 3G networks operational. There are nearly 4. 7 billion mobile subscribers worldwide, of which 13 per cent have migrated to 3G. One study suggests there will be 570 million 3G subscribers in the Asia Pacific region by 2013. India is expected to have nearly 6 per cent of this market
Several economic studies, including by ITU, indicate that every 1 per cent increase in the country's broadband internet penetration increases GDP by roughly 10 per cent, while a 1 per cent increase in mobile penetration increases GDP by roughly 5 per cent
3G networks have potential transfer speeds of up to 3 mbps (15 seconds to download a 3-minute MP3 song). In comparison, the fastest 2G phones can achieve up to 144 kbps (8 minutes to download a 3-minute song). Meanwhile, 4G technology would allow telecom operators to offer customers a speed of up to 10 mbps.
shalini. singh@timesgroup. com