INDIA--Although Telecommunication Minister A. Raja this week said it is possible to hold auctions for India's 3G spectrum by Mar. 31, experts doubt the current government will proceed with haste in this realm.
Nupur Singh Andley, senior research analyst for connectivity at Springboard Research, told ZDNet Asia in a phone interview: "It is doubtful that the private players will roll out 3G services within the next eight months. In fact, we may see the roll out of 3G and WiMax only in 2010."
Naveen Mishra, communications research analyst at IDC India, concurred: "We expect the launch of 3G and WiMax services by private operators to get pushed to at least the last quarter of 2009."
While the government were given 3G airwaves to state-owned telecom operators--Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL)--the launch of 3G and WiMax services by private players has been delayed.
In January, the Cabinet referred the proposal to auction 3G and BWA (broadband wireless access) spectrum to a group of ministers, thereby delaying the bid indefinitely. This was prompted by differences of opinion among ministries over the base price for the auctions and number of licenses to award.
While the Department of Telecom had set the base price for the pan-India 3G spectrum at US$406.6 million (INR 20.2 billion) and for the BWA spectrum at US$203.3 million (INR 10.1 billion), the finance ministry had demanded the floor price for both be doubled. The issue became further complicated when the Planning Commission, the Department of Industrial Policy and Promotion, and the IT ministry opposed moves to double the base price.
Mishra told ZDNet Asia in an e-mail interview that although leading telecom operators already ran trials of 3G services, they would need about six months from the allotment of the 3G spectrum to offer these services. This time lag is because telecom operators have not placed orders for 3G network equipment, which takes around six months to procure. Given the uncertainties over the auction, operators do not want to take risks and will place orders only after the auction.
Delay can hurt growth
Despite the global recession, the Indian telecom market has been growing at a fast pace of 50 percent per annum. India added 113.26 million new customers in 2008, taking the total number of mobile subscribers to around 350 million by end-December. India also added over 2.3 million broadband connections in 2008, registering a growth of more than 74 percent.
The market growth is happening on the 2G platform, even as 120 countries across the world have already migrated to 3G.
D. K. Ghosh, chairman and managing director of ZTE Telecom India, told ZDNet Asia in an e-mail: "It would be naive to expect the Indian telecom industry to keep following the growth trajectory, despite other industries facing the recession. If the current market scenario continues for another year or more, we might see the negative effects on the telecom industry."
Springboard's Singh Andley said: "Delay in spectrum allocation is demoralizing the sentiment, especially for international investors."
According to Ghosh, both 3G and WiMax technologies have the potential to put a virtual PC with a broadband connection in the hands of over 350 million mobile users in the country.
Industry reports estimate that a 10 percentage rise in mobile usage can lead to 0.5 percent increase in GDP (Gross Domestic Product). "Going by this estimate, the gains each year for India, which is already a trillion-dollar economy, could be as high as US$50 billion," Ghosh said, adding that the rapid adoption of 3G can solve the twin problems of low broadband and PC penetration.
"The delay [in the launch of 3G and WiMax services] has been hindering the growth of not just the telecom industry but also the country," he said.
Mishra concurred, noting that any delay in launching this aspect will result in India lagging behind global markets where people are already consuming such services. As voice tariffs in India are one of the lowest in the world, operators would like to launch value-added services to sustain and improve their current ARPU (average revenue per user) levels, he said.
Competing wireless technologies?
Last month, the WiMax Forum, which certifies and promotes interoperability between broadband wireless products, launched its Global Roaming Program that lets operators and vendors easily obtain information required to establish WiMax roaming services. This has raised questions on whether 3G and WiMax technologies are complementary to each other or will compete over time.
In India, companies such as Tata Communications, Intel, BSNL and Reliance Communications, are proponents of WiMax and most of the companies have already done beta-runs of the technology.
Mishra noted that not all telecom operators in the country will win 3G spectrum licenses, and some of them "will have to bank on bagging BWA spectrum licenses, which will allow them to offer mobile WiMax services". He added: "3G and WiMax would compete with each other."
However, most experts believe WiMax and 3G technologies can coexist.
Raghu Prasad, Oracle's Asia-Pacific and Japan communications senior director of business transformation, said in an e-mail interview: "It is very likely that in a diverse market such as India, both 3G and WiMax will find their pockets of use and influence."
Singh Andley said: "While the advent of 3G will help in the growth of e-medicine, e-government, e-health, m-commerce and e-learning, WiMax will increase broadband connectivity, especially in India's rural areas."
The Telecom Regulatory Authority of India is banking on both 3G and WiMax to increase the country's broadband penetration, setting a target of 20 million broadband connections by 2010, up from the current 4.3 million connections.
Ghosh said: "The industry is expecting both WiMax and 3G to bridge this gap."
Swati Prasad is a freelance IT writer based in India.