India 4G rollout 'not too early'

India 4G rollout 'not too early'

Summary: Country's push into new network technology timely, despite controversy over 2G spectrum auction and 3G's lack of traction, but observers say 4G success depends on more LTE devices entering market and cheaper data services.

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India is among a handful of countries that has made an early push to roll out 4G services, in spite of skepticism over whether the country is ready for the next-generation network amid setbacks facing the industry such as the recent 2G scandal and the lack of traction in 3G. Success, however, depends on having more multimode-enabled devices entering the market and cheaper data services, observers note.

Among those who cast doubt was Kapil Sibal, the country's minister for communications and information technology.

In a report by local news site DNA last month, Sibal said: "I dare say that though 3G was launched, the benefits are not yet seen [by the common man]. Now we are launching the 4G." His comments were made at the milestone launch of Bharti Airtel's 4G service in Kolkata—India's first city to receive the advanced network.

"I dare say that though 3G was launched, the benefits are not yet seen [by the common man]. Now we are launching the 4G."
-- Kapil Sibal
Indian Minister of Communications and Information Technology

Joss Gillet, senior analyst at Wireless Intelligence, felt that it was "quite ironic to hear the minister say that the benefits of 3G are not yet mainstream".

"If the government wanted a fast adoption of affordable 3G services, it should have thought in advance about the profitability challenges it imposed on operators in 2010 by squeezing US$15 billion out of their wallets [for 3G spectrum rights]."

Basharat Ashai, market analyst for Asia-Pacific and Middle East at Maravedis, agreed, saying there was a chance of history repeating itself with the 4G launch.

"The 3G service pricing has acted as a determining factor for subscriber acquisition in price-sensitive markets like India. Although 4G has only been launched in April 2012 we expect it to face the same situation like 3G if operators do not reduce the 4G tariffs soon," he said.

4G "not too early"
Despite the lack of 3G traction in India, Gillet said it is "not too early" for 4G as operators could choose to leapfrog 3G for the newer network technology.

"4G networks are delivering the best-in-class mobile broadband experience which consumers in India could benefit from considering the country's low fixed broadband penetration," he explained.

Kamlesh Bhatia, research director with Gartner's Technology & Service Provider Research group, added that 4G services "are an enabler" for other industries such as healthcare and education.

However, there is a cloud hanging over India's telecoms industry. The unresolved scandal over 2G services, where 122 licenses were revoked in February over corruption charges and put up for auction again, has led to operators and foreign investors holding off any more investments into the country.

Ashai believed the 2G spectrum auction situation would have minimal bearing on 4G's success though. "In India, 2G is primarily for voice and 4G will be used mainly for data," he said.

Network needed to drive rest of ecosystem
Rather, it is the absence of a TD-LTE (Time-Division Long-Term Evolution) device ecosystem that remains the prime hurdle, he stated, who believed that chipset and device manufacturers have to find a way to bring down the cost of multimode devices substantially in India.

"The challenge Indian operators face lies in bringing an inexpensive multimode--which straddles 2G, 3G, and TD-LTE--device to the consumer. The current price of a multimode dongle in India is US$152 and is way too high for the average Indian consumer," the Maravedis analyst pointed out.

Such devices would give operators an opportunity to expand 4G-based services with the option of falling back on cheaper network technologies, such as 3G networks, he said. This would help service high growth data environments in a cost-effective manner, and help operators which have LTE coverage issues.

"If the operators still delay the 4G rollout it will take more time for the device cost to come down," Ashai noted. "Maravedis believes that mass market devices for 4G TD-LTE are still a good 12 to 18 months away."

"If the government does not change the rules and assume a catalyst role in its 'broadband on demand' plan, 4G is poised for a gloomy future in India"
-- Joss Gillet
Senior Analyst, Wireless Intelligence

Local authorities will have a big say in allowing 4G to take off too, Bhatia added, saying it is important they do not treat the next-generation mobile broadband network as a "cash cow". "If operators spend too much on the spectrum, they will have less to invest in other areas such as infrastructure," the Gartner analyst added.

Gillet concurred, calling for Indian authorities to have a change in mindset and consider subsidizing the coverage of some areas, if necessary, and promoting convergence with adjacent industries such as banking.

"India needs a spectrum policy that breaks with the old auction model which does not work; it needs to foster operators' network investments and foster private investors' confidence," the Wireless Intelligence analyst stated.

"If the government does not change the rules and assume a catalyst role in its 'broadband on demand' plan, 4G is poised for a gloomy future in India," he said.

Topics: Networking, Emerging Tech, Hardware, Mobility, Software Development

About

Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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