Wireless broadband to change India mobile landscape

WiMax and LTE will heighten competition against existing 2G and 3G services, but players in both camps face issues bringing their services to market, note industry analysts.
Written by Swati Prasad, Contributor on

Broadband wireless access (BWA) technologies such as WiMax and LTE will pose serious competition to players in India's 2G and 3G mobile market, but players from both camps will face various issues bringing their services to market, say industry analysts.

The Indian government last month allotted 20MHz spectrum for BWA services deployment to four local operators: Infotel Broadband, Bharti Airtel, Aircel and Tikona Digital. Two other players, Qualcomm and Augure (Mauritius), will be given the radio waves after they procure telecom licences.

With BWA, operators can offer mobile broadband services that can facilitate high-speed wireless data transmission of up to 40 Mbps.

According to news reports, operators have initiated talks with telecom vendors such as Samsung, Motorola and Ericsson as well as Chinese vendors such as Huawei and ZTE, to discuss plans to deploy either WiMax or LTE (Long Term Evolution).

While there have been reports that most operators in India may prefer LTE, the technology is still not commercially available and mainstream adoption is expected only in 2012. In comparison, WiMax is available today.

With India poised to see both 3G and BWA services before the close of 2010, some analysts believe this could create rivalry between both camps.

Ashish Khanna, India lead for Accenture's communications and high tech group, noted that 2G and 3G players will face tough competition from BWA players in the long term.

WiMax offers simpler all-Internet Protocol (IP) architecture resulting in lower network expenditure and operating costs. It also offers spectral efficiency, resulting in higher throughput and speeds touted to be about 10 times that of 3G. Moreover, WiMax can be scaled up to support growing mobile data.

Khanna said: "WiMax has an opportunity of reaching out to the rural masses in a cost-effective manner."

While these factors work in favor of WiMax and BWA, adoption will depend on how companies market these services to consumers. "There is limited consumer awareness on WiMax," Khanna added. "If companies promote the technology right and educate the consumer, the future is bright for BWA."

However, Bryan Wang, associate vice president of connectivity at Springboard Research, noted that BWA and 3G platform can co-exist as they address different market segments . "BWA may still enter the market from the fixed wireless or broadband angle. Therefore, the positioning will be very different," he said in an e-mail.

Data overriding voice
Market players are also finding more returns from offering data services which are outpacing voice, and this could be further heightened if the Indian government changes its regulations and allows voice services to be delivered via BWA platforms.

According to Sivarama Krishnan, executive director at PricewaterhouseCoopers, most mobile operators earn 50 percent to 60 percent of their operating profits from data services such as data cards and enterprise last-mile connectivity. Only 30 percent of their operating profits come from voice.

"BWA will affect the margins of mobile operators, whether voice over BWA is allowed or not," Krishnan told ZDNet Asia in a phone interview.

Even if the laws remain unchanged, Wang noted that it would be difficult for operators to block voice over BWA. "Some kind of cooperation with global players like Skype might [need to] happen in the marketplace, where operators can get revenues to offset the increasing competition in BWA tariff," he explained.

However, he said voice over BWA will not be available in the first 12 to 18 months of launch.

Nareshchandra Singh, principal research analyst at Gartner, believes there will unlikely be too much restriction governing the delivery of voice services over BWA.

"A player like Infotel Broadband [which is 95 percent owned by Reliance Industries] would not have paid such a hefty price [for the spectrum] if they weren't allowed to do everything [with it]," Singh said in a phone interview to ZDNet Asia.

Demand will be further boosted when WiMax-enabled phones are launched and PCs are equipped with WiMax support.

Krishnan believes that there will be policy changes around voice and VoIP. "Such regulatory changes will benefit enterprises and individuals. Changes will be dramatic in the landline space," he said.

BWA needs better ecosystem
And while 3G spectrum will only be allotted in September, analysts believe this will not give BWA players--which have already been handed their spectrum--a headstart in the market over 3G operators because the necessary components need to be built first.

"Smooth rolling of BWA technology requires presence of relevant infrastructure and that is the reason, I think, the regulators auctioned it first," Khanna said.

Gartner's Singh concurred: "There are several issues with the ecosystem for BWA. For instance, there are not enough vendors for BWA and the backbone is also not in place. In that sense, 3G has a clear headstart over BWA."

Wang added: "Universal Mobile Telecommunications System (UTMS) is a far more mature technology, and most leading vendors have not continued their R&D (research and development) for WiMax due to lack of scale."

With these issues in mind, Khanna noted that each player in the industry will get a level-playing field. Operators offering 3G already have the infrastructure to offer these services, and these telecom players are typically well-established and will not have to spend time to build brand equity, compared to market players that are launching BWA in India.

"BWA players will have to invest time and money [to support] customer education [and] this is [in addition to] the time these companies will take to build the infrastructure."

Swati Prasad is a freelance IT writer based in India.

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