3G service providers in India gearing up for battle

Bharti Airtel, Vodafone, Reliance, Tata DOCOMO, Idea Cellular, Aircel and S Tel readying 3G services for India

The clock is ticking, and BSNL is gearing up to face competition. Third-generation cell phone services by private telecoms operators are poised to be launched in India soon. It was less than six months ago –May, to be precise – that the government announced the results of the 3G auction, where non state-backed industry players bid for telecoms circles in which they would provide 3G services. As it turned out, no operator could bag the 3G spectrum in all circles – with Bharti Airtel, Vodafone, Reliance Communications , Tata, Idea Cellular, Aircel and S Tel ending up sharing the 3G pie.
Less than a month ago, the Indian government allocated airwaves to the winning operators and agreed to amend existing license terms. According to the new conditions, private operators will be allowed to use the 3G spectrum for a period of 20 years (starting now) even if their telecoms licenses expire before that. There is a caveat, though – that the 3G service cover at least 90 percent of the relevant areas in the metros within the next five years. Soon after the allocation, Minister of IT & Communications, A. Raja, confirmed that 3G and Broadband Wireless Access (BWA) will be launched very soon.
What this means for you is that by the end of the year, if not sooner, we will have access to much faster data streaming and download speeds on your cell phones and other computing devices. But better be prepared to shell out some extra cash as the 3G services aren’t likely to come cheap, thanks to the high cost of the spectrum (the auction winners paid out a total of more than Rs. 51,000 crore), plus the limited bandwidth allocated to each operator.
Since no one player will be able to tap the entire market, Airtel, Vodafone and Idea have decided to team up and share the basic infrastructure (and thus, the cost) needed to provide 3G services across India. The trio already jointly own Indus Towers, a leading Indian tower company. Not the best news for Reliance, which will have to go the whole hog alone.
So how big exactly is the 3G opportunity in India? Well, a report by PwC anticipates that 3G services will reach rural India by 2012, with the number of subscribers in those areas likely to cross 107 million by 2015. Quite significant, considering that the total number of current telecoms subscribers in the country stands at almost 670 million, according to Raja.
Individually, telecoms operators are doing their groundwork to ensure a smooth rollout of 3G services in the respective circles allotted to them.

Vodafone 3G services

Vodafone Essar Limited, the Indian subsidiary of Vodafone Group Plc, is reportedly planning to pick a non-Chinese vendor for its 3G portfolio. The company is eyeing contracts with Nokia Siemens Networks and Ericsson for 3G equipment in India. Vodafone will provide 3G services in Delhi, Mumbai, Kolkata, Maharashtra, Gujarat, Tamil Nadu, Haryana, Uttar Pradesh (East) and West Bengal circles.

Meanwhile, Reliance Communications (RCom) has inked a deal with global telecommunications solutions provider ZTE to deploy the new 3G-UMTS/GSM network for Reliance Mobile. ZTE will manufacture and supply 3G-UMTS equipment for eight out of 13 telecoms circles bagged by Reliance Mobile. The network to be deployed by ZTE is based on the standard SDR platform, which can currently support 2G and 3G modes in a single base-station and can be easily upgraded to support a 4G network in the future.

Reliance makes its 3G moves

RCom has also established a 3G Innovation Lab with at Reliance ADA Group’s headquarters in Dhirubhai Ambani Knowledge City, near Mumbai. The Lab is based on the concept of “Open Platforms” architecture and is expected to bring together content developers, product innovators, technology platforms enablers, device manufactures and original equipment manufacturers from India and abroad to create 3G products and applications.
RCom bagged 13 3G circles – Delhi, Mumbai, Kolkata, Punjab, Rajasthan, Madhya Pradesh, West Bengal, Himachal Pradesh, Bihar, Orissa, Assam, North East and Jammu & Kashmir.

Airtel’s 3G plans

The highest bidder in the 3G auction (Rs. 12,295.46 crore), Bharti Airtel, reported that it has tied up with Ericsson India, Nokia Siemens Networks (NSN) and Huawei Technologies for its 3G infrastructure. Networks in seven out of Airtel’s 13 circles will be managed by Ericsson India, whereas NSN and Huawei will take care of three circles each. Each vendor will plan, design, deploy and maintain 3G-HSPA networks in its allotted circles.
Airtel’s circles include Delhi, Mumbai, Andhra Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh (W), Rajasthan, West Bengal, Himachal Pradesh, Bihar, North East, Jammu & Kashmir and Assam.

Idea readying 3G service

The next telecoms operator to get its hands on 3G bandwidth was the Aditya Birla Group-owned Idea Cellular, which won licenses for 11 circles – Maharashtra, Haryana, Gujarat, Andhra Pradesh, Punjab, Kerala, Uttar Pradesh (W), Madhya Pradesh, Himachal Pradesh and Jammu & Kashmir.
Idea plans to launch its 3G services in the last quarter of this year but is likely to face delays in Punjab as it is awaiting certain regulatory clearances in the area, following its merger with Spice Communications last year. In related news, there have been rumors of Idea evaluating stake-sale proposals. The chief of Emirates Telecommunication Corp recently mentioned that the Middle East-based company might consider an investment in Idea Cellular.

BSNL slashes 3G rates

In anticipation of the flood of 3G services from private telecom operators, BSNL, which already offers 3G services across the country, slashed rates of its existing 3G data packages by up to 45 percent last week. The tariff for an unlimited data plan for post-paid customers has been cut from Rs. 2,499 to Rs. 1,359. Recharge vouchers for pre-paid customers will also be cheaper at Rs. 1,499 (earlier available for Rs. 2,756). The public sector undertaking has also launched new short-term validity vouchers. A voucher of Rs. 10 offers 20MB worth of data download for a day, a voucher for Rs. 25 gets you 25MB for three days and a Rs. 50 voucher offers 100MB worth of data download for seven days. Currently, BSNL’s 3G services are available in more than 500 cities in India.
It sounds all nice and good, doesn’t it? But one wonders what will be the challenges posed to the telecoms industry by this 3G revolution in India, with so many private players – having coughed up such massive amounts of money to secure licenses – chartering unknown territory? Ellen Daley, vice president and practice leader at Forrester Research, sounds a note of caution. Speaking to The Economic Times recently, Daley predicted  the introduction of “flat rate plans” and a furious price war to begin once the service is launched – much like what happened last year when tariff cuts affected both voice and SMS segments and nearly halved the revenue realized per minute by operators.
She added that 3G operators will have to increase their number of cell sites and enhance the backhaul infrastructure – all of this at steep costs – to support the additional traffic.
The advent of 3G services seems well-timed as India expects a number of 3G-ready devices to hit its shores as early as next month. So, if all goes according to plan and private operators get their infrastructure in place, you will soon enjoy the high-speed data revolution that’s been raging across other countries in recent years.
As you might recall, alongside the auction of 3G bandwidth in May, airwaves for wireless broadband access were also up for grabs. The winners of the broadband spectrum have yet to decide between WiMax, a technology readily available, and Long Term Evolution (LTE), for which standards are still being thrashed out.