Just as Indian consumers were about to give up waiting for the 3G bus, in December 2008, Mahanagar Telephone Nigam Limited (MTNL) softlaunched its 3G service, Jadoo, in Delhi.It was a move that included India in the ranks of developed international markets such as the US, the UK and Japan, where 3G services have already been deployed.Soon after the MTNL launch, in February 2009, Bharat Sanchar Nigam Limited (BSNL) too followed suit with the softlaunch of its 3G service in Chennai.

But while the government released 3G spectrum for the public sector utilities (PSUs), in April 2009, telecom secretary Siddhartha Behura announced that the 3G spectrum auctions were likely to take place only after the formation of the new government. This has come as a major setback for private operators like Bharti Airtel and Idea Cellular, which have already prepared their 3G networks and are ready to launch services as soon as spectrum becomes available. These players are now at least a year behind the PSUs on the 3G front.

Making matters worse, in a recent development, the Department of Telecommunications (DoT) has reportedly rejected the terms and conditions laid down by the defence ministry for vacating spectrum.Both parties had earlier decided to sign a memorandum of understanding (MoU) to expedite the setting up of an alternative network for the defence services, in order for spectrum to be vacated. The breakdown in negotiations will undoubtedly set the auction process back further.

In its most recent proposal, the defence ministry has reportedly demanded that the government reduce spectrum charges payable by the armed forces, as well as take care of the maintenance charges of the alternative communications network for 10 years. It also asked for 60 per cent of the available mobile spectrum bands to be reserved for the armed forces.

The earlier draft agreed upon by the concerned players required DoT to set up a dedicated fibre optic network for the defence services at an estimated cost of Rs 88.93 billion within a three-year period. The defence ministry, meanwhile, was required to release 10 MHz of spectrum while signing the MoU and another 5 MHz on placing the supply order.

In another twist of events, in March 2009, DoT asked BSNL and MTNL to stop offering 3G services till the security agencies were able to put a suitable monitoring system in place that would track traffic on their networks. The Intelligence Bureau was of the view that till such a facility was made available by the service providers, 3G services should not be offered. The PSUs have, however, informed the government that services will not be stopped since traffic monitoring is indeed possible and that it is the intelligence agencies that need to install the necessary equipment for doing so. The dispute is still pending.

Despite the setbacks and the confusion surrounding the date of the spectrum auctions, industry forecasts remain upbeat.Analysts confirm that despite everything there is still significant potential for 3G in India. An industry report released by BDA Consulting in January 2009 forecasts that there will be 90 million 3G subscribers and $15.8 billion in 3G service revenues by 2013. The report further states that 3G subscribers would form around 12 per cent of the overall wireless base by 2013 and account for as much as 46 per cent of the total wireless service revenues.

During this time period, annual 3G device sales will reach 81.3 million, while device revenues are expected to be $11.2 billion, with handsets in the high price segment accounting for 59 per cent of annual sales revenues.

Players are gearing up accordingly.While MTNL and BSNL have already introduced 3G services in India, private players are ramping up operations and securing finances for the same. tele.net takes stock of key telecom operators and their 3G plans…

MTNL

In December 2008, MTNL became the first telecom operator in the country to soft-launch 3G mobile services in Delhi under the brand name Jadoo. Commercial launch took place two months later. Users can now access MTNL’s 3G services by paying a one-time activation charge of Rs 500 and a monthly rental of Rs 599.Customers have to, however, pay separately for the calls they make and also for the data they download. Calls to another operator’s network cost Re 1 per minute while call costs within MTNL’s own network are pegged at Re 0.60 per minute. For video calls, charges vary between Rs 1.80 and Rs 3 per minute. The PSU has also partnered with Samsung for providing highend 3G-compatible handsets as part of a special bundled offer for both BSNL and MTNL customers.

The company now aims to soft-launchservices in Mumbai and intends to add 100,000 3G users in Delhi and Mumbai in the current fiscal year.

BSNL

Following MTNL’s lead, BSNL has also rolled out its 3G mobile offerings. The PSU first targeted Chennai by soft-launching services in February 2009. Soon after, the company introduced services in Lucknow, Agra, Dehradun, Ambala, Jammu, Shimla, Jaipur, Jalandhar, Patna, Durgapur, Haldia, Ranchi and Bhubaneswar. By the end of the year, BSNL plans to take the service to all key cities, commercially important towns and all district headquarters.

The company plans to cover 700 cities in the first phase of its 3G rollout plan, at a proposed investment of Rs 27 billion. It plans to cover 48 locations in Orissa by July 2009 and has made Rs 750 million worth of additional investments for the purpose, and will launch services in Tamil Nadu shortly. The company intends to expand its 3G operations across northern and eastern India by June 2009, and across southern India by July 2009. In southern India, it will first target Bangalore, where it will provide 200,000 lines at an investment of Rs 6.5 billion. Customers can expect video-on-demand, video conferencing and broadband-on-mobile.

BSNL is offering a range of services like live TV and high speed mobile broadband and movie downloads, and has tied up with Nokia, Sony Ericsson and Samsung for handset bundling. It has also rolled out BlackBerry solutions on its 3G network across the country. The company has launched three BlackBerry handsets ?? BlackBerry Bold, BlackBerry Curve 8310 and BlackBerry 8700, in a price range of Rs 14,499-Rs 34,399.

In order to enhance its 3G services, the company has tied up with the consulting arm of Ericsson. The two have signed an agreement according to which Ericsson’s consulting arm will provide network improvement and optimisation services for the core, radio and transmission networks installed by its parent company.

Private players

Private operators, meanwhile, are awaiting the ever-impending spectrum auctions. Almost all operators, including new players like Sistema Shyam TeleServices, have expressed interest in the auctions and intend to launch 3G services.

Bharti Airtel has already launched 3G services in a number of international markets in which it is present. These include Seychelles and the Channel Islands, Jersey and Guernsey. Its most recent 3G launch was in Sri Lanka in January 2009.

Meanwhile, Vodafone is keeping busy, securing funds for a 3G venture in the offing. So far, the State Bank of India has agreed to lend Vodafone Essar Rs 100 billion to finance the company’s entry into 3G telecom services and to expand its broadband operations. The five-year loan carries an interest rate of 13.25 per cent for the first two years.

Another private operator, Aircel has successfully tested its complete range of 3G services in Chennai and is ready to offer services across the country once it secures spectrum. The company believes that it can gain a competitive edge if it enters mature markets like Delhi and Mumbai with 3G rather than 2G services.

Tata Teleservices Limited is also looking at 3G and will fine-tune the details once a clear picture of the auctions is available. Its tie-up with NTT DoCoMo is bound to provide it with a helping hand in 3G. The case is the same with Idea Cellular, which also plans to participate in the 3G auctions and roll out 3G services on a pan-Indian basis.

Future outlook

India is likely to become a haven for 3G service providers with analysts expecting China and India to lead in terms of 3G subscribers. However, next-generation technologies like long term evolution and ultra mobile broadband are still a long way off. At the same time, with a favourable policy framework and regulatory environment, it may not be long before operators start vying with each other to offer 4G services. While the government released 3G spectrum for the PSUs, private operators are awaiting the ever-impending spectrum auctions. Almost all operators, including the new players, have expressed interest in the auctions and intend to launch 3G services.