The telecom sector, which surpassed expectations in terms of voice connectivity, has been battling to write the same success story in the internet space, but in vain. The broadband segment in the country has yet to pick up; at the end of March 2011, there were only 11.87 million broadband subscribers or just 1.5 per cent of the total mobile population. Consequently, the auctioning of 3G and broadband wireless access (BWA) licences in India was seen as a key milestone by the telecom industry. The launch of 3G and BWA services is being seen as the appropriate medium to offer internet services in remote and rural locations, as well as untapped semi-urban areas, without the constraint of network infrastructure.

While 3G was rolled out by Japan?s NTT DOCOMO way back in 2002, in India, its entry has been very late. Even though most operators have now rolled out 3G services, it is very unlikely that the demand for internet connectivity will suffice with 3G services alone. The primary reason for this is that the networks of India?s leading mobile service operators are already choked with low-cost voice calls. Since voice currently contributes 95 per cent to operator revenues, 3G spectrum will also be used for voice apart from data.

Given this scenario, India is likely to leapfrog to 4G. To facilitate this, the Telecom Regulatory Authority of India is likely to bring out recommendations on 4G technology by end-June 2011.

However, for the operators, the transition to 4G may not be easy. With 3G, Indian operators were able to adopt a familiar technology, but BWA put them in an altogether unfamiliar territory as far as technology is concerned.

4G update 

Currently, private operators like Reliance Industries Limited-owned Infotel Broadband, Bharti airtel, Aircel, Tikona and Augere are showing more inclination towards TDD-LTE technology for deploying wireless broadband. Bharti airtel, Infotel and Aircel are testing TDD-LTE along with several global vendors. The other two operators, Tikona and Augere, have plans of launching TDD-LTE services by the end of the fourth quarter of 2011.

Government-owned Mahanagar Telephone Nigam Limited is yet to take a decision on the technology front. Initially, it was keen on rolling out Wi-Max in Delhi and Mumbai via the franchise route; however, it now appears that the PSU is also likely to opt for TDD-LTE. On the other hand, Bharat Sanchar Nigam Limited (BSNL), the other state-owned operator, does not seem keen on rolling out TDD-LTE in the immediate future.

Even as 3G mobile services are being rolled out, industry experts are of the view that the more-advanced 4G platform would be launched in India soon. When the industry was at the threshold of spectrum auctions in 2010, it was still speculating whether India should miss the 3G era and leapfrog to the 4G platform.

There are many reasons for the inclination towards 4G technology. Its spectral efficiency, that is, the capacity per hertz of spectrum per cell, has been found to be almost 40 times higher as compared to 2G. Moreover, unlike 3G, which requires a minimum of 2×5 MHz carrier, 4G technologies can operate using a minimum of 2×1.25 MHz carrier. This allows existing GSM operators to partly or wholly refarm their current 900/1800 MHz spectrum for 4G services. Hence, operators can initially allocate a smaller amount of spectrum for 4G services and keep adding more bandwidth as the user base increases.

The economic advantage of the 4G platform over 3G, given its easy upgradeability on the existing infrastructure, is another positive. Moreover, the technology, even at its initial launch stage, holds the promise of internet speeds that are at least five times faster than the speed offered by mature 3G networks in Europe and the US.

However, the availability of 4G-compatible handsets is a major issue that is likely to hamper the uptake of this technology. This is especially true for TDD-LTE, which seems to be the preferred technology and for which the device market is yet to develop, both on the domestic and global fronts. Moreover, as of now, the volumes have not picked up for these devices and so there are no economies of scale to drive down costs.

The affordability of these devices will play a major role in 4G adoption. The cost of personal computers, laptops and tablets is still way beyond the reach of the average consumer. Current prices of Wi-Max dongles are in the sub-$30 range. There may be some incremental costs added to support a 20 MHz channel for LTE dongles, which would result in a higher cost of approximately $100. However, as soon as vendors build up volumes for these devices, the price is bound to come down.

Also, as TDD-LTE technology is at a nascent stage, its deployment cost is much higher than that of 3G. The biggest challenge is building the backhaul and core network, which would be an expensive task. However, as the technology matures, standards too will mature and gain more acceptance, thereby reducing costs.

The way forward 

Going forward, the industry is of the view that India may surpass global operators and emerge as one of the first few countries to adopt the new TDD-LTE technology for rolling out BWA services. As Indian operators are faced with steadily declining profits and ARPUs averaging at a low Rs 105 per month, data services are the most viable option to revive the industry?s revenues. Since spectrum is expensive and a scarce resource, the 4G platform, which offers higher utilisation and is spectrally more efficient, is likely to emerge as the preferred options for providing data services.