3G Services–Reconnecting India; an opportunity for handset makers

Majid Pandit

At last, 3G mobile services are set to beam into Indian households. The technology has been waiting in the wings to enter India for quite some time now. While 3G’s entry opens up new possibilities for mobile operators and handset vendors, it is worth to know what it will bring to the table for an end user.

3G stands for ‘Third Generation’, that is the next generation of mobile networks that enable high speed flow of data to and from your mobile handset. It is the next generation technological leap from the existing to 2G (Second Generation) in India. Simply put, 3G implies that operators will now have higher bandwidth to provide better and greater variety of multi-media services to subscribers.

Is it going to make a difference?

How will 3G change the way we use our mobile phones? Considering voice, which in spite of high claims about endless other possible services on our cell phones, it remains the killer application for operators. As is being witnessed by operators who have launched 3G services in different countries, voice remains the most popular service. Voice telephony is still the key application in mobile telecommunications today. While 3G usage is growing, perhaps it is more due to enhanced voice capacity than data applications. Higher bandwidth through 3G spectrum would mean less congestion in the networks, fewer call drops and better voice clarity. But voice alone won’t be the limit of what is possible on a 3G network.

As far as the services go, get ready for a 3G lifestyle, as mobile phones will become the fourth screen. Watching a crucial match or a favourite movie will be possible in your mobile phone.
Apart from that, services like m-commerce, mobile banking and mobile social networking, many other applications that require high bandwidth will see a big growth. This is mainly because with 3G the speed of data services and the voice capacity of operators will rise. On the flip side, the cost of all the data services on 3G will also shoot up, mainly because operators will have to shell out money for buying new spectrum and for rolling out new networks. Since they cannot increase their ARPUs (Average Revenues Per User) from voice, data services will be their key to higher profit margins from 3G.

Third generation mobile networks will be able to support data speeds of up to 3 Mbps, which is way beyond what 2G networks are capable of today. For that matter, even current fixed broadband services offer up to 2 Mbps data speed. So it means that the download time will be slashed by more than half.

Foreign connection
The 3G guidelines, which were announced recently, have also carved a path for foreign players into the country. This will usher in new age of services for the Indian mobile subscriber. Secondly, international content providers will also come to India as well. This will mean availability of richer content and a wide variety of services.

The entertainment business is a small fraction of the opportunities that 3G will open up. 3G brings in a broadband pipe to the wireless device thereby enabling launch of bandwidth intensive service such as video streaming and mobile TV.

Surge in handsets
Apart from services, another area where one can already see a lot of 3G action is the handset segment. There are already numerous 3G-enabled handsets available in India. As per industry estimates, around five million people already possess a 3G enabled phone. These phones currently belong to the high-end segment. However, with the recent announcement of 3G guidelines, efforts are on to bring in affordable 3G handsets to the country.

India, which is the largest growing mobile market, will definitely see lot of action both from service providers and handset makers. To just grab a pie of it, 3G handset makers are likely to associate directly with the service providers. Apple iPhone and Vodafone collaboration is one of them, even if the cost is much higher than the foreign markets particularly than that of USA.

Things are going to change as different handset makers are lining up to flood markets with comparative sets, with somehow similar features as that of iPhone. Nokia N95, LG Viewty and Sony Ericsson W 980i are serious competitors to the Apple version. Entry of latest Blackberry has further heated up the market. Presently the cost of such high-end models might be comparatively high but Indian customers will see downslide of their prices with the advent of competition.

Wait! Once 3G services are available, prices will go down and besides competing with each other. These high-end products will have to face serious competitors from not-so-costly Chinese manufacturing hub.