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The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Mobile Data Growth in India an Opportunity and a Challenge

Anjan Ghosal
Thursday, December 30, 2010
Anjan Ghosal
Mobile data continues to grow at a phenomenal rate in countries that have already deployed data centric 3G networks. AT&T for example has noted a data growth of over 5000 percent in just three years. Most of this growth is attributed to high bandwidth video related services like video chat, IP TV and access to video content over sites like YouTube on the Internet access. The continued price pressure on data rates together with an unprecedented growth in demand has created a major challenge for operators around the world forcing them to seek ‘unconventional’ solutions.

One such solution is a ‘small cell’ approach where operators deploy femtocells in locations with poor cellular coverage. The data is backhauled via the existing broadband network using standard IP providing a more cost effective data coverage. The alternative solution that is gaining favor is to enable the Wi-Fi radio on the user’s smart phone and deoliver data over that interface rather than over licenced spectrum like UMTS/3G. Data in this case is also backhauled via the pubic Internet. Studies have shown that the majority of mobile data is generated by smart phones in indoor settings which make Wi-Fi an excellent data offload technology. Both these technologies allow data to be moved at a fraction of the cost – though Wi-Fi can be an order of magnitude cheaper than deploying femtocells.

India has been late to the 3G party but is fast catching up. Earlier this year, seven private operators paid a whopping $14.6 billion to buy 3G spectrum. A number of operators like Reliance and Tata have already launched their 3G services. As of end of September 2010, the wireless subscriber base in India stood at 687.71 million, second only to China. However, iSuppli forecasted that 3G will garner 250 million subscribers by 2012.

While there are similarities between India and other 3G enabled nations, there are some very significant differences. Due to fierce competition, voice tariffs in India are one of the lowest in the world. The Telecom Regulatory Authority of India recently reported a year-over-year decline in Average Revenue per User (ARPU) per month of 33.9 percent for GSM subscribers and 19.6 percent for CDMA subscribers. As of June 2010 the ARPU for GSM was Rs. 122 ($2.71) and for CDMA INR 74 ($1.64). This can be compared to an ARPU of more than $50.00 for post paid service in the U.S. Hence, to recover their huge investments in 3G, Indian operators will have to increasingly look at data services to drive revenue growth.

Indian operators do have a great track record in generating significant revenue from VAS services like ring back tones, music downloads, SMS and a variety of downloadable applications. Most of these services are offered through a strong web portal as ‘premium services’. So it is reasonable to assume that as 3G gains momentum, a lot of these services will be supplemented by high bandwidth services like video sharing, mobile TV, multi-player high-definition gaming and videoconferencing which can become a major revenue generator for them.

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