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June - 2010 - issue > Editor's Desk
3G Will it Revamp the Face of India?
Christo Jacob
Tuesday, June 1, 2010
In one of the popular temples in the US, a quote is engraved on a pillar, “There are some things which Google cannot answer you. So believe in God.” This reflects how profoundly Google has revolutionized the very face of the Internet since the 1990s. A similar revolution is expected to happen with the recent 3G auction in India that earned close to $15 billion to the Indian government. How? Unlike before, when the mobile was a commodity of the upper class individual, the scenario has completely changed today. In the past few years, the Indian and Chinese consumers have been leading the growth in this sector – the number of mobile users in India is expected to increase from 600 million to over 1 billion by 2014. Moreover, the increasing mobile broadband subscribers and data usage has fuelled the spread of smartphone penetration from 11 percent to 17 percent in 2009.

But there may be a hitch. Despite the market looking rosy for the 3G spectrum auction winners, there are worries of the ‘winner’s curse’ that plagued the UK’s 3G spectrum allocation in 2000, which raised $34 billion. During that time, the bidders ended up paying so much for the license that they did not have funds to create the infrastructure to support the rollout of the products and services.
Hopefully there is no repeat of the disaster in the current bid in India where telecom players have paid 10 times the amount they paid for 2G licenses just two years ago. Moreover, no single company has won a bid in all circles.

Hence, striking a balance between making 3G affordable to premium customers and upgrading their instruments, providing the data-rich 3G service through their own service providers in respective cities will be a major challenge for these players, especially when the BSNL and MTNL have already set the rules of the game some months back. A bright spot for the telco service providers at a time like this is the fact that the Indian mobile industry is ready with handsets and supporting infrastructure.

The only concern for these winners is to play the card right coupled with the right push to mobile app developers encouraging more 3G apps to be developed and also to develop a clear understanding between the operator and the mobile startups so that both can flourish. For 3G, there is much to gain from the buzz created by online app stores of Apple, Nokia, Samsung, and Sony Ericsson, and on Facebook and Orkut as well, where developers can sell directly to consumers. Of course, they must pay a yearly fee and 30 percent of their revenues to the service platform, perhaps much lesser initially, which may encourage more mobile app developers.

Please do share your thoughts with us.

Christo Jacob
Managing Editor
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