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Mobile Data Growth in India an Opportunity and a Challenge
Anjan Ghosal
Thursday, December 30, 2010
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.

Another important factor that is likely to drive up data traffic is India is general internet access from mobile devices. While India has a rapidly growing mobile subscriber base, the low penetration of laptops and personal computers means that the primary source of internet access are likely to be mobile devices. Whatever be the driver, the focus on mobile data is likely to become a double edged sword, quickly outstripping network capacity. These factors, coupled with the limited spectrum allocated to operators in India, may lead to a ‘perfect storm’ where the networks get overwhelmed.

Operators are already aware of this problem and are actively seeking solutions to this problem using offload techniques. Femtocells are a valid proposition for them but they are pricey and are still not proven in the current deployments. A more appropriate solution for the Indian market is data traffic offload to Wi-Fi networks.

With this in mind operators are looking at developing Wi-Fi zones of their own or partnering with Wi-Fi operators and aggregators to see if some of the data can be offloaded to these networks. Both, Tata Communications and Bharti Airtel have been actively deploying hundreds of Wi-Fi hotspots across the country as a service to their broadband subscribers. BSNL, Reliance and Spectranet are also offering Wi-Fi Internet access.

Vikas Singh, CMO for Telemedia Services at Bharti Airtel was quoted as saying: “Airtel Wi-Fi hotspots will be strategically located at leading premium hotels, hospitals, chains of restaurants, coffee shops and corporate buildings that are the hub of corporate, community and social activities. For us, this is an initiative to increase customer stickiness and enhance average revenue per user (ARPU) of our broadband customer base.”
In parallel with the 3G roll out, alternative wireless services are being deployed to address the demand for wireless Internet services.

Companies like Tikona, a recent startup, are building all-IP wireless networks using unlicenced spectrum. The technology, referred to as WI-BRO - a variation of WiMAX, is built on meshed networking routes traffic over wired and wirelessly meshed access points. The iSuppli study forecasted a subscriber base for such services to reach 19 million by 2012.
By deploying a Wi-Fi data offload solution, mobile network operators can provide:
l Improved coverage and Quality of Service (QoS) for mobile data subscribers
l Seamless transition between 3G and Wi-Fi – no need for subscribers to manually register or log in to use the network
l Utilization of the existing mobile billing and charging infrastructure
l Subscriber access to secure content provided by the mobile operators – known as “walled garden” services

However, some work must be done to implement this functionality. Based on the operators’ requirements we have classified them into the following three categories.

The 3GPP and 3GPP2 standards bodies have published specifications for these techniques and some companies have developed products to enable seamless integration of Wi-Fi and Cellular networks. IntelliNet has been actively involved in a commercial trial with a leading edge operator in India and the initial results are promising.

However, successful deployment of this solution will require the vendors and the operators to work closely to implement a complete end-to-end solution which will not only address the technological aspects but also all the operational issues in deploying this service such as the integration with the backend OSS systems.

This technology will not only assist operators with 3G licenses offload their excess traffic but also will help operators with 2G licenses to provide their subscribers a 3G-like experience - and do so at a fraction of the cost of deploying 3G infrastructure.

Anjan Ghosal
The author is President, CEO and Founder, IntelliNet Technologies

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