Telecom companies have to make 3G more affordable

By SiliconIndia   |   Saturday, 30 August 2008, 04:56 Hrs
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Kolkata: The much-hyped 3G data services are not affordable for Indian customers due to the revenue sharing model between the operator and content developer. To make it more affordable for the Indian customers and to take off in India, the service providers have to redesign the business models.

According to a study conducted by Strategy Analytics, an international research and consulting firm only a limited number of services like ringtones have tested success due to the high price of value added services (VAS). Moreover, the current data average revenue per user (ARPU) of operators in India is around $ 0.7 percent per month.

"Though the roll out of 3G will definitely benefit the data services portfolio of operators, it does not guarantee its success," David A Kerr, Head, Strategy Analytics (global wireless practice) told The Economic Times.

Due to high tariff rates and low level of user spend, there is low a demand for data services in rural areas. The study pointed that 3G services would gain acceptance in rural areas only when localized content can be offered at a very nominal price. The penetration level of GRPS enabled handset is still coming around 10-15 percent in India and such phones still limited to the metros.

The study further noted that the time frame of auctioning of 3G spectrum could prove a hurdle for foreign players who are looking to enter the Indian telecom market.

Rahul Gupta, Manager, Strategy Analytics ( global wireless practice) said, "It is virtually impossible to get FIPB approval within the deadline since it takes several months to get through the process and Indian government should examine this before announcing the auction if they are serious about opening up the bidding process to major foreign players."

The study also estimated that the out of 800-850 million mobile phone subscribers, around 271 million subscribers would use 3G services by 2013.

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