Indian telecom may be traveling through choppy waters on account of the 2G spectrum re-auction but there’s a silver lining of sorts on the mobile broadband front
Telecom presents a mixed picture today. On the one hand, mobile penetration is India is as close to 100% as it’s ever going to get—at least in terms of mobile voice. On the other, mobile data hasn’t quite taken off though I expect that to change in the next 12-18 months. Then there’s the whole 2G spectrum scam and its aftermath.
Despite its present blues, I’m convinced that Indian telecom has a strong story in the years to come. Take 3G, for instance. Unrealistic pricing of 3G resulted in it being a big flop to start with but now that 4G is being introduced (again overpriced), 3G is now affordable and we are seeing an uptick in usage. The critical factors—availability of cheap devices, reasonably priced 3G and India-specific content—are all coming together in a perfect storm this year. On the device front, the open source phenomenon that is Android (it’s based on Linux) has ensured that smartphones now start at Rs 6,000-7,000. 3G pricing was slashed by Airtel when it introduced 4G to close to GPRS/EDGE levels and the other leading operators followed. Today, picking 3G over EDGE is a no-brainer. Quality of Service issues remain but they aren’t as bad as they used to be. Last but not least, Youtube and its plethora of Bollywood (and other regional film-based content) clips has ensured that there’s compelling content for the aam aadmi.
For the first time, the predictions of 100 mn 3G users by 2014 looks realistic. By end 2012, we are expected to have over 40 mn subscribers using 3G, which is quite believable considering that we are already in the mid 30 millions. 4G’s another story. Unrealistic pricing will result in slow uptake, much like what happened in the case of 3G.
As far as the 2G spectrum brouhaha goes, notwithstanding all the sturm and drang, I don’t see it having a major affect on pricing of voice calls. That’s already gone up once from 1 to 1.2 paise per second and even if there’s another hike we won’t see usage drop much. As data usage picks up, operators will finally start to see their toplines improve. ARPU hasn’t been great but, provided that the operators don’t totally botch it up, it should start to rise in the next year or two. The scope for telecom in India hasn’t really been tapped. We have only seen the tip of the proverbial iceberg to date. Watch this space for developments and you will be pleasantly surprised.
– Prashant L Rao
Editor, Express Computer
