Operators Fear Stalling 3G Growth: NSN

Despite taking the positive step of slashing 3G tariffs in a hope to increase their market shares, the operators are reluctant to expand their 3G networks fearing poor returns, says a top Nokia Siemens Networks executive. (See Smart Strategies For Telco Growth, 3G Roaming: The Axe Of Split Verdict, The 3G Tariff Turnaround and Himanshu Kapania: Managing Director, Idea Cellular.)

"2G has been relatively successful in driving the use of mobile broadband in India, but we are now witnessing that 3G is pushing the uptake of mobile broadband, especially in the Category B circles. The key challenge, however, is that operators are not confident if expanding their 3G networks will help them to get the returns on 3G subscribers," says Sandeep Girotra, Head - India region, NSN while unveiling a report.

The report, titled MBit Index, says that the overall mobile data traffic in India grew over 50 percent between December 2011 and June 2012 - much faster than the 2G data which grew at 47 percent during the last seven months. "On average, each 3G user consumes four times more data than each 2G user, indicating 3G as an acceptable alternative for broadband in terms of speed and experience," says the report.

It further adds that it is the Category B circles which are driving country's mobile broadband story and hence indicates that it is critical for operators to expand their data offerings in tier 2 and tier 3 cities to get the momentum going. According to the report, Category B circles as well Category A circles contribute 36 percent of the total mobile data, driven by 2G and 3G dongle users as smartphone penetration is low.

Since 2G networks have contributed over 75 percent of the total data traffic it has generated, the report projects that 2G will continue to remain a focus area for operators. The consumption patterns indicates that, on an average, a 3G user consumes 4.1 times more data than a 2G user. Web browsing social media usage are the key drivers for the uptake.

While operators have taken a positive step by slashing the 3G data prices to encourage the uptake, it's also important to develop an ecosystem which may help operators tap the opportunity. One needs to understand that the dynamics of Indian market is different and hence proper emphasis should be given towards developing local applications and content.

Factors like quality services, affordable devices and investing in educating the consumer are some other key measures that could help achieve the growth. (See Is MVAS Industry Ready For A 3G Revolution? and VAS Has Major Potential: Report.)

- Jatinder Singh, Principal Correspondent Light Reading India