Following the euphoria of the 3G and Broadband Wireless Access (BWA) spectrum auctions last year, 2011 has been characterised by a lukewarm response to 3G services, a no-show for , and a shift in industry trends. (See and .)
Most notable in terms of the trends was the substantial drop in the number of net mobile line additions every month. Early this year the mobile operators were adding 20 million new mobile customers per month: Now that number is down to fewer than 8 million. (See India Crosses 800M Mobile Mark.)
It's not the only number that's decreasing. The volume of voice minutes and ARPU (average revenue per user) figures are also declining, though at least the average revenue per minute and data usage is going up, which is helping the operators cushion the voice volume blow. However, the operators need to rethink their strategies, especially when it comes to 3G. (See Carrier Revenue Growth: Slow But Steady, Mobile Operators Show Data Growth and India Needs Radical Rethink.)
3G = No ji
The second reason for disappointment in 2011 was the lukewarm response to the country's initial 3G services: High tariffs coupled with patchy coverage led to a muted response.
Besides, there was no compelling reason for a subscriber to move from 2G network to 3G network. The operators were unable to come out with services or packages that appealed to the subscribers. Another reason for the slow uptake of 3G services was the lack of affordable devices. Very few people had 3G-enabled devices.
The operators were initially shy of offering a subsidy on devices but now this seems to be changing. Idea Cellular Ltd. has recently come out with subsidized devices and others are likely to follow suit. These kind of initiatives are likely to lead to an increase in the 3G subscriber base in the country. (See Idea's Brand New 3G Plan.)
A big controversy that further impacted the growth of 3G is that of the 3G roaming deals between Bharti Airtel Ltd., Vodafone India and Idea Cellular. While earlier 2G roaming deals were mainly focused on offering seamless coverage to the subscribers, in 3G the operators went a step ahead and started selling 3G connections to the subscribers in the circles where they didnt own spectrum. Currently, the Government is in the process of resolving this crisis, but any quick decision is unlikely. (See 3G Roaming: Win-Win Deal Is Needed and IndiaWatch: 3G Roaming Might Cost the Carriers.)
Going forward, we believe the operators will have to work hard to increase the uptake of 3G services in the country. They will have to rethink their strategy of demanding a premium on 3G services. Besides, the operators need to come out with compelling applications or services that will spur the uptake of 3G services.
LTE = Long Time to Evolve
It has been a huge disappointment that there has been just one LTE TDD deal this year. The vendors were anticipating at least a few LTE deals in 2011 but the operators decided to wait and watch. The technology will take a longer than anticipated time to evolve. Only one deal for equipment and management of services between Ericsson AB and Augere Holdings has been announced so far. The vendors were clearly anticipating more traction in this segment but were sorely disappointed. (See Vendors Suffer From LTE Delays and Ericsson Lands India's First LTE TDD Deal.)
2011 = The year of restructuring
This year will be remembered by many in the Indian telecom sector as the year of restructuring. Bharti Airtel triggered the wave by restructuring its enterprise division. It was followed by Aircel Ltd. and then later Tata Teleservices Ltd.. Aircel divided its operations into network operations and marketing operations. TTSL, on the other hand, decided to consolidate all its brands under one brand: Tata Docomo. (See IndiaWatch: Aircel Restructures, Bharti Restructures Business Units and Tata Bids Adieu to Indicom.)
However, while the operators revamped themselves, there was not enough in the way of sector restructuring by the authorities, as India still lacks a clear policy roadmap. The Draft National Telecom Policy 2011 released by Department of Telecommunications did little to dissipate the anxiety in the industry. Many operators cite this as a prime reason for the current delay in network decisions.
Other factors have also dragged the sector down, most notably the ongoing 2G scam case and the innumerable notices served to the operators for reasons ranging from 3G roaming deals to the award of extra spectrum to the details of rollout obligations. No wonder operators are scared to take any decisions, however small or large. (See NTP 2011: An Open Letter to the Telecom Minister and NTP 2011: Strong Action Plan Required.)
2012 = A sense of optimism
In short, the year was one of operator transition and sector uncertainty. The upcoming year is likely to see greater clarity from the Government and clearer operator strategies where 3G and BWA/LTE are concerned.
Along with the operators and their suppliers, partners and customers, Light Reading India hopes that 2012 will be a better year all round. Amen.
Gagandeep Kaur, Editor, Light Reading India
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