The battle is set for mobile operators to fight an exciting game. Some like Tata Docomo have raced ahead in launching (and surprising the industry) 3G much ahead of its peers.
Other operators like Airtel, Rcom, Idea, Vodafone and Aircel who won 3G spectrums will be launching 3G only between Dec 2010-Mar 2011. Introduction of MNP at the same time will heat up the battle and make the contest more fierce and exciting.
Every operator claims that it has won lucrative 3G circles. The question is who will win the 3G game? There are no simple answers because of the fragmented nature of spectrum/license distribution (No pan India operator).
The operator who will lead the 3G race will be the one who creates a perfect ecosystem (Innovative Products and Services, Pricing/Value, Network coverage (including roaming in non-local operator network), Network QoS, Good customer service and reasonably priced hardware - dongles and bundled handsets. I will address each of them separately.
Products and Services:
Unlike GPRS/EDGE (primarily on Mobile phone) and EVDO (primarily on Laptop/PC), 3G will be accessed equally both on mobile phone and via laptop/pc. 3G will primarily be data driven and majority of them will use 3G for Video Calling, Video Streaming (Mobile TV) and Entertainment content downloads (Movies, Music, Webisodes, Mobisodes, Games) apart from the regular email, chat, social networking etc.
3G will not only offer high speed data but will also change the way we consume content. 3G will make Internet/Mobile TV mainstream and expand content beyond the regular Movies, Music or TV shows. People will plug and fill their non-productive time (during travelling or waiting) with short and interesting content (small movies, single music videos, mobisodes etc.).
There is huge potential for other innovative products and services over 3G like e-learning, e-governance etc. Since it will sometime before 3G reaches the masses and rural areas, I will deal with this topic later at another time.
Pricing/Value/Usage:
Well the above fancy products and services will remain an unaffordable dream or an indulgence, unless the pricing is kept right for both voice and data. I know 3G operators have paid exorbitant amount to win the spectrum (nobody forced them to bid at such exorbitant prices. they always had a choice to opt out. anyways) but they will put off customers if they price 3G excessively. They will have to create a fine balance between their investment cost and customer expectation/affordability.
3G data is almost 10 times faster than 2G and almost 4 times spectrum efficient than 2G. Hence fair 3G data pricing should be 2-2.5x (10 times faster/4 times spectrum efficient) the current 2G data prices (GPRS/EDGE).
If I consider Tata Docomo’s current GPRS/EDGE benchmark of 6GB download for Rs.95/month, I would expect a fair entry level 3G data to be priced at Rs.99 for 2-3GB download going up to Rs.999 for 40-50GB download. Whether other 3G operators do it or not, I hope at least Tata DoCoMo sets a fair standard.
India overall is a highly competitive value game (with a bias towards pricing). Did you know that the highest selling models of Mercedes in India are diesel versions? Got the Que?
I will agree with the mobile operators that give the size, demand and fragmented spectrum availability, unlimited download plans will be unfeasible and unrealistic and will choke the network. But at the same time am disappointed with their pricing policy for limited download plans. If telcos follow FTP (Fair Tariff Policy) in pricing limited downloads fairly then there will be no need for FUP (Fair Usage Policy). And everyone will be happy.
Globally, wholesale or bulk bandwidth costs about 10 cents or Rs.4-5 per GB. Adding their investment costs (capex, opex, spectrum etc), the total cost would be around Rs.8-10 per GB. Hence a fair 3G data pricing would be Rs.20-50 per GB depending on the speed and volume of download. If the limited download pricing is kept at fair and affordable levels then customers would not miss or complaint non-availability of unlimited 3G plans.
As for voice calls, customer expectation is that the same/equal price should be there for 2G and 3G, while they will be ready to pay 20-25% premium for video calls over voice calls.
Network coverage and Network QoS:
I have little to say about Network QoS because 3G is new to India and it will take some to create and compare benchmarks. Regarding the 3G Network coverage, the roaming proposition that 3G operators offer will be important, especially for high end customers. For example, if Tata DoCoMo in Maharashtra circle offers its 3G customers roaming free access (both incoming and outgoing) in Mumbai (like 2G), then it will play a crucial role in customers opting for Tata DoCoMo as their preferred 3G operator.
Handset/Hardware:
3G will not pick up if there are very few affordable handsets (Rs.3000-5000 range) or dongles (Rs.1000-1999 range). There will be customers wanting just the basic video calling service to stay in touch with their loved ones to tech savvy youngsters and business executives who would like to be connected all the time and will be looking at mid to high ranged feature rich smart phones.
It will be interesting to see if Tata Docomo does la Tata Sky, i.e., brings down the entry level dongle device cost to Rs.999. This together with affordable data plans will propel 3G usage in India.
Conclusion:
All 3G mobile operators will have to keep in mind near term and impending strategic threat from RIL/Infotel, which has won the Wireless Broadband Auction and most probably go with LTE (4G). So 3G operators will have to ramp up customer acquisition and capacity utilization before RIL becomes a dominant force in the Wireless Broadband (3G/4G) landscape of India. And that is not far away.
Probably in 2-3 years RIL will start dictating and dominating the wireless broadband ecosystem in India. And we all know RIL is a price warrior. So it would be wise if 3G operators look at their strategy and RoI keeping in mind RIL imminent and dominant presence in the near future.
-About the Author
Hemal V K, is the Founder Consultant of iTree Consulting,
An independent Brand and Innovation Consulting firm
Based in Mumbai.
