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3G Technology Adoption in India

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Neil Taskar| 61110056 | Indian School of Business | Class of 2011

Synopsis

With the 3G auction completed, the wait for the Indian consumer for 3G services is finally over. In

spite of all the hype surrounding 3G, it is not expected to have the same impact as voice services. In

the short term, 3G is expected to enhance the mobile-based internet usage experience and provide a

slew of infotainment based services targeted at the urban junta. Adoption of 3G as a pure mobile

service by the larger populace remains doubtful, though it may be the harbinger of increased

broadband penetration, something which has been on top of the government agenda.

Introduction

What the car is to the American, the mobile phone is to the Indian ( anonymous). For the Americansociety, car ownership came to be associated with independence, freedom, and increased status

(Wikipedia). Similarly, the advent of mobile telephony in India in the mid-90s liberated the Indian

soul. The first phase of the mobile revolution in India, i.e. the 2G / 2.5G mobile services (essentially

voice) allowed Indians to do what they love doing most talk. Several initiatives by the government

(CPP Calling Party Pays) and the private sector (Reliance Infocomms Monsoon Hungama)

improved the affordability of mobile services for a large section of the population. At the crossroads

of its evolution, the Indian telecom sector is now poised to leap into its next phase of growth. If the

phase-1 was voice, then phase-2 is undoubtedly belongs to data.

Impact of 3G Mobile Services

The immediate impact of 3G is expected to be significant, though not of the same magnitude as that of

voice services. Incumbent technologies like GPRS and EDGE have whetted the appetite of the Indian

consumers for data based services. Till yesterday the consumer was happy just making voice calls;

today the consumer wants to do a lot more. The consumer now wants to be able to surf the internet at

high speeds, quickly pay utility bills, watch high quality streaming video of the latest cricket match

live, switch on the geyser from office etc. Due to its high cost, the increased consumption of data

services is expected to be initially limited to urban areas.

The real impact of 3G shall be felt in the long run. Increased adoption and hence economies of scale

will eventually lead to more affordable devices and services. Consequently, 3G will be able to usher

in an increased adoption of broadband and hence internet based services by the larger Indian

populace. It is well known that one of the biggest challenges that India faces today is the inequitable

distribution of wealth, a key reason for which is the inequitable distribution of knowledge. 3G and

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hence broadband access can help eliminate this huge knowledge barrier, allowing Indians to improve

skills and education levels and hence improve their productivity and overall quality of life.

For a country with 1200 million people, India has a mobile penetration of nearly 50% and an

extremely poor broadband penetration of nearly 0.65% (recent TRAI reports). What these figures

actually reveal is that if affordable broadband services were made available on the mobile phone, it

could give a huge fillip to the overall broadband adoption by the Aam Aadmi (majority of the Indian

populace) and this is where 3G will make its biggest impact albeit in the long run.

Blockbuster Services a.k.a. The Killer Application

The one question that has been on the mind of anyone and everyone associated with the telecom space

regulators, operators, equipment manufacturers, value added service providers etc has been What

is that Blockbuster Service or Killer App thats going to define the 3G landscape? The answer,

surprisingly, is counter intuitive broadly speaking, there is no single or defining Killer App.

To figure out this conundrum, think back to when broadband was first launched in India. We were

moving from aNeanderthal-esque age of inefficient and slow dial-up connections to an age of faster

and reliable broadband connections, essentially opening up a thicker pipe between the end-user and

the service provider. Did this advent of broadband really throw up any radically new services? No.

However, what did happen was that we started using mail more often, did more of song / video

downloads, were able to update our social networking statuses much faster, uploaded and shared our

pics almost instantly etc etc etc. So what broadband really did was improve the overall user

experience and hence drove increased usage of a lot of existing internet based services. Analogously,

3G will do to the mobile phones what broadband did to PCs, i.e. dramatically improve the end-user

experience of a lot of the existing services.

Having said so, there will be a few services that will be new to the Indian consumer; the adoption of

these services, however, depends on several factors which we shall examine later.

A. Existing Services that will see Increased Usagea) Wireless Data Cards - One of the main reasons for poor consumer broadband penetration inthe country has been management of the last mile, which has predominantly been wired. With 3G

bringing a wireless last mile option, more and more consumers in urban and semi-urban India are

expected to avail the wireless broadband services.

b) Mobile Broadband - Probably the most telling impact of the adoption of 3G mobile servicesin India is going to be on the increased use of internet based services via mobiles. The following three

areas will probably see the greatest surge in mobile-based internet traffic:

i. Social Networking Services 3G is expected to give a boost to creation and sharing of UserGenerated Content (UGC) via social networking sites. 3G devices and services shall together enable

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