Three years into the 3G mobile service launch, the uptake has not been impressive. The government auctioned 3G spectrum for private players in early 2010 but the state-owned Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) had already launched their 3G services in 2009.

Market estimates suggest that the share of 3G subscribers is just a little over 2 per cent of the total wireless users. As of March 2012, the country had over 900 million mobile users, of which only 20-21 million were 3G subscribers.

One of the key reasons for the slow uptake is the exorbitant price of 3G services. On an average, these services cost at least three times more than 2G services. While GPRS is charged at Rs 50-Rs 100 per GB, these services are charged at Rs 150-Rs 300 per GB. This pricing gap will have to be narrowed down to drive 3G service uptake. However, industry experts believe that tariffs, which are a function of volumes, will not come down unless an ecosystem for the service, including handsets, is developed. For instance, currently, only 3 per cent of Vodafone India’s customer base owns 3G-enabled handsets. Even if 70-80 per cent of them use 3G, it does not account for much in terms of volumes.

Another reason is the patchy coverage. While almost all operators have launched these services in big cities, there are several pockets within these cities where 3G services are not available.

Broadly, India is following Europe’s 3G growth model, where spectrum was auctioned at sky-high rates and the services failed to spread rapidly. In contrast, in Japan and South Korea, where bandwidth was sold at affordable prices, 3G services witnessed considerable uptake.

Besides, it takes operators two to three years to roll out their network. As per the data presented by the minister of state for communications and IT, almost 80,000 base transceiver stations for 3G services have been installed in over 5,000 cities and small towns so far.

Operator plans

Bharti Airtel

About 9 million of Bharti Airtel’s 180 million wireless subscribers are on the 3G network. Of these, 30 per cent are active users, according to a company official.

The company plans to upgrade its 3G operations in the domestic as well as African markets. It has launched 3G services in seven African countries and plans to extend these to all its markets in Africa by September 2012.

Meanwhile, the company’s 3G operations have put a strain on its finances. Bharti Airtel has been reporting a fall in its net profits for the past several quarters. For instance, the decline in net profit in the quarter ended March 2012 was primarily due to interest costs for debt taken to finance the 3G spectrum purchase and network roll-out. This resulted in higher costs on account of the 3G licence fee amortisation (Rs 1.06 billion) and 3G interest costs (Rs 840 million).

Vodafone India

The company, which launched commercial 3G services in February 2011, saw a huge surge in data revenues. During the quarter ended December 2011, revenues from the data segment grew to Rs 6.47 billion, a 29 per cent increase over the corresponding quarter of 2010. The company provides 3G services in 683 towns and cities across 20 circles. Its total data customer base stood at 31.2 million as of December 2011, accounting for 21.5 per cent of its total subscriber base of 144.9 million.

Idea Cellular

Idea launched 3G services in March 2011. Since then, the company has expanded its footprint across 3,000 towns and over 10,000 villages. But 3G network expansion is only one of the factors responsible for wireless broadband penetration in the country. The company has decided to build on its data capabilities. To this end, Idea has undertaken augmentation of its back-end systems. It is upgrading its fibre transmission network to high capacity dense wavelength division multiplexing, microwave to IP radios, etc. It is also improving its billing, customer care and IT capabilities, and building a high capacity network packet core to manage the expected surge in wireless broadband data.

As of December 2011, Idea Cellular had more than 5 per cent of its 106 million customers on the 3G network and more than 2.25 million active 3G subscribers.

Reliance Communications

Reliance Communications (RCOM) has launched 3G services in all the 13 circles, in which it won spectrum.

Realising that it would need a considered strategy to leverage the proliferation of smartphones, 3G service availability and data services, RCOM recently formed a marketing alliance with Google. Under this partnership, RCOM would market Google’s Android operating system and mobile services. The operator would offer 1 GB of free usage per month on its 3G plan to all Android users. RCOM would offer customer care services, carrier billing, exclusive applications and content, in addition to the Android experience zone, at its retail outlets across the country.

Last year, RCOM had launched two Android-based tablets. The company will now also be able to target new customers of major Android-based smartphone manufacturers such as Samsung, LG, Sony and HTC.

TATA DOCOMO

TATA DOCOMO, the first private sector operator to launch 3G services in the country, has introduced several exciting applications for its customers. The company’s 3G services are already available in over 150 cities and more cities are being added in a phased manner.

The company is working directly and also partnering with various organisations to offer relevant 3G services on mobile devices. These services include applications such as smart pilot, which provides turn-by-turn route directions on the user’s mobile through visual and voice assistance; DOCOMICS, a mobile-based comic viewer; and Route Finder, which provides directions from the subscriber’s current location to the destination.

Aircel

The company, which has spent about Rs 100 billion on 3G so far, plans to invest a further Rs 75 billion to expand its 3G and Bbroadband wireless access networks. Aircel, like its peers, is trying different strategies to popularise its service offering. The company has announced its new Pocket Internet Smart 3G data plan. The plan, available at a starting price of Rs 7, is valid for a day and offers 50 MB of data transfer on both its 3G and 2G networks. A speed of 3.6 Mbps is offered for the first 50 MB of data usage, which is reduced to 128 kbps on crossing the limit. Similarly, users can avail of 100 MB of data for three days; 200 MB for seven days; and 250 MB for 15 days at a speed of 3.6 Mbps for Rs 18, Rs 37 and Rs 65 respectively.

BSNL and MTNL

MTNL and BSNL were among the first operators to launch 3G services and offered one of the lowest 3G data tariffs. However, none of the two operators seems to have popularised these services among its users. A key reason for this is that a large number of their subscribers are PSU employees, who are allotted BSNL/ MTNL numbers by their respective companies.

The way forward

In the past, broadband access took over from the conventional dial-up connections and significantly changed the pattern of internet usage through conventional desktops and laptops. Similarly, 3G service, in spite of its small subscriber numbers today, promises to increase data usage in the country in the coming years. The real challenge is to educate users about the benefits of the service. For instance, Tata Teleservices Limited has launched a series of educational initiatives, beginning with an experiential campaign at TATA DOCOMO Dive-In stores, where anyone can walk in and experience 3G services.

The adoption of the new digital lifestyle in India has been slow. But this is set to change as the ecosystem for wireless broadband develops, with the availability of affordable 3G smartphones, and relevant applications and content.