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3G has witnessed phenomenal success with close to a billion subscribers worldwide and is expecting a compound annual growth rate (CAGR) of around 13 per cent in its subscription rates between 2010 and 2013. Globally, various technological benefits such as video applications, corporate solutions, multimedia services, high speed data and mobility, are playing an important role in the rapid development and deployment of 3G technology. The large-scale adoption of 3G has also led to the evolution of some advanced versions of the technology, with higher capabilities including high speed downlink packet access (HSDPA) and femtocells.

With 3G, innovation is the keyword. Initially, a large number of 3G subscribers worldwide returned to 2G due to the lack of a compelling service that this platform could offer. With time, higher bandwidth and faster download speeds on 3G, and the increasing availability of more attractive content have led to the growth of the value-added services (VAS) industry from the traditional ringtones and wallpapers to more sophisticated video applications such as movies-on-demand, video conferencing, mobile TV, high speed web access and interactive gaming over the internet. This, in turn, has led to the expansion of the market for data services, which is increasingly driving operators' average revenue per user (ARPU). While in Europe and Latin America, music and gaming have emerged as the top growth drivers over 3G networks, in the case of India, video is expected to help the companies monetise their networks.

An evaluation of some of the key 3G applications that have found a significant market as well as the various ongoing initiatives...

Killer applications

Video applications like movies-on-demand, video calls and conferencing, and mobile TV are some of the services that are attracting the high-end customers.

These services leverage the higher speeds offered by 3G. While the market for mobile TV is currently limited with only about 115 million subscribers (accounting for less than 5 per cent of the global mobile user base), it is expected to grow at a CAGR of 45 per cent between 2009 and 2013 to reach around 450 million subscribers by end-2013. The Asia-Pacific region is expected to account for 67 per cent of this subscriber base with India and China being the primary markets for mobile TV.

3G's anytime, anywhere accessibility feature also provides an opportunity for marketers to utilise this technology to draw a significant portion of the digital advertising segment to the mobile platform. 3G not only helps in loading advertisements faster but also enables service providers to incorporate richer media and content, thereby leading to a better consumer experience. With greater interactivity, advertisers have a small and dedicated market to target, which enables them to deliver better services at lower prices. In the case of India, 3G advertising has the potential to generate significant revenues for the industry, but its success will depend on the pricing and service strategy that the operators eventually adopt.

Globally, mobile broadband has achieved significant growth with mobile broadband users having exceeded fixed line broadband users. For instance, in the case of Malaysia, the launch of 3G had led to a quantum increase in data revenues from 17 per cent to 25 per cent. Similarly, in Singapore, 3G mobile broadband has witnessed tremendous growth. It accounts for 6 per cent of the overall broadband growth with data revenues also increasing significantly as a percentage of total ARPUs. India is expected to follow a similar route.

While financial services and mobile commerce using 3G networks have already reached a new level of visibility around the world, they are only just beginning in India. 3G can help this industry take off in a big way and increase transaction volumes in the country by making banking and payment solutions convenient and secure. Face-to-face interactions between customers and bank officials through video calls increase the customer trust in the bank. For banks, online banking is cost effective as it enables them to lower their opex significantly.

Meanwhile, the online gaming business, which is currently worth about Rs 2.2 billion in India, is also betting big on 3G. With 3G, at least 10 per cent more consumers are expected to download heavy data and content. The entertainment industry and social networking are other areas that are expected to get a fillip with the launch of 3G in the country.

Some of the other applications that have evolved on account of the availability of better technology include location-based services and physical security such as video surveillance across enterprises and municipalities. The market for multimedia applications, which convert a mobile phone into a smartphone, has also been enhanced with the coming of 3G.

Moreover, 3G will be an effective tool to penetrate the underserved rural regions in India on account of its ability to keep people connected at all times in a more advanced manner. For instance, it will act as a key enabler to undertake social initiatives such as e-education and telemedicine. In a country like India, where basic medical facilities have failed to reach isolated locations, 3G will give a much-needed shot in the arm. Services ranging from medication reminders to remote diagnostics and monitoring services that have the potential to improve and extend life can be facilitated through video conferencing and visually interactive mobile conferencing phones.

The wireless health industry is only just gaining critical mass across the world and, by driving down costs, 3G may turn around India's struggling health care system.

3G may also become a predominant platform to achieve the government's broadband target of 20 million broadband users by end-2010. Rural banking infrastructure is also expected to get a boost with the remittance of funds through mobile phones becoming a possibility.

Another interesting 3G application that is gaining momentum is e-education, wherein people can learn English using regional languages as a platform.

Industry initiatives
Following the near completion of 3G auctions in the country, several major operators are gearing up for the launch of data services. This is primarily because the market for data services, which currently accounts for only 10-12 per cent of operator revenues, is expected to expand at a CAGR of over 40 per cent from 2010 to 2015. This offers a major opportunity for service providers to cash in on the demand and expand their mobile broadband coverage. The operators are, therefore, increasingly focusing on this area to shore up their ARPUs in the wake of the tariff wars and the severe drop in voice revenues.

Bharti Airtel, Reliance Communications (RCOM) and Vodafone Essar have started offering browsing and downloading facilities at Re 0.10 per kb to their post-paid customers. To tap the prepaid mobile segment and give customers a sense of mobile internet services, they have introduced internet cards. Of late, the mobile internet business has also witnessed a spurt due to increased usage of social networking sites.

RCOM, which offers its community applications and user-generated content through RWorld, is planning to launch a 3G application store. This portal will have a service delivery platform supporting on-device portals, idle screens, widgets and RSS readers showcasing the latest developments across the world. The idea behind the launch of the application store is the much-in-demand smartphone experience for customers and content localisation.

State-run operators Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) are not far behind. BSNL is offering a range of services such as live TV, high speed mobile broadband and movie downloads.

It has also tied up with Nokia, Samsung and Sony Ericsson for handset bundling, and rolled out BlackBerry solutions on its 3G network. Meanwhile, MTNL's 3G VAS platform offers a number of interactive applications such as video interactive voice response portals, video chat, video SMS and alerts.

VAS providers are also taking steps to cash in on the rising demand and are in the process of developing applications suitable for 3G. For instance, Nazara Technologies, a mobile entertainment and content provider, is looking to launch 3G gaming on mobile phones. Though the company will introduce only 10 games to begin with, more are likely to be added at just Rs 5 per download, depending on the demand. The company has also recently introduced Archies comic strips on mobile phones in various Indian languages, which can be accessed through a GPRS connection. These are currently being offered at varied price points from Re 1 per day to Rs 10 per week and Rs 30 per month, depending on the operator.

The competition among vendors is rising to tap this high-growth segment. Apple has recently launched its 3G iPad, a cross between a laptop and a smartphone.The device, which is more compact than a laptop, is especially suitable for media applications such as video, games, electronic books and web browsing.

The road ahead
Globally, the usage of data-based value-added services has increased with the adoption of 3G technology. But, in the case of India, despite the optimism surrounding the advent of 3G and the various initiatives being planned, the extent to which the technology will push demand remains to be seen and will largely depend on how operators utilise spectrum.

Snapshot

3G applications in rural areas

• Telemedicine
• E-education - computer training, learning English
• E-governance - information on policies and schemes

• Video: Movies-on-demand, video surveillance, video calls and video-conferencing, mobile TV
• Mobile advertising
• Mobile broadband
• M-commerce
• Social networking and mobile gaming