Every second Indian will go mobile by 2012

NEW DELHI: With India now adding 8-10 million mobile subscribers every month, up to half the nation’s population-or one in every two citizens-will own a mobile phone in India by the middle of 2012.

According to Business Monitor International, a renowned London-based research firm, 612 million mobile subscribers by 2012 will help India clock a mobile teledensity of roughly 51% by 2012. This scorching pace of growth is unlikely to falter unless the sector faces unforeseen policy disasters or if India’s operators fail to roll out their networks.

International Telecom Union’s (ITU) projections are in the same range.India is already the world’s second largest mobile market, behind China’s 500 plus million mobile subscriber base.

Increasing incomes, changing lifestyles and lower cost of technology are allowing more and more Indians to ride the telecom wave. The new numbers overtake earlier estimates, including from UBS, Citigroup and Credit Suisse, predicting a mobile population of 400-450 million by March 2010. Merrill Lynch and Lehman Brothers have been more even conservative, betting on a base of just 400 million by 2010.

However, India will reach this milestone in 2009 itself. India’s mobile revolution has been a huge social leveler, with the growing number of users tying a diverse nation in a manner rarely seen before.

Its youth are expected to contribute significantly to these surging numbers. Sir Richard Branson, founder, Virgin Group, which tied up with Tata Teleservices to launch branded services in India recently said, “An exciting market, with over 215 million Indians aged 14-25 years. Over the next three years we expect to be adding 50 million new youth subscribers.’’

While companies like Virgin are currently focused on the urban market, it is clear that the next set of growth will come from B and C category cities as well as rural India. Mobile penetration of this magnitude has the ability to revolutionalize long distance learning and health care quickly reaching some of the most far flung and difficult terrains.

Where mobile content is concerned most analysts agree that, largely on the back of India’s popular film industry, music services will grow very quickly, even if other content related revenue lags behind.

Given that a reasonable part of the population by 2010 will be children below 14 and senior citizens, it seems mobile access among the youth and working classes will be more in the range of 70-80%. In policy terms, government needs to quickly turn its focus on redirecting funds for rural mobile access, manage spectrum efficiently and invite multi-billion dollar investments at a pan-India level to fuel this already scorching telecom growth.

Source : Economic Times

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Shyam Tele gets spectrum for all-India rollout

NEW DELHI: Mobile operator Shyam Telecom, in which Russian communications major Sistema holds a majority stake, has become the first of the new telecom players to get pan-India spectrum for launching mobile services. The company has been allotted radio frequencies on the CDMA technology platform. New GSM licensees such as Datacom, Unitech, Loop Telecom and Swan have been given start-up spectrum, but this has been largely restricted to the southern circles in the country.

ET has learnt that communications minister A Raja has already approved the allocation of spectrum to Shyam Telecom. Earlier this year, Shyam-Sistema had announced that the company would offer mobile services across India on the CDMA platform.

The company also bagged licences for 21 circles except Rajasthan, where it already offers services under the brand name Oasis. Shyam also becomes the third private pan-India player to offer services on the CDMA platform.

Sistema president Alexander Goncharuk recently told ET that the company would increase its stake in Shyam to 74 per cent over a period of time. Sistema has already invested about $500 million in India — it paid the Rs 1,651 crore licence fee for Shyam. Sistema also plans to finance its investments by utilising money under the Rupee-Rouble debt agreement between India and Russia.

Source : Economic Times

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3G auction to also include CDMA: Raja

NEW DELHI : The Govt has decided to auction CDMA licences for 3G services, a change in policy that means Reliance Communications and Tata Teleservices will have to bid for spectrum they were previously guaranteed of getting.

No. 2 mobile operator Reliance Communications and sixth-ranked Tata Teleservices are the only operators with major CDMA operations in India, where the GSM platform dominates.

At the start of August, the government announced plans for a global auction of 3G licences. At the time only two CDMA licences were thought to be available, so the plan was that Reliance and Tata would pay a pro-rata price based on the outcome of the GSM auction, telecom minister Andimuthu Raja said on Thursday.

"Now one more operator has been permitted. So again we consulted the TRAI (Telecom Regulatory Authority of India) and took a decision that it can also be auctioned." CDMA and GSM mobile services are provided on different bandwidths.

The government has said the global auction for GSM 3G spectrum would end by December. Current Indian telecoms operators and foreign firms with prior experience in 3G services are eligible to bid.

Reliance Communications has some GSM subscribers, and is expanding its network, but at present more than 80 percent of its customers are on the CDMA platform.

Chairman Anil Ambani has said Reliance would consider providing 3G both on GSM and CDMA. Tata Teleservices has acquired licences for second-generation GSM mobile, but is yet to start services.

Source : Economic Times

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'India could have 270 mn 3G subscribers by 2013'

NEW DELHI: India could be the largest 3G market among emerging countries as 270 million subscribers are expected to use these high-end value added mobile services in the next five years, says a research agency.

The guidelines have been already issued for 3G services and the Government hopes to roll out high-end mobile services by December.

"In terms of subscribers, India is going to be the largest market for 3G users among all emerging markets...India could have 270 million users subscribing to 3G services by 2013," research agency Strategy Analytics VP, Wireless Practice, David A Kerr said.

The research agency said 3G subscribers would constitute more that one third of the total wireless users in the next five years.

Initially, the subscribers would come from metro and 'A' category cities, and enterprises and business customers would make the largest chunk of it, it said. "India has 700 million untapped customers and it is very much possible to have 270 million 3G subscribers in next five years."

At present, the country's total mobile subscriber base is about 290 million.

"At the initial stage corporate and enterprise users as well as tech-savvy young generation would drive this market," Kerr said.

Source : Economic Times

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3G spectrum auction for CDMA players

NEW DELHI: The Telecom Commission has modified its policy on allocation of spectrum for third generation (3G) mobile communications using the CDMA technology platform. The Telecom Commission has decided to auction 3G radio frequencies for CDMA players in the 800 MHz band.

This would deny Reliance Communications (RCOM) automatic entry into CDMA 3G on the strength of its subscriber base, as envisaged in the policy earlier. The decision was taken during Telecom Commission’s meeting on August 21 and incorporates telecom regulator Telecom Regulatory Authority of India’s (TRAI) recommendation.

The government, in its 3G policy announced earlier this month, had decided to allot 3G spectrum in the 800 MHz to the CDMA player with the highest subscriber base, without taking resort to auction as mandated for GSM players, provided it was willing to pay the same price that the highest GSM operator was paying in that particular circle. This gave RCOM, which has the largest subscriber base in all circles, except Delhi and Maharashtra, the right of first refusal (RoFR) for offering 3G services in the 800 MHz band. This band is the most efficient and cost-effective frequency for CDMA players to offer high-end services.

However, Telecom Commission’s move to have an auction now implies that other CDMA players such as Tata Teleservices, Shyam, BSNL and MTNL as well as new players who want to enter India on the CDMA platform now stand a chance to get radio frequencies in the coveted 800 MHz band. Currently, only one operator can be accommodated in this band, as the rest of the band is occupied by the defence services, which will take at least one year to vacate it. As and when the defence forces vacate more spectrum in this band, more operators would be able to bid for and acquire spectrum to offer 3G services.

The Telecom Commission, which is the apex decision-making body of the Department of Telecom (DoT), has also said that the base price for 3G frequencies in the 800 MHz will be Rs 40 crore for metros and category A circles, Rs 20 crore for category B circles and Rs 7.5 crore for category C circles. The base price has been fixed at a fourth of what GSM operators will pay for 3G frequencies. This is because CDMA players can bid only for 1.25 MHz of radio frequencies in the 800 MHz band while GSM players will bid for 5 MHz of 3G spectrum in the 2.1 GHz band.

The DoT was forced to review the 3G policy after TRAI pointed out that the government’s decision to allot 3G spectrum to CDMA players without an auction is against the principles of equality.

TRAI chairman Nripendra Misra, in a communication to DoT secretary S Behura on August 8, 2008, had said: “Since various service providers have been given licences in different service areas at different time periods, TRAI believes that keeping the subscriber base as the criterion for deciding the priority of spectrum allotment will go against the level-playing field and the principle of equity.”

Mr Misra had also demanded that CDMA players too be subject to an auction. “Spectrum in the 800 MHz should be auctioned among applicants with the highest-bid price received for the auction of 2.1 GHz spectrum as the reserve price. The subscriber base of the CDMA network of a service provider in any service area is a result of different environments, and cannot muster the test of fairness if it was to become the basis of priority,” he had added.

Source : Economic Times

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Indian VAS cos betting big on iPhone applications

KOLKATA: Indian mobile phone application developers are trying to come up with unique applications for the iPhone 3G, which was launched in the country on August 22. The likes of Bharti Telesoft, CanvasM, OnMobile, Mauj Mobile and ADAG’s JumpGames have initiated work to develop business, entertainment and utility applications for Apple’s iconic device.

The VAS players plan to bundle and sell these applications through both the operators and Apple’s application platform. The move has been triggered by the fact that iPhone subscribers are usually heavy users of data applications due to the gadget’s features like the multi-touch interface, accelerometer, motion sensor and 3-D graphics.

“Since iPhone application development has started recently, there are scarcely any developers available worldwide. We are developing applications that are customised for Indian subscribers and newer ones for enabling financial transactions, mobile entertainment and games,” said Jagdish Mitra, CEO at CanvasM Technologies.

CanvasM is in talks with major financial institutions from France for replicating the mobile commerce application suite for the iPhone. Applications are also aimed at adding newer functions. “Since iPhone doesn’t support MMS, we are going to release a MMS client for the device by December. The operators too are planning to offer unique applications,” said Bharti Telesoft CEO Manoranjan Mohapatra.

Analysts feel applications tend to improve the operator’s margin and ARPU. “However, a lot of these are also available free. Indian developers will have to also create such an eco-system in India,” feels IDC Asia Pacific research manager Aloysius Choong.

The major focus seems to be on games, since iPhone’s technology supports them best. Gameloft has launched six iPhone games and plans to add eight more by December. “We will release 2-3 games for the iPhone. And once 3G arrives in India, the market for iPhone applications is expected to explode,” said Salil Bhargava, CEO, Jump Games, a Reliance ADAG venture.

Developers plan to monetise their iPhone applications by making them compatible with other phones. “An integral part of creating any mobile application is to render it compatible with most of the handsets,” said Mauj Mobile CEO Manoj Dawane. The companies also plan to sell such iPhone applications across the globe by developing them as per iPhone’s developer programme.

Source : Economic Times

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Telcos to mutually settle linking issues

NEW DELHI: Following the resolution of the interconnect issue between GSM operators and Reliance Communications (RCOM), all telcos have now signed an agreement to resolve all other pending issues related to linking their networks. The agreement was signed in the presence of telecom regulator TRAI over the weekend.

The agreement envisages that telcos mutually settle all other interconnect requests (outside the recent controversy) by October 15. It also envisages that telcos settle pending payments for existing interconnect agreements within the next seven days. Besides, all operators have also agreed to renew all interconnect agreements that have expired. More importantly, operators have also agreed that in case of similar disputes in their future they will adhere by Trai’s decisions on the issue.

Last week, the interconnection row between RCOM and GSM players was settled in closed door meetings in the presence of TRAI officials . Interconnection is the life line of telcos as without it the subscribers of one operator cannot make or receive calls from customers of another telco.

Traffic from one operator passes on to that of another at specific junctions called Points of Interconnect (PoI). The number of PoIs between operators depends on the volume of traffic flowing between their networks. The larger the number of PoIs, the lesser the congestion in the networks. Call drops, failure to connect on the first attempt and poor voice reception of calls happen when the traffic flowing between the networks of two operators is larger than what the PoIs can handle.

“When we resolved the interconnect row between GSM operators and RCOM, we came to know that there were several other outstanding issues related to interconnection. Several requests for interconnect have been pending for the last 18-24 months. We have got them to sign a comprehensive agreement where all pending requests will be completed before October 15,” a top Trai official told ET.

“As per this agreement, all operators have agreed to cooperate with each other on interconnection under the overall supervision and control of TRAI,” the official added. However, if operators fail to settle pending payments for interconnection within the next one week, or cannot settle issues bilaterally, Trai will step in again. In such a scenario, telcos will have to abide by TRAI’S settlement.

With telcos such as RCOM, the Tatas and others gearing up to offer mobile services on both platforms, TRAI has also a constituted a committee to determine the methodology to calculate the total revenues.

Source : Economics Times

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Global majors threaten to hang up on new telcos

MUMBAI: The government’s go-ahead for foreign telcos to bid for 3G spectrum has come as a blow for new Indian operators like Unitech Wirelss, Essar group’s Loop Telecom and Videocon’s Datacom Solutions. The valuations of these fresh 2G licensees may tumble as international operators find a new door to the world’s fastest-growing mobile phone market.

Players such as US-based AT&T, UAE’s Etisalat, Telecom Italia and Bahrain’s Batelco, who were in talks with new operators for buying stake, are now willing to pay much less than they were ready to shell out a month ago, according to industry insiders.

Foreign firms are now looking at bidding for 3G spectrum and roping in a minority Indian partner as against picking up a stake in the new telcos that are learnt to be seeking enterprise valuations in the range of $2-3 billion. “It’s better to bid for 3G spectrum and rope in a 26% Indian partner rather than pay a hefty price for being a minority partner in a new venture, which has no operations or brand name yet,” an official at an international telco told ET.

The base price for pan-India 3G spectrum is Rs 2,000 crore, or $500 million. Also, it is felt that with a wireless subscriber base of over 280 million, new operators may not be very successful in the 2G market where the cream of users has already been taken by existing players.

According to Ernst & Young India telecommunications leader Prashant Singhal, “There is a challenge for greenfield operators to demonstrate success. That is why, though many foreign players are interested in them, there could be valuation differences.”

Sources in the investment banking circles said Unitech had almost finalised a deal with Telecom Italia before differences over valuation surfaced. While Telecom Italia feels the enterprise value of Unitech Wireless is around $900 million, promoters feel it is much higher. UBS is advising Unitech on the divestment. Similarly, valuation of Datacom is said to be not more than $1 billion.

Meanwhile, it may not be difficult for the foreign operators to find minority partners for 3G operations. “The Indian partner we are seeking need not be a telecom player or with a business history in the technology sector. We may look at FMCG companies or infrastructure companies for tying up to gain entry in the lucrative Indian market,” the foreign telco official said. Besides, entities, which were denied license in the September-October 07 rush, may also be willing to become minority partners with foreign operators who are looking forward to bid for 3G spectrum, said the source.

Source : Economic Times

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High bidding for 3G licences may inflate consumers' bill

NEW DELHI: The next generation telecom services, or 3G, may not come cheap at all. Customers opting for 3G services may have to shell out double their current mobile bills if the forthcoming auction battle results into unreasonably high price for 3G licences.

According to international experience, customers should not pay more than 40% of their current bill if they opt for 3G services.

The department of telecom (DoT), which doubled the reserve price for 3G licences from what telecom regulator Trai had recommended earlier, fears that intense auctioning process for 3G may finally burden the customers, or even hinder the smooth roll-out of 3G services in India.

What’s more, if the finance ministry asks DoT to raise the reserve prices of spectrum, it may further put pressure on the final auction amount, and thereby on the billing of the end users.

Telecom secretary Siddharth Behura told SundayET that too much emphasis on revenue could spell doom for the roll-out itself. “I have no estimate of what could be the total revenue generated by this auction, but we should not be too revenue-centric either. Good, if we can raise a huge amount for the country, but if the 3G service providers are burdened with a heavy price for spectrum, they will pass that over to the consumers. There are some international examples where only technical capabilities of the service providers were weighed in for starting 3G. After all, rolling out the services is more important than anything else,” he argued.

Though the finance ministry has not asked DoT to raise the reserve prices so far, it may question the methodology to derive at the reserve price, SundayET has learnt. A senior finmin official said; “We are not happy with the content of the DoT’s reply after we had objected to the issuing of 3G guidelines without consulting us. Anyway, as spectrum is a scare commodity, we have every reason to know how they have derived at the reserve price. We are writing a letter to the telecom ministry asking the economic rationale behind fixing the reserve price for spectrums,” he said.

Significantly, the UK government in the 3G auction in 2000 gained a whopping £22.5 billion (Rs 182,500 cr), one of the highest amounts raised from such license sales globally. But it hurt the telecom companies and the roll-out was delayed by several years. Mr Behura said: “In the UK, the companies bought spectrum at such a high price that it became difficult for them to roll out the services. At times, companies bid for the sake of bidding and later find it impossible to execute the plans.”

KPMG director (telecom) Romal Shetty said India must learn a few lessons from UK. “India will have to make sure that it does not go the UK way where it took six years to launch the services. In India, I feel, the main market could be the metros, but the companies will have to struggle hard to get people interested in 3G. So far as the pricing is concerned, the customers have to be prepared to shell out at least 40% more of their current mobile bills after they opt for 3G services,” he said.

Source : Economic Times

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