Wireless technologies that will impact India significantly in 2009

(2G,3G, Wimax and WiFi/VoIP: My choice of wireless technologies that will impact Indian telecom scene in 2009. However, more than the technology and its acceptance, I have focused on the stumbling blocks and hence what to expect out of these technologies.)

In 2009, India should see a great deal of activity happening in the telecom sector. 1. 2G would continue its unabated subscriber addition with another 100 million new users.
2. After a few years since its been in the horizon, 3G would finally see the light of the day.
3. Wimax would see some metro action in the second half of the year.
4. Wi Fi/ VoIP would serve the enterprise segment as the most favored data/voice transfer mechanism

However in terms of mass absorption and usage, more than 98% of the consumers will depend on the 2G network and fixed line access for communications and internet. The consumer acceptance and usage rates would directly depend upon the cost of ownership or per unit costs of communication. From a technology, infrastructure and company’s perspective, the government policy structure, licensing fees, USO levies and usage charges need to be more transparent and less inhibiting. 2009 is going to be an election year in the country, which would mean truck loads of populist measures. The exchequer would try and recover the money from the licenses, levies and usage charges in the sectors such as telecom. If that happens, then the roll out of these technologies could be seriously impeded.

Going back to the discussion on technologies:

2G with its rock bottom tariffs would be the choice of the majority who use mobiles for little more than voice and texting. We have been adding close to a 100 million users for last three years in succession and this trend will continue till 2012. All this subscriber addition would happen through the 2G (GSM and CDMA) technologies.

BSNL 3G services would start by the end of Jan – Mar 2009 quarter and over the next 9 months, we would see the 3G roll outs in most of the metros and some mini metros. However, the Rs.4040 crore 3G license is prohibitorily priced. In these days of recession, companies may not want to bid on this price. I do not see a profitable standalone business case for pure 3G services for any operator in India. Evidence from around the world is overwhelmingly against such a 3G business case. From the consumer perspective, there are a limited number of high profile, high ARPU consumers who would buy into the 3G, but that is a significant minority.

Wimax also suffers from similar licensing issues. The services are pegged at a licensing fee of Rs.2020 crores and there isn’t even a proper policy structure in place. Tata and reliance which have bought Wimax states, are currently limiting their efoorts to metros and Class A cities at present.

Wimax offers wireless broadband access to a 30 Kms radius. This is of significant importance in a terrain like India to increase internet connectivity and in the years to come Wimax may be the technology which will enable internet savvy panchayats. It will beat 3G in costs, but will be limited in its coverage compared to 3G which will have a greater carpet area.

Given the state of legislations, it will perhaps be a year or more, towards the mid/end of 2010, that mobile communications will feature in Wimax.

Wi Fi and VoIP will power the enterprise segments and the growth in this segment will be directly proportional to the office space and lap top sales.

The introduction of these technologies is heavily subject to two other factors

Mobile Number portability which would increase churn at the high end of the users. This has a profitability impact for incumbents
The spectrum release by the government. Chronic shortage of spectrum spaces and their interplay with the defense forces will impact launch dates.

Net of all things, 2009 will be a year which will be remembered as the launch of 3G. However, I doubt whether there will be a large scale activity in the Wimax and 3G space. 2010 may turn out to be the year when real time activity on field happens with these new technologies. A pro active government intent and policy could make a lot of difference to the sector. Our policy makers and leader would need to take a out of leaf of the Chinese government which is doing the 3G full Monty, full steam across the country.

As an after thought, I would like to add a comparison and analogy between Wireless technologies and The railway system in India.
2G would be the general railway (the way we know it, serving majority of the nation)
3G would be the Shatabdi and the Rajdhani, for a select few who are discerning.
Wimax would be the Local trains (The electric ones) connecting smaller parts of a geography.
Wi fi would be the metro rail connecting cities and businesses (Enterprise segment)