3G now in India… immediate impacts on Telecom Sector

Today’s biz papers were all shouting out loud about the 3G telecom policy now finally being here. For the uninformed like me, it meant too much excitement about half a mark (thats how much of technology leap we would take by this costly migration from strong2.5G to 3G/strong ) on the score card…

3g MTNLSo I decided to read more about it and understand the business logic behind all the fuss. It seems 3G promises the platform for real convergence on the small screen (read handset)- with streaming video, media rich applications, high speed data transfer and what not. But the real low hanging fruits for the telcos lies in the 3G’s strongspectrum handling efficiency/strong.

As mentioned in a previous note-Spectrum is the biggest fixed cost for telcos and better utilisation in circles of high user base will reap immediate rewards.

So here I go again, trying to predict how the 3G roll-out will happen/strong in India:

  • The top players like Vodafone & Airtel will have to adopt 3G when it happens. There will be too much reputation risk (from the premium segment customers) for them to delay this. Coz in my mind, this premium segment customer has either tasted a better user experience abroad or feels that he would use these “cool” features once 3G is here
  • If the 3G license is available by circles- the top players will go about doing this in phases. I would have done it coz that way you dont need to implement it in smaller towns – barring a few like Ludhiana, Chandigarh etc
  • The battle for content will start- albeit with a substantial lag of 6-7 months, before the critical mass of consumers builds up
  • The initial 3G consumption on the consumer side will be high in the school & college/strong going segment- where entertainment will be the underlying theme- music, music videos, sports clips etc
  • Over a longer period of time- once the novelty factor fades out, it would be easy to segment the 3G consumers by category of content consumed/strong .Hence the Telcos will have to be tied up with the perceived leaders in each vertical.
  • It would create a whole new industry of applications , content providers. VAS as a term would now mean more than ring tones amp; wall papers 🙂
  • The average cost of phones bought will rise in short term, before 3G phone prices start coming down. 3G capability will become a decision criteria at the handset level- possible death of mid-segment phones.