Thursday, May 19, 2005

3G for India... hmm.

The Telecom Regulatory Authority of India has recommended the Indian government to provide free 3G licenses to existing telecom providers. If the recommendation is accepted, then only new players in the telecom market would be required to pay licensing fee. Looks real smooth doesn't it!!

Ok let me explain - India is definitely one of the fastest growing telecom industries in the world. Also, credit must go to Indian telco providers for being early adopters and even innovators of technology - unlike a country like US, which was still holding on to AMPS in the new millenium.

Another observation which I often make to compare the telco industry in India to the rest of the world - is the difference in customer maturity. Even today, for a typical NYC customer, the primary concern is to get good coverage on their plans - and many are willing to pay the extra buck to get it. Whereas, back in India, its about the best value added services (like 3G) for the cheapest prices - take my work for it - prices in the Indian mobile phone industry are amongst the lowest in the world.

But, despite all these attributes, the Indian telco industry has often shown lack of direction - and a lot the fault for this lies with the Indian govt due to their obvious lack of regulation. This has resulted in many prominent international carriers staying clear of India. And the current issue of 3G licensing is no different.

The two warring factions of the industry - GSM based providers and the CDMA based providers are worried about the allocation of spectrum to the other - hence both are feeling hard-done-by this recommendation. Of course, the government may not accept this recommendation at all, but they haven't swayed either direction thus far. The only comment of note has been from the Indian communication minister - who is in favor of skipping 3G alltogether and going straigt through to 4G (remember my point of early adopters :)).

I can foresee an: allotment - a set of licenses - followed by a string of court cases - falling prices - a few more internation carriers packing their bags. You don't believe me..? Trust me - its a protocol - works like clockwork :)


At May 19, 2005 3:14 PM, Anonymous Praveen said...

TRAI's recommendations have made a lot of sense always. TRAI was the first one to recommend waiving off the license fee for many previous licenses. Telecom industry takes about a decade to just break even and more so in India, where customer demands are high and so is competition.
The government has embarrased us internationally in the past by ignoring TRAI recommendations and allowing many MNCs to leave. But that was a different govt. So I am hopeful.
People must understand that the role of the TRAI is to help the telecom industry grow in the country. You pointed out correctly, we are one of the largest telco markets inthe world. But, people at high places need to understand the mechanisms that drive the telco industry.

At May 19, 2005 3:16 PM, Anonymous arvind said...

Come on Praveen, we all know that certain industrial families paid their way to licenses last time. The system is too corrupt. Even now, I wouldn't be too hopeful.

At May 21, 2005 3:29 AM, Anonymous Praveen said...

Thats cynical Arvind. I understand the frustration, and we all observed the row surrounding CDMA licensing, but things need not be the same always.
The very fact this has been recommended is an excellent testament to India's bright plans. These licenses are being sold for millions around the globe. We are looking to embrace technology even at its early stages, isn't that great.


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