Introduction: An overview of what this project aims to study and listing down the Research methodology adopted for the project
What is 3G and its Global Trend: A brief on how the technology moved from 2G to 3G and Now 4G globally and how the technology advanced globally. Analysis of the technology on the basis of People perception, Cost effectiveness Vs services, Regulations.
3G Technology in India: The current status of the technology in India. Analysis of the technology on the basis of People perception, Cost effectiveness Vs services, Regulations
MVAS and Applications: This will give us details of various applications that would be available to Indian users with the advent of this technology in India. Analysis of growth opportunity and challenges for these applications.
Legal Requirements for 3G in India: Analysis on the Legal regulations and Ethical requirements for this technology in India.
Recommendations and Findings: On the basis of the analysis some findings and recommendations for this technology in India.
Table of Contents
Annexure-B: Sample of Table of Contents 1
This page is intentionally left blank 3
PREFACE 4
3G is the new Technology in Town for India. This project would cover Global Trends of 3G and how the technology in the telecommunication sector grew over the period of time. This would also analyze the current global players in this sector and how this technology is used worldwide. Then the project will look at how this technology is going to spread in India and how people would react to this. The project will also briefly discuss the MVAS (Mobile Value Added Services) available with 3G and the various implications of that. The project will also look at the Legal requirements and Ethical issues. 4
Place, Date: Mumbai, 20th November 2010 Author: Ramnath Subramanian 4
This page is intentionally left blank 4
ACKNOWLEDGEMENT 5
I would like to sincerely thank my project guide Ms. Preeti Khanna for her continuous guidance during the entire course of this project. She guided me in the right direction which helped me in completing the project with the desired outcome. I would also like to thank my colleagues At Hutchison 3 Global services for helping me with the required data and information. I would specially like to thank the Vodafone and H3G Technical Support teams for providing me details of the 3G technology. I would also like to thank the VAS team for providing me insight to various value added services available with the technology. 5
Place, Date: Mumbai, 20th November 2010 Author: Ramnath Subramanian 5
This page is intentionally left blank 5
EXECUTIVE SUMMARY 6
This Project report is sub-divided into following areas, 6
1.Introduction: An overview of what this project aims to study and listing down the Research methodology adopted for the project 6
2.What is 3G and its Global Trend: A brief on how the technology moved from 2G to 3G and Now 4G globally and how the technology advanced globally. Analysis of the technology on the basis of People perception, Cost effectiveness Vs services, Regulations. 6
3.3G Technology in India: The current status of the technology in India. Analysis of the technology on the basis of People perception, Cost effectiveness Vs services, Regulations 6
4.MVAS and Applications: This will give us details of various applications that would be available to Indian users with the advent of this technology in India. Analysis of growth opportunity and challenges for these applications. 6
5.Legal Requirements for 3G in India: Analysis on the Legal regulations and Ethical requirements for this technology in India. 6
6. Recommendations and Findings: On the basis of the analysis some findings and recommendations for this technology in India. 6
Table of Contents 7
CHAPTER 1: Introduction & Research Methodology 10
10
The mobile phone for today's users is more than a simple communication device they want it to be a converged device which can take care of their multiple needs of communication, staying connected and updated .The mobile phone has become a user's communication cum entertainment device. Music MP3, Radio, High quality camera, Wi-Fi, Games, Calculator, Reminders, Scheduler, Organizer, Polyphonic ringtones etc have become hygiene features and are a must for any handset today.MMS failed due to the high cost charged by the operators. 10
3G or 3rd Generation is a generation of standards for mobile phones and mobile telecommunications services fulfilling specifications by the International Telecommunication Union. The 3G network provides faster and secure data transmission. 10
After 34 days and 183 rounds of bidding, India's 3G spectrum auction is over. With the auction value running up to ` 68,000 Crore , many of the Private Players, MTNL & BSNL are competing with each other in this rat race. 10
The bandwidth and location information available to 3G devices gives rise to applications not previously available to mobile phone users. Some of the applications are Mobile TV, Video on Demand, Video Conferencing, Tele-medicine and Location based services. 10
With such a wide variety of services available and the 3G service offered by all major service providers there is huge potential in the market. To add to the competition, Number Portability might also be available next year. India has a very huge potential market with a huge population which is technology savvy and is ready to spend money on services and technological products that would improve their lifestyle. 10
CHAPTER 2: What is 3G and its Global Trend? 11
CHAPTER 3: 3G Technology in India 14
CHAPTER 4: MVAS and Applications 18
Chapter 5: Legal Requirements for 3G in India 23
Chapter 6: Recommendations and Findings 25
CHAPTER 1: Introduction & Research Methodology
The mobile phone for today's users is more than a simple communication device they want it to be a converged device which can take care of their multiple needs of communication, staying connected and updated .The mobile phone has become a user's communication cum entertainment device. Music MP3, Radio, High quality camera, Wi-Fi, Games, Calculator, Reminders, Scheduler, Organizer, Polyphonic ringtones etc have become hygiene features and are a must for any handset today.MMS failed due to the high cost charged by the operators.
3G or 3rd Generation is a generation of standards for mobile phones and mobile telecommunications services fulfilling specifications by the International Telecommunication Union. The 3G network provides faster and secure data transmission.
After 34 days and 183 rounds of bidding, India's 3G spectrum auction is over. With the auction value running up to ` 68,000 Crore , many of the Private Players, MTNL & BSNL are competing with each other in this rat race.
The bandwidth and location information available to 3G devices gives rise to applications not previously available to mobile phone users. Some of the applications are Mobile TV, Video on Demand, Video Conferencing, Tele-medicine and Location based services.
With such a wide variety of services available and the 3G service offered by all major service providers there is huge potential in the market. To add to the competition, Number Portability might also be available next year. India has a very huge potential market with a huge population which is technology savvy and is ready to spend money on services and technological products that would improve their lifestyle.
1.1 Methodology
The project findings is based on secondary data that has been collected from dot and COAI websites which is genuine data which has been collected for the telecommunication industry. The findings also throw some light on the secondary research carried on the industry. Secondary sources of information, like journals, magazines and Internet were used to arrive at the findings. A discussion was also carried with Hutchison 3 Global services customer care support helped in understanding the technology better.
1.2 Limitations
The data used for the analysis in the project are from the COAI website and internet and from discussion with the Hutchison 3 Global services employees hence names and exact details of interviews could not be shared due to confidentiality issues.
CHAPTER 2: What is 3G and its Global Trend?
3G (Third Generation) is the one of the newest in wireless technology. It is also known as UMTS (Universal Mobile Telecommunications System), an improvement over 2G (Second Generation) providing wireless access to the data and information to the users from anywhere and anytime.
3G cellular phones were first launched in Japan in October 2001. This 3G phone was designed so users would be able to surf the Internet, view pictures of the people they are talking to, watch movies and listen to music on their handsets .
International Mobile Telecommunications-2000 (IMT-2000), better known as 3G or 3rd Generation, is a family of standards for wireless communications defined by the International Telecommunication Union, which includes GSM EDGE, UMTS, and CDMA2000 as well as DECT and WiMAX. Services include wide-area wireless voice telephone, video calls, and wireless data, all in a mobile environment. Compared to 2G and 2.5G services, 3G allows simultaneous use of speech and data services and higher data rates (up to 14.4 Mbit/s on the downlink and 5.8 Mbit/s on the uplink with HSPA+). Thus, 3G networks enable network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved spectral efficiency. Mobile telephony allowed us to talk on the move. The internet turned raw data into helpful services that people found easy to use. Now, these two technologies are converging to create third generation mobile services. In simple terms, third generation (3G) services combine high speed mobile access with Internet Protocol (IP)-based services. But this doesn't just mean fast mobile connection to the World Wide Web. Rather, whole new ways to communicate, access information, conduct business, learn and be entertained - liberated from slow, cumbersome equipment and immovable points of access. It will enhance and extend mobility in many areas of our lives.
2.1 Evolution Of 3G Technology:
1G:
First-generation wireless telephone technology, cell phones. These are the analog cell phone also known as AMPS that were introduced in the 1980s.
2G:
Digital mobile phones, including those that use GSM, CDMA or TDMA networks, are the second generation phones. 2G networks were built mainly for voice data and slow transmission. They offer data-transfer rates ranging from 9.6 kb/s to 19.2 kb/s.
2.5G :
Technologies such as i-mode data services, camera phones, high-speed circuit-switched data (HSCSD) and General packet radio service (GPRS) that provide some functionality domains like 3G networks, but without the full transition to 3G network. Interim hardware and software solutions are emerging that promise to have real or perceived data transfer rates ranging from 56 kb/s to 170 kb/s.
3G:
Third-generation digital-phone networks will have a nominal maximum data rate of 2 Mb/s, which can handle streaming video, two-way voice over IP, and Internet content with high-quality graphics and plug-ins to a wireless phone.
According to Ericsson, 3G is a generic term that actually describes different flavors of wireless:
Code Division Multiple Access 2000 (CDMA2000) :
CDMA2000, also known as IS-136 and IMT-CDMA Multi-Carrier (1X/3X) is a radio transmission technology for the evolution of narrowband cdmaOne/IS-95 to 3rd-generation adding up multiple carriers. Cdma2000 will be deployed in two phases.
Universal Mobile Telecommunications System (UMTS):
The name for the third generation mobile telephone standard in Europe, standardized by ETSI.
General Packet Radio Service (GPRS):
A packet-linked technology that enables high-speed (115 kilobit per second) wireless Internet and other data communications. GPRS will offer a tenfold increase in data throughput rates, from 9.6kbit/s to 115kbit/s. Using a packet data service, subscribers are always connected and always online.
Wideband Code Division Multiple Access (WCDMA):
A technology for wideband digital radio communications of Internet, multimedia, video and other capacity-demanding applications. WCDMA, developed by Ericsson and others from CDMA, has been selected for the third generation of mobile telephone systems in Europe, Japan and the United States. WCDMA uses variable rate techniques in digital processing and can achieve multi-rate transmissions. WCDMA has been adopted as a standard by the ITU under the name IMT-2000 direct spread.
Enhanced Data rates for Global Evolution(EDGE):
A technology that gives GSM and TDMA the capacity to handle services for the third generation of mobile telephony. EDGE was developed to enable the transmission of large amounts of data at a high speed, 384 kb/s. EDGE uses the same TDMA (Time Division Multiple Access) frame structure, logic channel and 200 kHz carrier bandwidth as today's GSM networks, which allows existing cell plans to remain intact.
Cellular mobile telecommunications networks are being upgraded to use 3G technologies from 1999 to 2010. Japan was the first country to introduce 3G nationally, and in Japan the transition to 3G was largely completed in 2006. Korea then adopted 3G Networks soon after and the transition was made as early as 2004.
CHAPTER 3: 3G Technology in India
The Indian Telecommunications network with 621 million connections (as on March 2010) is the third largest in the world. The sector is growing at a speed of 45% during the recent years. This rapid growth is possible due to various proactive and positive decisions of the Government and contribution of both by the public and the private sectors. The rapid strides in the telecom sector have been facilitated by liberal policies of the Government that provides easy market access for telecom equipment and a fair regulatory framework for offering telecom services to the Indian consumers at affordable prices. Presently, all the telecom services have been opened for private participation. The Government has taken following main initiatives for the growth of the Telecom Sector.
The government has in a pioneering decision, decided to auction 3G & BWA spectrum. The broad policy guidelines for 3G & BWA have already been issued on 1stAugust 2008 and allotment of spectrum has been planned through simultaneously ascending e-auction process by a specialized agency. New players would also be able to bid thus leading to technology innovation, more competition, faster roll out and ultimately greater choice for customers at competitive tariffs. The 3G will allow telecom companies to offer additional value added services such as high resolution video and multimedia services in addition to voice, fax and conventional data services with high data rate transmission capabilities. BWA will become a predominant platform for broadband roll out services. It is also an effective tool for undertaking social initiatives of the Government such as e-education, telemedicine, e-health and e-Governance. Providing affordable broadband, especially to the suburban and rural communities is the next focus area of the Department.
BSNL & MTNL have already been allotted 3G & BWA spectrum with a view to ensuring early roll out of 3G & WiMax services in the country. They will pay the same price for the spectrum as discovered through the auction. While, Honorable Prime Minister launched the MTNL's 3G mobile services on the inaugural function of 'India Telecom 2008' held on 11th December 2008, BSNL launched its countrywide 3G services from Chennai, in the southern Tamil Nadu state on 22nd February 2009.
Rank in world in network size
3rd
Tele-density (per hundred populations)
52.74
Telephone connection (In millions)
Fixed
36.95
Mobile
548.32
Total
621.28
Village Public Telephones inhabited (Out of 5,93,601 uncovered villages)
5,69,385
Foreign Direct Investment (in millions) (from April 2000 till March 2010)
4070
Table 3.1 Source www.dot.gov.in
Table 3.2 Source : telecominfo.wordpress.com
Table 3.3 Source : Source : http://www.coai.com
Bharti-Airtel leads the wireless market with 24% market share. The company recently achieved the magic figure of 100 million subscribers. However, Bharti-Airtel expects a bloodbath in the Indian telecom market in the near future, and is looking to spread its risks by entering new geographies (Bharti-MTNL deal is discussed in Industry Update Section). With 12-13 players present in the market there would be a severe pressure on margins. Be it an Aircel or Etisalat, the new operators would not remain fringe players in the Indian market, but would try and rock the applecart of existing operators. The growth in Indian market could start tapering off very soon. According to an industry expert the subscriber base will not expand beyond 800 million in coming years from current number 400 million.
Figure 3.3 Source : http://www.coai.com
Table 3.4 Source : www.medianama.com
CHAPTER 4: MVAS and Applications
Operators are facing cutthroat competition and with the call rates in India being one of the cheapest in the world, the margins are very low. Therefore they are looking at VAS as the next wave for growth.
4.1 Factors which are contributing to the development of the VAS market in India.
Growing Economy
India has maintained its position as the second-fastest growing major economy after China, as rising consumer and government spending taking place. Consumption and infrastructure spending are driving the growth. This booming economy has created job opportunities and increased the spending power of an average Indian. This has resulted in higher disposable incomes and faster acceptance of new technologies with a willingness to spend for them.
Need for more than basic mobility services
There is now a critical mass of users in the Indian mobile telephony market who are experienced mobility users. These users are very comfortable in using their phones and want to exercise the option of doing more on them beyond basic voice applications. The first phase of growth for VAS has come in from these converts; and these users will continue to drive the market and evolve into more advanced applications. At the same time the basic VAS applications will also continue to appeal to the new mobility category initiates.
Personalization of the phone, now a digital device
With increasing pressures and stress on individuality, mobility users also want to carry forward their individuality to their mobile device. Thus for a large number of users the mobile phone has become a truly personal device and VAS has become an extension of persona. The enormous success of Caller Ring Back Tone (CRBT) is an excellent example which illustrates that users are ready to adapt to any service which offer them the option of personalization.
Reduction in call rates & CPP initiation
CPP (Calling Party Pays) was an important initiative which unshackled the mobility market and allowed many more subscribers to enter the mobility category. This initiative, in conjunction with the gradual reduction in call rates has ensured that the expenditure on voice for a typical user has gone down over the years. As a result more users have become comfortable in spending on VAS as it does not significantly impact their overall outlay on mobility.
Market efforts driving VAS
For the operators, success of VAS has become important for their growth. This has led to a sharp focus on marketing & tie-ups and a somewhat limited focus on development of content. Most operators are now trying to innovate in their VAS offerings and create sharper differentiation for their offerings.
Focus on movies & music
Movies & Music are the passion of India. Most of the rich content available to the end users revolves around these two, with Ringtones of popular Bollywood songs, Wallpapers of movie leads and games developed around movie themes. Given that Youth account for a large segment of users & also dominate the pre-paid category, the focus on entertainment has been a strong hook to develop the VAS category and operators & content aggregators have been sharply focused in their efforts to pluck this low hanging fruit. It has been helpful that the film industry in India is very prolific and there are endless options to develop content around.
SMS contests
Television is another culturally entrenched constant in the life of the average Indian. Typically TV viewing has been a passive affair however following the global trend TV channels have been focused on making programming interactive. Thus programs, especially music & contest shows have started giving the option to their viewers to participate through SMS.Popular reality show generate millions by SMS over short periods. These shows have also been a key driver in increasing familiarity with basic SMS for traditional low user segments like non-working women.
Table 4.1 Source: telecominfo.wordpress.com
4.2 Mobile VAS into three broad heads, based on the nature of the service Offerings:
Entertainment VAS- Entertainment VAS is designed for mass appeal and extensive usage. These provide entertainment for leisure time usage. An example of these kind of services are Jokes, Bollywood Ringtones & games. These services are currently very popular and are driving the revenues for the Indian mobile VAS market.
Info VAS- These are the services which provide useful information to the end user. The user interest comes in from the personal component of the content. E.g. Information on movie tickets, news, banking account etc. These also include productivity services like missed call information which brings back lost business opportunity for the operators. They also include user request for information on other product categories like real- state, education etc.
MCommerce VAS (Transactional services)- mCommerce VAS allow the use to conduct a transaction using the mobile phone. These services are in a very nascent phase and are not really available to most users. An example of this kind of service is buying railway tickets or movie tickets through the mobile phone.
4.3 Content Enablers
Content Portals/Aggregators/Developers:
At the first level existing portals in the Internet space are providing content to end users. For most of them, mobile data content offers an additional revenues stream, from a strategic perspective it also offers an opportunity to leverage the traffic to the portal and generate potential advertising revenues. Ringtones & wallpapers are two very popular categories where portals like Indiatimes & Rediff lead. On the next level there are a host of large content aggregators. Most of these like Mauj &Indiagames offer content directly to the end user through their own portal and also provide content to mobile operators. They perform the twin functions of in-house content development & also aggregating from other smaller boutiques.
There are also many small pure development entities, as they do not have the technical support to host content or to negotiate with operators they prefer to provide it to aggregators.
The countries abroad already have various content sports news, entertainment, infotainment etc which are a major source of income for these providers which is supported by high data bandwidth and fast speeds of 3G.
Third Party Copy Right Owner
Most of the rich content in mobile VAS is built around Bollywood movies & music. The
copyright for these are held by production houses or rests with individual artistes. A part of the revenue is shared as fee with the owners for using the copyright material.
Apart from Ringtone & wallpaper development there is also a growing trend of game development around popular Bollywood movies, These owners can now even pass on larger files and better options would be available the customers .
Traditional Media Companies
Following the global trend most traditional media companies are also trying to bring the feature of interactivity into their media. As we have discussed in the first part, SMS contests have been a very successful way for TV channels to achieve this. However using this feature involved revenue sharing with several entities, so to generate cost efficiencies over the long run, some media houses have expanded and acquired Short Codes for their own brands. Prominent amongst them are Sony TV, Aaaj Tak & Zee TV. With the 3G technology onset these media companies can think of proving more media intensive services with high bandwidth downloads supported by the availability faster and hassle free downloads .
4.4 VAS Platforms
Every service needs a platform for delivery VAS can be provided to the customers on two
Platforms- Data & Voice
Data/Text Platform
The end user sends the service request in an SMS form. The request goes to a server managed by the Platform enabler on behalf of the operator. The content is arranged by the Operator from the Content Aggregator who procures it from the Content developer. This content is forwarded to the Platform enabler who stores it in the server. The server automatically and instantaneously entertains the request from the customer as all these VAS are preloaded into the server.
Voice Platform
The end user calls up the service provider and avails of the service. The call is routed to a server managed by Platform enabler. The server interacts with callers using IVRS (Interactive Voice Recognition System), gathers information and routes calls to the appropriate recipient. The remaining chain is same as that of a text based platform. Per unit voice based VAS generates more revenue than text based VAS as the call charges are very high at Rs 6/7min and selecting the service normally takes more than a minute. This means that for the same service voice based will generate several times the revenue over text based VAS.
As the penetration increases more in rural India, necessity and importance of IVRS will increase as people will be more comfortable with an interactive voice platform in local language over selecting options by pressing numbers.
Chapter 5: Legal Requirements for 3G in India
5.1 Legal spectrum requirements
The policy calls for an auction for spectrum with different reserve price fixed for separate telecom circles. As against the demand of certain lobby groups, the government has opened the market for local as well as foreign players, as long as they meet certain criteria - holding a unified access service (UAS) license or being eligible to hold UAS license. The foreign players who will be eligible to hold a UAS license will have to form JVs with local partner and can hold a maximum of 74 per cent in the JV as per the existing FDI norms in the telecom sector. However, in addition to the auction price, they will have to pay UAS license fee.
The spectrum will be auctioned in blocks of 2Ã-5 MHz in 2.1 GHz band. There can be a maximum of 10 players in any circle and in most cases the number will vary between 5-10 players. The license will hold for 20 years and besides 3G license fee firms will have to pay spectrum usage charge. However, in the first year, the firms will not have to pay this spectrum charge which will amount to 1 per cent of annual gross revenue from the second year onwards.
The reserve price for the auction of spectrum in Delhi, Mumbai and other Circle A categories has been fixed at Rs 160 crore. Kolkata and Circle B areas will have a reserve price of Rs 80 crore and Circle C will have a floor price of Rs 30 crore. A pan India license will have a reserve price of Rs 2,020 crore.
The government is looking to garner as much as $10 billion from the auctions. While this may be small money for India (the second fastest growing emerging market in the world and also the second largest wireless market after China) compared to 3G auctions worth $34 billion in UK eight years back, one needs to factor in the disaster that the high prices caused in the British market as telecom operators struggled to generate returns. If the number of bids is less than or equal to the number of spectrum blocks in a particular circle, spectrum will be allocated to all the bidders at the highest bid price. If the number of bids is more, then the e-auction rules will be applicable. The government will appoint an external agency for the auctions.
The PSU operators - MTNL and BSNL - will get a preferential treatment. They will be allocated one block in the circles in which they are operating. They need not participate in the auction but will have to shell out an amount equal to the highest bid price for that area.
At the time of allocation of the spectrum blocks will be given to bidders according to their bids. In case of a tie those having an existing operation in a circle will get a preference and in case of another tie on those criteria, those having more subscribers in that circle will get the preference.
The government has also put a mandatory rollout plan for 3G services to dissuade hoarding of spectrum. The licensee has to rollout services in 90 per cent of metro areas within five years and for other circles the license holders have to cover 50 per cent of the area which would have to include 15 per cent rural areas. There are also penalties for not meeting the rollout obligations.
5.2 Guidelines for 3G Services:
The 3G (3rd generation) mobile telecommunications is the generic name for the next generation of mobile networks that will combine wireless mobile technology with high data rate transmission capabilities. The 3G networks will be capable of providing higher data rates and will also be capable of supporting a variety of services such as high- resolution video and multimedia services in addition to voice, fax and conventional data services.
3G spectrum will be permitted in the 2.1 GHz band.
The 3G licenses would be granted through a controlled, simultaneous ascending e-auction, by a specialized agency to ensure transparency in the selection process.
Besides the initial, one time spectrum charge, it has been decided that the successful service provider would pay additional spectrum charge of 0.5 % of their total Adjusted Gross Revenue (AGR), as the recurring annual spectrum charge. This additional revenue share is proposed to be 1% of AGR after 3 years from the date of spectrum assignment.
The roll out requirements, including rural roll-out, as well as stiff penalties for non compliance of the same has been stipulated.
Mergers will not be allowed during the initial five years. No trading/ reselling of spectrum is allowed.
The CDMA spectrum in 800 MHz band for EV-DO applications would be treated separately from 2.1 GHz spectrum. If the CDMA based service provider(s) ask for the EV-DO carrier of 2 x 1.25 MHz, they would have to pay an amount proportionate to the highest bid for spectrum in 2.1 GHz band.
Chapter 6: Recommendations and Findings
Impact Of The 3G Technology:
The day government introduced the 3G norms the Sensex shot up 301 pts which shows that the market and companies in India are ready for the technology and many companies are ready to invest in this technology as they foresee the success of 3G in India.
The existing 2G spectrum is already congested and has very little room for further expansion and is already congested with the current players and the ever increasing consumer user base.
The 3G technology brings with it higher bandwidth and a more secure and a reliable network as compared to the existing technology which will support applications and allow media and content of large size to be downloaded faster and in a easier way.
The 3G technology offers more Interoperability between service providers which would give more options to customers to switch providers for better coverage accessibility. The 3G technology uses IP based connectivity and hence will allow users to be always online on the move and its gives the providers to configure different data rates for different users and hence
The high bandwidths will also opens the door for rich multimedia to be shared and accessed with the support from the bandwidth of the new spectrum provides.
6.2 Suggestions:
The cost of upgrading base stations and cellular infrastructure to 3G is very high. Hence the players involved need to have very deep pockets to support their investments and may look for support from foreign investments.
The users will require different handsets and there is the issue of handset availability especially if we are looking at handsets which support.
The 3 G technology requires the base stations to be nearer as compared to the 2G technology which would increase the cost for the services providers .The costs will also add up with the spectrum license cost, network deployment costs and handset subsidies to the customers .The power requirement is also higher for these devices and all this will add to the capital requirement which will be a question to the companies whether they would earn margins and when would they break even. The other challenge is also that user would not be that ready to switch from 2G to 3G if the switching cost is high.
CONCLUSION
3G is going to do to the Internet in India what 2G did to mobile telephony. Telecom operators in India have been facing issues of declining ARPU and MPU on voice services which has brought call charges to as low as half a paisa per second and even lower than that for certain operators, questioning sustainability for these players. VAS has bettered the viability of this sector in recent times, and 3G will further add to telecom operator's data carrying capacity, allowing them to roll out long awaited data-intensive services.
The Service Providers will have to provide the service at low switching costs for better acceptance this would result in delay in breaking even for the investments already made by these companies to acquire the technology.
The ARPU trend shows a positive trend which is a positive sign for the service providers as they can expect to generate revenue from the 3G technology but will have to look out for intense competition from the players in the market as MNP available would cause high churn rates of customers.
