3G success (if we define financial criteria) as success will largely depend on two parameters

1. Which circle the operator is in.

2. Quality of subscribers in operators network

If an operator is leader in say delhi circle, there is high likely hood that the 3G business case is positive for this operator, while in the same circle another operator with lower quality of subs will struggle to make 3G business case

Thsi is because most of the 3G subs are from operators 2G base. Migratinghigh end users (with higher usage pattern) frees up spectrum in 2G network, allowing more 2G customer acquisition and more usage thus increasing over all revenue

While VAS ARPU uplift due to 3G is still on lower side (but recent global trends suggest they are growing driven by new handsets e.g. iPhone which is driving usage), wireless broadband access on 3G has really a big new upside for 3G operators.

Till now 3G ecosystem has not seen impact on volume from China and India. Today Indian operators are on the last leg of 2G expansion. In a couple of years, 2G growth will start tapering off. Then Operators will shift focus on 3G. The combined volume will ensure drastic reduction in Device, application, network element prices making 3G a mass market proposition with wireless broadband leading this trend

To summarise, 3G may not be financially viable initially (except for a few circle /operator combination), but in 10 years time frame it will make sense. India will not follow trend set up by Europe or Malaysia or SA, the sheer size of Indian market will create a new market dynamcis

Having said that, I don’t think you can look at larger emerging markets as homogenous. A 3G network covering the whole of India might not fly, but I would imagine that, if you analysed ARPU in Mumbai and some of the other large cities, you would have a viable market for it. That is how mobile operators started in South Africa. They first rolled out 3G only in commercial centres and wealthier areas of the major metropolitan centres, before expanding into other areas as demand grew.

The fact that India and China have such large markets, means that a much smaller uptake level can be viable, provided one can target the areas where that market is.

Good point raised by you,In country like india where teledencity is below 30% and large section of Rural market is still unpenetrated 3 G seems a Hullaboo.Although product offering and delevery gets much customer centric but there sholud be a sense while offering the services to the customer base in Devloping countries.Why we are running for 3G when 2 G or 2.5 G is not fully utilised here.I agree this will be a shift to better customer experince but what will be the cost justification and how much pocket do we have.
There will always be a gap of Demand and Supply in case of devloping Market,wants to see how the operators does in this scenario…

Of all these comments one thing is clear: “Disruptive Technologies” need a “Think Different” attitude. It is difficult for distinct cultures to come together in a world of convergence, with several different business models.

An important think-different-attitude need to be adopted by the telecomm operators. IP communications is all about IT, and efficient packet transfers. And no network design can serve all types of applications. So the telecomm operators, and their networks, can neither carry all the traffic, nor play gate keepers to all communications. Think Internet. Think UC, and client owned networks. This way you will not get in trouble!

… And obviously keep focused on your market limitations, so much more critical in emerging markets. These limitations will require innovation, and simplification of the networks, and collaborative business models.

Pay great attention to quality of your services, and keep them affordable to your clients. This is my main, and final, suggestion.

It is really an exciting new world!

Of all these comments one thing is clear: “Disruptive Technologies” need a “Think Different” attitude. It is difficult for distinct cultures to come together in a world of convergence, with several different business models.

An important think-different-attitude need to be adopted by the telecomm operators. IP communications is all about IT, and efficient packet transfers. And no network design can serve all types of applications. So the telecomm operators, and their networks, can neither carry all the traffic, nor play gate keepers to all communications. Think Internet. Think UC, and client owned networks. This way you will not get in trouble!

… And obviously keep focused on your market limitations, so much more critical in emerging markets. These limitations will require innovation, and simplification of the networks, and collaborative business models.

Pay great attention to quality of your services, and keep them affordable to your clients. This is my main, and final, suggestion.

It is really an exciting new world!

If I reflect on start of 2G service in India 10+ years ago. We had similar questions on success of 2G in India with all kind of ARPU questions. We had similar questions on business case of 2G success.

AirTel struggled to survive.

Considering where India & AirTel is today, it was an investment well worth it.

We will go through same business curve for 3G.

However, early players will eventually win a bigger market share (as happened in 2G).

So, waiting for business momentum is NOT an option.

In USA, with introduction of iPhone and bundling, user-experience & mobile-internet is becoming alive. This is despite broadband internet penetration being very high.

In India, broadband internet penetration is NOT high. So, mobile-internet has bigger opportunity and better chance of success and change quality-of-life for consumers.

No emerging market can afford to miss 3G boat…

CAPEX for 4G will be very high for few years and 3G is the only available option.

Do NOT miss this Growth opportunity.

Now let’s consider the future. I predict that 3G uptake will steadily increase in China. The driver will be lower cost 3G enabled devices, Smart Phones, Tablets, Netbooks, etc. combined with Internet-based services. This will create a ‘virtuous circle’ driving down costs, while proliferating devices and services. The ROI will be good.

In India, WiMAX may provide low cost Internet access. Thus by consuming the scarce discretionary spending of users, it may choke the ROI of 3G. Ironically this is “WiMAX vs 3G” rather than vs LTE. I would love to hear others’ comments on this.

Martin Varsavsky, CEO FON said that why operator opted for 3G ,in his perception it is a blunder . It is a matter of which technology has a bigger ecosystem to support. It is just like the war between toshiba and sony for VCR and ???. Today 3G has bigger ecosystem supported by bigger companies like ericsson and NSN etc .Which big company is supporting WiMAX ???. What operators are looking for is not just which technology but actually looking for relabile vendor who stand the pressure of market in long run and can keep the supply and innovation.

What happen if government from different countries say that 2G spectrum is not available from say 2020 and all operator has to use the 3G spectrum. It is a win -win sitation for countries like china and India where the population bigger chunk lives in rural area where is there is no basic facility of education, medicine, governence. 3G backed by government can remove this type of divide and bring people to the main stream of economic development.

Earning money from 3G depends on many factors.

How you segment the market.
How you price the services.
Killer application and strategy by which the operator gains the subscriber base.
3 as a telecom operator is a great example to look for pricing and strategy in Europe.

Best Regards
Vishnu Chanduka

3G will not cause EBITDA dilution since the incremental OPEX for 3G will be small for operators that have a 2G/2.5G network. Capex recovery will be much harder.
For greenfield 3G operators – both OPEX and CAPEX recovery will be a challenge.

3G consumer adoption will be slow, will be initially restricted to the metros (since this is where the network rollout will happen first). WIll take a few years before you see a significant impact. However the operator marketing machinery will kick in and there will be substantial buzz around new applications/uses of phones.

Harish

As the bandwidths in the RAN increase, revenue per bit falls. For the fixed line operators
offering broadband technologies, such as DSL and cable modems, this situation is nothing new. T1/E1 TDM circuits currently used within RAN backhaul networks are ideal for carrying the high- value voice services but are clearly not optimized in terms of cost or capacity for transport of high bandwidth data services. Therefore the mobile operators face a significant challenge;
how to grow the data service revenues without having an associated cost per bit that makes the economics of the solution unacceptable.

One possible and compelling solution to this problem is the hybrid approach. With the hybrid approach, the data traffic associated with mobile devices is separated from mobile voice services directly at the cell site. Voice traffic can be carried reliably and cost effectively over existing T1/E1 infrastructure whilst HSPA traffic can be backhauled using lower cost broadband technologies such as xDSL, cable modem, and where economically viable, carrier Ethernet. The traffic characteristics of mobile data are closely aligned with the asymmetrical nature of existing broadband solutions and as such a new synergy is developing between mobile and fixed broadband providers.

The opportunity exists for advanced fixed line operators to step forward with a full end-to-end managed service that offers HSPA offload capability to the mobile operator. This should be a complete technical solution that delivers to the Mobile Network Operator (MNO) the interfaces needed to directly interface to the radio subsystems at both cell site and core aggregation locations. It should offer guaranteed SLAs in-line with broadband data availability, monitoring, pro-active fault isolation and recovery. A mixture of transport technologies may be employed to deliver the service and perhaps even multiple operators, but these underlying complexities should be transparent to the MNO. Combine these elements with rapid and flexible bandwidth upgrades and the need for a NGN packet-switched infrastructure is evident. Many fixed line operators have invested heavily already in such infrastructure, exploiting these investments to offer a tailor-made managed service solution which would allow the MNO to concentrate on deployment and optimization of the air interface, service creation and subscriber uptake.

Alternate Technology to work on packet network is ready today to offer a network operator all the features needed to build a complete HSPA backhaul managed service.
In summary, the solution is available for platforms to deliver a solution allowing the transport of TDM, HDLC, and ATM based services over packet-based technologies such as MPLS, IP and Ethernet networks. Whether the underlying transport is xDSL, bonded SHDSL/EFM, native Ethernet on fiber or even point-to-point microwave, Also this technology is designed to make efficient use of the offered bandwidth to ensure MNOs can effortlessly grow their mobile broadband business and the managed service
provider can profit from the new and growing revenues associated with mobile data services and its millions of subscribers.

Now the drag for 3G and beyond is mostly due to our being over traditional.

South Africa having population of about 50 Mil and subscriber base growing @ 40% and Malaysia with population of about 25 mil and Mo. Penetration of 98 % are but miniscule markets compared to India & China having a subscriber base of above 400 & 700 mil respectively (Population of India & China above 1.2 billion each) with the Indian mkt growing @ 30% YoY. This gives rise to a few questions:

a. How many markets of the size equivalent of S. Africa can china or india accomodate based only on ARPU – US $ 18.5 and data ARPU of 1.75 (Are 7% of the subscribers in china in the same ARPU category as in S.Africa – I will safely guess – Yes; though Yixin will be better off in confirming)

b. How many Mkts the size of Malaysia with ARPU of above US$ 15 and Data ARPU US $ 3 are there within India or China (Are 8% of the sibscribers in India in the ARPU category of Malaysia – Yes).

I will say there will be many among the subscribers in India who will feel the need to subscribe to the 3G advantage ‘what ever it provides’, (better experience, snob value) to make the critical mass while the world is evolving towards 4G – LTE.

I guess the critical mass of 8 & 7 % in Inida & China respectively will be the driver for making 3 G services affordable and acceptable as happened about 10 yrs back when cellular services were launched in India @ Rs 16/- Per min (USD 0.3) and has been driven to the lowest tariff rates in the world as on date.

As we go along, I suspect WiMAX may steal a march if what Dave says about 3 G comes true and 4 G still a distance away (especially with the way Mohit has sequenced the roll out steps). That ‘elusive’ killer application will be exploited to equal advantage by both 4G as well as by WIMAX – what happens then? Some players taking aggresive positions to be part of the Inida Telecom growth story may be forced to take the WiMAX route when unsuccssful in winning the 3G slot. The results will be out soon hopefully. Winners of 3G slot (if at exorbitant cost as happened elsewhere) may dig their own path towards extinction giving way to WiMAX.

Though Mohit in an article dated 02 Mar 09 has relegated WiMAX to playing a complimentary role to 3G/4G in the long run, I feel it may need a revisit.