The Hindu Business Line : Incumbent players best placed to make 3G profitable: Qualcomm

New Delhi, Aug. 11 Incumbent pan-Indian mobile players such as Bharti Airtel and Tata Teleservices, which already have a large number of cellular base stations across the country, are best positioned to leverage third generation spectrum, according to technology major Qualcomm.

Speaking to Business Line, Mr Kanwalinder Singh, President, Qualcomm India and South Asia, said, “Incumbent operators have a great advantage of owning thousands of towers across the country. Density of base station is important for a good 3G business case. This means that when they get spectrum for 3G services, all they have to do is to invest in putting up the radio on these towers to get nationwide coverage.”

In comparison, a new operator will either have to invest in setting up the towers or rent space from existing players, both of which raise the cost, he said.

Extensive coverage

Mr Singh said that since existing mobile players already have extensive coverage they can even move their entire voice subscriber base to the 3G spectrum and still have bandwidth to offer data services. “An operator with 60,000-80,000 towers spread across the country can actually free up their entire 2G spectrum by moving the voice traffic to 3G spectrum by using just 50 per cent of the 5Mhz 3G spectrum being allocated to them. The operators will still have 50 per cent of the 3G spectrum left for offering high-speed data services. Technologies like HSPA+ have that advantage which incumbent players can benefit from,” he said.

On the other hand, if a new player wins 3G spectrum it will not get this flexibility and may have to use up the entire 3G spectrum for offering either data or voice services.

Until now, Indian mobile operators have got spectrum either bundled with the licence or on a criteria based on their subscriber base. Apart from the upfront licence fee and the annual revenue share, operators do not pay any money to get spectrum. This allowed them to adopt a low-cost business model, which makes them profitable even though they are offering the world’s lowest tariff. But with 3G spectrum being auctioned with a minimum base price of around Rs 4,000 crore, operators are concerned about the business case.

But going by the initial response, 3G services seems to have caught the consumer’s attention. BSNL, which is the only operator to start full-fledged 3G services across the country, already has 40,000 subscribers. 3G SIM cards are available for as low as Rs 59. Reliance Communications and Tata Teleservices have launched USB data cards on their CDMA using the EVDO technology. Qualcomm expects a million 3G users by the end of 2009.