The Hindu Business Line : All set for play!

The biggest slugfest is waiting to happen with almost all the operators chalking out strategies to launch the much talked about third generation (3G) mobile services.

The State-owned Mahanagar Telephone Nigam Ltd is first off the block and has floated a Rs 1000-crore draft tender to roll out four million mobile lines on 3G technology.

"We hope to launch our 3G service by the end of 2005. We have lost out in the GSM market, therefore we want the first-mover advantage in 3G services," says R.S.P. Sinha, Chairman and Managing Director, MTNL. The company has called a meeting with leading equipment vendors on April 15 to discuss the project.

The others aren't just watching. Almost all the Global System for Mobile (GSM)-based operators, including Airtel, Hutch and Idea, have already applied for the radio frequency required to launch 3G services.

"3G is the natural next step in the evolution of mobile services. Globally, a number of operators have already launched high-speed services. In India, cellular operators are still on 2.75 G or 2.5 G with technologies such as GPRS (General Packet Radio Services) or EDGE (Enhanced Data rate for GSM Evolution )" says a Delhi-based operator, who is in advanced stages of negotiating a deal with a vendor of 3G equipment.

For the uninitiated, 3G services allow high-speed data connectivity on mobile phones. While at present data speeds of broadband Internet services go up to an average of 256 kilo bits per second (kbps), 3G services allow more than 380 kbps on a mobile handset. So one can watch a movie, play interactive games, download data from the World Wide Web on the move.

Wide band Code Division Multiple Access (WCDMA) is the 3G technology choice, commercially available on 64 networks in 33 countries. Since year-end 2003, it has grown from 2.7 million to 18 million customers worldwide. Japan saw the world's first launch of 3G, by NTT DoCoMo, in October 2001. Today, Japan has the largest 3G subscriber base of any market, served by two 3G operators.

Europe has enjoyed the widest WCDMA 3G deployment so far. A total of 93 licences for 3G have been issued in nearly 30 countries in Europe, with more to be granted this year and later, especially in important markets in eastern Europe such as Russia. Also, the majority of the world's commercially-launched WCDMA 3G networks are located in Europe. This exceeds the growth rates of GSM technology at the same stage in its evolution.

Swedish telecom equipment maker Ericsson believes that the rollout of 3G telecom networks in India will help operators reduce costs, offer an array of services to users, and connect millions in rural areas who have never used a phone.

"3G as a technology is more advanced and more efficient. One base station in a 3G network can take 80 calls as against 17 calls per base station in 2G," says Sudhin Mathur, Manager, Sony-Ericsson.

Other equipment vendors such as Nokia and Motorola are also gearing up to meet the demands of the Indian market. Nokia, for instance, is developing a High Speed Downlink Packet Access (HSDPA), a natural evolution to 3G that will bring even higher data speeds with a simple software upgrade.

A study by Ericsson has found that almost 50 per cent of users in metros are looking for services beyond voice and SMS. The study predicts that India will have 200 million mobile phone users by 2009.

But the urgency being shown by Indian operators for 3G rollout has more to it than just consumer benefits.

One key factor is that revenues for operators from voice calls are dipping considerably. According to a study by the Telecom Regulatory Authority of India (TRAI), tariffs for voice calls have dropped by more than 60 per cent over the last quarter. This has brought the average revenue per user (ARPU) to about Rs 400 a month.

Though the telecom regulator feels this is still on the higher side and tariffs should fall further, operators are looking to make up for the dipping revenues through data services.

But so far, even with EDGE deployments, operators have not been able to rake in much revenue from non-voice applications, except for the good old short messaging services (SMS).

"While EDGE and GPRS are good enough to act as catalysts for data users, they do not have the speeds required to provide a complete user experience. Operators are, therefore, looking to bring in 3G which will enhance the experience multiple times," says a national cellular operator.

Apart from revenues, 3G will also bring in efficiency in spectrum usage. For instance, in a 3G network, 175 calls can be taken in 10 MHz compared to 110 calls in 2G.

Apart from financial considerations, GSM operators are rushing in with their 3G strategy because of the impending threat from the Code Division Multiple Access (CDMA) mobile operators such as Reliance Infocomm and Tata Teleservices.CDMA operators have an advantage over their GSM counterparts when it comes to 3G deployment because most CDMA networks in India are already 3G-enabled. Simply put, a Reliance Infocomm is in a position to start offering 3G services from tomorrow once spectrum is allocated while GSM operators will have to set up a whole new network.

"It's the way the two technologies have evolved. CDMA operators like Reliance have the CDMA 1X technology and they can easily migrate to EVDO (Evolution Data Only). On the other hand, GSM operators will have to set up a parallel network with their existing 2G network to offer 3G services," says a senior executive at Qualcomm.

Qualcomm holds the patent for both EVDO and WCDMA technology.

However, there is a small hitch to the story. While the operators are making big plans to roll out services, the Government is yet to spell out its policy towards 3G services and seems to be in no hurry to do that."We don't think telecom growth in the country is dependant on 3G services at the moment. No one is waiting for it. It is going to be an expensive proposition for the consumers for quite some time. It is all a hype that is being created," says Nripendra Mishra, Secretary, Department of Telecom.

According to Mishra, 3G is irrelevant in the context of rural services at this point in time.

Another problem government authorities are grappling with is spectrum allocation for 3G services.

Both CDMA and GSM operators want space in the 1900 Mhz frequency band. While GSM operators are strongly against sharing the frequency on the ground that it would create interference, CDMA operators say they would not be able to offer services in any other frequency band.

Pradip Baijal, Chairman, TRAI, admits there are no answers yet.

The operators are gearing up for a prolonged battle. Though right now the battle is on allocation of radio frequency, the war for 3G supremacy will be fought in the market.

What having 3G means

WHAT different services will be available on third generation systems?

Video on demand, high-speed multimedia, and mobile Internet access are just a few of the possibilities for users. 3G services expand the possibilities of content-rich information and communication.

However, the main benefit of 3G systems is that they will offer substantially enhanced capacity, quality and data rates above those that are available currently with 2G.

What do the handsets look like?

Many of the first 3GSM handsets were significantly larger than standard GSM terminals but the bulkiness of the terminals has been reduced very quickly.

Several manufacturers are producing their second and, in some cases, third releases of 3GSM terminals, rapidly building a range of choice for consumers.

As a result, handsets could vary from a wrist-watch style `simple' telephone to mini PC-type PDAs (personal digital assistant) for multi-media Web-browsing.

Will my current mobile cease to work when 3G Services are launched?

Second and third generation systems are likely to co-exist for a significant period of time. 3G services are being introduced in addition to, and not as a straight replacement for, 2G services. This means that existing 2G terminals will continue to work for as long as significant numbers of customers are using them.

Will I be able to receive 3G services from my current mobile?

3G is a new technology and therefore you will not be able to access 3G services using your existing GSM terminal.

Picture by P.V. Sivakumar

tkt@thehindu.co.in

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