case study - Analysys Mason

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A Joint Report with The Confederation of
Indian Industry (CII)
Wireless India
Catalyzing Next Wave in Economic Growth
June 2007
This report was originally authored by BDA India, which
has subsequently been acquired by and integrated into
Analysys Mason Limited in April 2010.
WIRELESS INDIA
Catalyzing Next Wave
In Economic Growth
A Joint Study
between BDA and
the Confederation
of Indian Industry
June 2007
© BDA Connect Pvt. Ltd. All rights reserved.
For any report related information,
please contact
Mr. Vikram Tiwathia at
[email protected]
or
BDA Connect at
[email protected]
FOREWORD
I am happy to present the report on “Wireless India: Catalyzing
Next Wave in Economic Growth” - a forward-looking study based
on new primary research conducted by BDA Connect on behalf of
the Confederation of Indian Industry (CII). This is a continuing
initiative of the CII, to create awareness on the current state of the
Information and Communications Technology (ICT) industry
and the associated development and new economic growth
opportunities that are being catalyzed by the expanding wireless
communications coverage of the country.
Every year we see a new dimension of the ongoing Digital
Revolution, which is enabling an abundance of information to
move faster, cheaper, in more intelligible forms, in more directions, and across borders of every kind. The exciting new dimension on which the CII has been focusing over these last few years
with the release of the report on “Enabling India’s Broadband
Economy: Vision 2010” in 2004, and “Building India’s Broadband
Economy” in 2006 is telecom connectivity, which is making the
Digital Revolution ubiquitous. Wireless, has the potential of connecting the Next Billion people, who are still in the shadow zone
of the benefits, the ICT enabled development opportunities, this
Millennium presents.
Widespread adoption of wireless handsets, the increasing use of
wireless internet, and the new, on the go content, that characterizes the new generation of users are changing behaviors in social,
political, and economic spheres. Wireless devices are providing
developing economies with opportunities unlike any others previously available. The affordable cell phone has the potential to
break down barriers of poverty and accessibility previously posed
by other communication devices. Together with a rapidly expanding economy, and an increasingly active consumer society, the elements are ripe for a forthcoming wireless based internet revolution. Yet much of this future depends on policy decisions that have
been debated by all the stakeholders and are currently under consideration.
The report provides rich insights into key trends and challenges
that public and private sector needs to focus upon. The capacity of
Networks providing voice and broadband data connectivity will
depend on the capital investments in infrastructure to provide
wireless coverage for the last mile, especially in the rural areas. In
the recent years the Indian Telecom industry has received commendable worldwide acclaim in enabling the country’s economic
growth. However the true value proposition of Wireless connectivity will lie in ensuring adequate availability of spectrum, infrastructure roll out and providing the right incentives for innovation in providing affordable devices and services, relevant content,
commerce and employment opportunities that will follow.
I thank all the respondents to this study for their valuable inputs,
which will help to shape and guide the efforts of policy makers and
industry, in creating new opportunities for sustained and inclusive
economic growth. CII hopes that the recommendations of this
report will be implemented and we hope that India will exploit
ICT to accelerate economic activity across sectors in the country.
Our sincere thanks to BDA, our partner for this Report, for their
detailed work and for sharing their knowledge, and all those who
have contributed to this report for their effort and ideas.
Sanjeev Aga
Chairman
CII National Telecom and Broadband Committee
Wi re l e s s I n d i a | 1
EXECUTIVE SUMMARY
India has gone wireless.
Telecommunications in India has experienced unprecedented
growth since the introduction of new players in 1995. Last years’
annual growth outpaced total combined growth from the beginning of telephony in India through to March 2004. Progress has
been remarkable, but past success and astronomical growth figures
should not lead to complacency and the loss of what has brought
us here in the first place - the urgency to ensure a growth environment continues with a clear path ahead.
The rest of world has been deploying new services and features on
their telecom infrastructure, continuing to enhance their competitiveness by allowing people and businesses to realize the benefit of
ICT. While for us, voice connectivity has seen success, empowerment from broadband connectivity is yet to reach the same level.
Broadband links are not about higher speed access to entertainment only - they enable and empower people to enhance productivity by making possible business and communications in ways
not available with today’s wireless networks. Broadband, at its
core, is also about convergence. Driving a multitude of services,
including traditional voice, but extended to include e-commerce,
unified messaging, supply chain management, location based
services, tele-education, e-health, e-governance and sophisticated
entertainment, all independent of geography, is what enables convergence.
A robust competitive environment where players and technologies
compete to deliver value to the end user has worked spectacularly
for mobile telephony, and it can also work wonders for broadband
access, which can empower India’s people and economy.
Interestingly, further growth of vanilla mobile telephony, too, will
depend largely on the robustness of spectrum policies relating to
broadband. So the reasons to expedite broadband deployment are
both necessity and foresight.
The road ahead for the Indian telecom industry is not going to be
easy, but a clear path exists towards achieving the next wave of
growth. Leveraging AWS platforms, utilizing the correct device for
access and delivering relevant and useful content and services are
the steps the industry needs to take aggressively.
In our analysis we take a closer look at what will drive the next
phase of growth in the Indian telecommunications industry, and
how advances in this industry will impact the people and the
growth of India as a whole. We discuss at length the various fac-
tors that will impact deployment and use of wireless data services
in India. These factors include technology as well as cost of rollout
and new business models that might be necessary. However, policy and rules designed by Government and regulators regarding
competition, spectrum, market entry, technology choice, public
investments, subsides, etc. often become more critical factors that
impact service rollout. They can dramatically affect the extent to
which this potential of new wireless technologies can reach consumers and benefit India’s economy at large. Anomalies in rules
can cause serious distortion and hurt the growth of telecom markets. We highlight the concerns as well as the opportunities in our
study in the following areas.
Macro-Economic Impact: Economic analysis demonstrates clearly the need for high speed data connectivity and the immense
impact it can have, particularly on developing nations. GDP per
capita additions of greater than USD 900 per 1% increase in
broadband penetration have been realized by developing nations
elsewhere, driven primarily by the fact that in these scenarios
broadband is an enabler for connectivity and access to the rest of
the world, which adopters of these technologies did not previously have access to.
AWS Technology Platforms: In the analysis of the various AWS
platforms, we found that the key parameters for comparison are
operating frequency, duplexing mode, core network integration
and use, frequency reuse, voice and data support, and backward
compatibility. Each technology, at a theoretical level, has its own
advantages.
We believe that the biggest advantage for 3G platforms is that they
are backwards compatible evolutions of the existing voice centric
2G platforms designed to support data efficiently in addition to
voice. 3G also is able to leverage existing investments in core network deployments, and will have larger coverage in rural areas due
to its FDD duplexing mode and lower operating frequency in
India.
WiMAX and Wi-Fi are platforms which are better suited for
“bursty” internet data traffic, and are IP-based technologies,
allowing them to leverage the flexibility of IP core networks from
the start. WiMAX is based on TDD duplexing, which is simpler to
implement in electronics, and is also more beneficial in supporting smart antenna systems. Implementations to better support
high volumes of voice users in a reliable and efficient fashion are
being refined.
State of Deployment: Global harmonization is key to ensuring
economies of scale and worldwide roaming. 3G systems have
come a long way in this regard with 155 commercial WCDMA and
77 CDMA 2000 1x EV-DO networks worldwide. The WiMAX
Forum is currently making efforts to ensure the same level of harmonization, and has also recently applied for inclusion in the
ITU’s IMT2000 program.
for fixed solutions.
Besides pure technical comparisons, the deployment of each platform in real world networks is a leading indicator of its maturity.
As of March 2007, there are 173 million 3G subscribers worldwide,
growing at a CAGR of 131% since 2004. WiMAX 802.16d has been
deployed in 14 commercial networks as of June 2006, and there
were a total of 107 trials, planned or commercial WiMAX (802.16d
and 802.16e) networks worldwide.
Access Devices, Applications and Services Move to Mobile
Wireless: The deficiencies inherent in PCs, the traditionally dominant internet access device, have prevented them from penetrating the mass market in countries like India. This has spawned the
need for alternative platforms which would be cheaper, easier to
use and maintain and serve the specific purpose of having mass
market appeal. These requirements have lead to the development
of set top boxes with computing power, low-cost PCs, and network
computers. While most of these devices continue to evolve, each
has its own inherent advantages and disadvantages, but the primary hurdle has been lack of scale and maturity in these platforms.
Handset availability and feature set are also integral to supporting
network deployment. WCDMA had 650 and EV-DO had 469
products in the market by March 2007. Wi-Fi also had hundreds
of solutions available in various device types, including PCs with
integrated chips, multimedia devices, cellular handsets and many
other consumer electronics. There were 28 WiMAX certified
802.16d products available as of March 2007, whereas 802.16e
products have not been certified yet, though certain vendors were
offering WiBro based handsets and data cards in the South Korean
market.
Economics of Rollout: Our economic analysis shows that given
the performance and cost of different AWS technologies, 3G platforms, in particular HSDPA and EV-DO Rev A, offer the most
favorable outcome. Both technologies provide the lowest capital
investment requirement for rollout compared with the total network capacity achieved, which is driven by the need for the least
number of BTS sites. Currently proposed disparate spectrum costs
in India for 3G and BWA can skew the results somewhat, but the
outcome remains unchanged because of other cost advantages
offered by 3G technologies. When considering an upgrade scenario for an existing operator rather than a greenfield deployment,
3G platforms reap advantages due to cost savings in both active
and passive infrastructure. This backwards compatibility also
allows operators to deploy a single network for multiple services
and transition users from existing networks to new ones without
forcing an abrupt shift.
WCDMA and EV-DO handsets are already crossing below the critical USD 100 mark, and HSPA and EV-DO Rev A devices will also
do so in the near future. WiMAX 16d CPE prices are also falling
rapidly, demonstrating the superiority of this technology platform
4 | Wi re l e s s I n d i a
For rural areas, a greenfield 3G network, offering both mobile
voice and broadband data, is likely to be more economical than
deploying two independent networks to offer these services separately, while also giving users the freedom to be integrated with
national networks when roaming.
At the same time, the mobile handset has emerged as a device with
increased computing power, better memory, improved displays
and input styles, and increased versatility in supporting applications. Even mid-level 2G (GSM/GPRS/EDGE and CDMA 2000
1X) mobile phones can support multi-media entertainment,
photo and video capture and external storage. Additionally, the
always-on mode of mobile phones gives them an edge over other
devices as they are always interacting with applications on the network while still being close to the user. Mobile handsets are also
easier to learn, use, maintain, and are already a converged platform
for offering voice and data services. Furthermore, the economies
of scale achieved by mobile handsets are far greater than those
achieved by PCs.
While high end users are not likely to adopt the mobile handset as
their sole and primary internet access device, for the masses who
have never used a PC and never experienced broadband, or even
the internet, various forms of mobile handsets may become their
primary connectivity gateway.
Applications and Services on AWS: Until now, SMS and ringtones
on mobile phones are applications that have been accepted by the
mainstream in India. However, major developments globally have
led to data capabilities on AWS platforms that enable wireless
operators to offer rich content that was once only possible on
wired networks. As operators are facing declining voice ARPUs,
wireless data, especially for those who have adopted 3G networks,
is emerging as a new revenue source.
As wireless becomes the predominant connectivity platform,
mature customers are likely to experiment with the next level of
value added services, and for many, mobile handsets will provide
the first ever experience and exposure to data services.
For cities and higher end users, the business environment will be
the primary driver of exposure to these platforms. Their affinity,
especially in larger companies, to leveraging computing and connectivity for their operations will force their employees to develop
comfort levels with such communication models. Increasingly,
these companies are also moving data connectivity to the mobile
wireless realm by promoting applications like mobile e-mail and
messaging. The future of mobile enterprise communications will
include unified communications, including integrated, presence
aware peer to peer voice and video.
Cyber cafes will also play a role in larger towns and cities as they
can be geared to become experience centers, especially for online
gaming and social networking / user generated content, rather
than simply e-mail access stations, as they are today. Users will also
increasingly transition from simply downloading ringtones and
low quality sound clips on to their mobile handsets, to full length
high quality tracks and albums.
For the mass market, in both towns and villages, the Government
has to play the leading role in deploying applications and services
that a broad range of the population will want to use. EGovernance is also an often-cited application to be used on broadband networks. This entails substantial efforts on reengineering
internal Government systems to support offering services directly
to customers.
Mass market and rural users can be empowered with access to
such services, which today are not feasible, like e-education and
tele-medicine, but the primary benefit would likely come from
enabling enhanced livelihoods. This would include not only providing agricultural and supply chain related information, but also
from Rural Shoring / Rural BPO. Rural Shoring will enable villagers to access income not tied to agriculture, while enhancing
their level of education, technical skills and exposure to the world.
Regulatory Issues and Implications for AWS: To unleash growth
and allow progress to occur, the Government, through its policies,
simply needs to enable the right environment while maintaining a
level playing field, allowing aggressive competition to exist, and
adopting technology neutrality.
We expect that wireless technologies will drive broadband growth,
just as they have ushered in the voice telephony boom. Without
any doubt, ensuring that sufficient spectrum is available in a predictable and transparent manner is fundamental to continued
growth in the Indian telecom sector. This includes having a technology neutral spectrum allocation and pricing system to avoid
market distortions, enable competition, and improve spectrum
use efficiency. The regulators should also recognize the roll that
AWS technologies will play in increasing the value of the existing
2G networks. While formulating policies this clear linkage should
be taken into consideration.
Additionally, the universal services fund should extend to supporting optimally priced converged networks to drive demand for
advanced communication services, rather than promoting the
rollout of multiple networks in the same area.
Projections and Way Forward: Finally, if the above recommendations are followed, we believe that India can continue to grow even
faster than the rapid pace it has seen so far. Based on affordability
estimates and the continuing decline in cost for subscribers, it is
expected that India should achieve 38% mobile teledensity by the
end of 2010. In case spectrum and other regulatory hurdles are not
cleared, it raises the potential of missing the Government’s mobile
subscriber target of approximately 440 million, as we believe that
only 364 million subscribers would be achieved.
For 3G rollout, if spectrum is released in the middle of 2007 to
allow operators to launch services in the beginning of 2008, we
believe that there would be 30 million 3G subscribers by the end
of 2010. This will also enable faster growth in 2G services as the
vacated capacity used by high end subscribers who migrate to 3G
platforms would allow at least another 30 million subscribers in
addition to our base case estimate, since the cost of adding these
subscribers would be only marginal. Therefore, total mobile subscribers would reach 467 million.
The Government’s broadband subscriber targets would also be
met by such growth. Each 3G subscriber is naturally broadband
enabled, and in addition there would be a set of fixed or nomadic
broadband connections, which are acquired for residential and
small office use. We believe this number, when combined with
total 3G subscribers, will reach over 35 million by 2010.
Working in tandem, Industry, Government and Consumers can
drive the next wave for India.
TABLE OF CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
BACKGROUND & SUMMARY OF FINDINGS
8
1.1 Past Initiatives to Promote Broadband Growth
8
1.2 State of the Telecom Industry
9
1.3 Lessons from Success in Mobile Telephony
9
1.4 Fostering Future Growth
10
1.5 This Report
13
ECONOMIC IMPACT OF ADVANCED WIRELESS SERVICES
15
2.1 Three Orders of Impact
15
2.2 First-Order Impacts: Revenues, Employment, Investment
16
2.3 Second-Order Impacts: Auxiliary Service Revenues and Growth
17
2.4 Third-Order Impacts: Quantitative and Qualitative Findings
18
2.5 Social Impact
21
2.6 Conclusion
22
AWS TECHNOLOGY OPTIONS
24
3.1 Wireless Broadband Platform Overview
24
3.2 Technical Operating Parameters
26
3.3 Conclusion
31
STATE OF DEPLOYMENT
34
4.1 Third Generation (3G)
34
4.2 WiMAX
42
4.3 Wi-Fi
48
4.4 Conclusion
50
ROLLOUT ECONOMICS
52
5.1 Radio CAPEX Analysis
53
5.2 Handset Economies
58
5.3 Conclusion
60
ACCESS DEVICES, APPLICATIONS & SERVICES MOVE TO MOBILE WIRELESS
62
6.1 Internet Access Devices
62
6.2 Wireless Data Moves into the Mainstream
68
6.3 Conclusion
73
APPLICATIONS & SERVICES ON ADVANCED WIRELESS SYSTEMS
76
7.1 Consumer Applications and Services
81
7.2 Internet and Mobile Banking and Commerce
87
7.3 Applications and Services for Indian Enterprises
90
7.4 Connectivity an Enabler for Social Improvement
95
7.5 Conclusion
103
REGULATORY ISSUES & IMPLICATIONS FOR ADVANCED WIRELESS SERVICES 106
8.1 Current Relevant Regulatory Issues and Their Status
106
8.2 Spectrum Needs of Current and Future Players
107
8.3 Expanding Access to AWS
112
8.4 Competition
113
8.5 Recommendations
115
PROJECTIONS & WAY FORWARD
118
9.1 Affordability
118
9.2 Subscriber Growth
119
9.3 Conclusion
126
1
BACKGROUND AND
SUMMARY OF FINDINGS
India has gone wireless. Whether it is the headlines of newspapers
screaming about India racing ahead on the world’s telecom stage,
growing faster than every other country, defining how business is
going to be done in a world where emerging economies dictate their
own terms rather than follow those of the developed ones or it’s the
sight of new cellular towers being built everyday to serve everyone
from roadside vendors to corporate head honchos… Looking
around, we can clearly see that what was unimaginable a decade ago
has indeed happened.
Progress has been remarkable, but past success and astronomical
growth figures should not lead to complacency, and the loss of what
has brought us here in the first place - the urgency to ensure a
growth environment continues with a clear path ahead.
1.1 Past Initiatives to Promote
Broadband Growth
The Confederation of Indian Industry (CII), in conjunction with both the Department of Telecommunications
(DOT) and the Department of Information Technology
(DIT) in the Ministry of Communications and
Information Technology, initiated an industry-wide
process in 2003-04 to define for the first time, “India’s
Broadband Economy: Vision 2010".
population by 2010 through rural kiosks.
The primary driver behind the above initiatives was that,
other than the qualitative impact of development, CII estimated that the economic benefit to India of broadband
deployment would be in excess of USD 90 billion for the
period 2010 - 2020.
In parallel to CII’s initiative, the Telecom Regulatory
Authority of India (TRAI) had also begun an extensive and
thorough analysis and consultation process in 2003 for
identifying what hurdles existed in limiting the growth of
internet and broadband penetration. The overall framework introduced by TRAI was to analyze development
with respect to three areas: infrastructure for access, access
devices and content (Figure 1.1).
TRAI looked at the various hurdles preventing uptake of
internet and broadband in India to deliver a holistic, yet
realistic set of recommendations to the Government for
what should be followed if widespread broadband penetration was the goal. In its recommendations “Broadband
India: Recommendations on Accelerating Growth of
Internet and Broadband Penetration", released on 29th
FIGURE 1.1 Growth in Broadband Driven by the Interplay of Three Factors
CII took the lead in trying to understand what the scenario
of internet and broadband was in 2003 and based on that,
deliver a roadmap for how to improve the situation. The
recommendations of that initiative were very broad in
nature, and were directed not only towards Government,
but also towards Industry. The study conducted covered
experiences, expectations and evolution of broadband in
India. The recommendations included ways to improve
demand, growth, infrastructure, content development and
consumer protection, regulation cost impact and measures
to be adopted.
CII recommended a target of 10 million broadband subscribers in urban Indian homes and enterprises by 2010,
including, potentially 1 - 1.5 million kiosks. In rural areas,
the target was set at providing coverage to 50% of the rural
Source: TRAI, “Broadband India", April 29, 2004
April, 2004, TRAI pushed for dramatic change in following
areas:
1. Price
2. Access to the customer
3. Costs of backhaul networks
4. Fiscal policies
5. Content and applications
combined growth from the beginning of telephony in
India through to March 2004 (Figure 1.2).
Following the efforts of the regulator and industry representations, the DOT released the “Broadband Policy 2004”
in October 2004, to initiate the growth of broadband connectivity in the country. As part of this policy, the DOT
boldly set the goals for both internet and broadband subscriber penetration to be achieved in the country (Table
1.1).
The same cannot be said for internet and broadband
growth (Figure 1.3). The current situation is well short of
the targets set by the DOT, and recent patterns do not seem
to be yielding any significant acceleration. Furthermore,
achieving the targets will be a daunting task given that the
country has already missed the targets for broadband subscriber set for 2007.
CII also continued to take a leadership role in supporting
the Government and telecom industry to ensure that the
business and regulatory environment continued to be forward looking. Its initiatives through “Making the
Connection: India’s Digital Future” in November 2006
and, in conjunction with Yankee, “Building India’s
Broadband Economy: The 3G Way” in April 2006 were
contributors to the industry knowledge base and served as
significant reference points to move forward.
This trend is further supported by the recent release of the
Economist Intelligence Unit’s (EIU) “2007 E-Readiness
Rankings” reflecting the gap. India’s ranking amongst 69
countries plummeted for a fourth year in a row from 46th
in 2004, to 54th in 2007 (Figure 1.4). In addition, India
ranked 57th, the lowest amongst its peer group of BRIC
countries, in the most important category of Connectivity
and Technology Infrastructure.
1.2 State of the Telecom
Industry
Telecommunications in India has experienced unprecedented growth since the introduction of new players in
1995. Annual growth in the past fiscal year outpaced total
Mobile subscriber growth has been the main factor behind
the remarkable increase in telephone subscribers, having
witnessed unparallel growth in the world and surpassing
all expectations.
1.3 Lessons from Success in
Mobile Telephony
Explosive growth in voice service in India has shown us
that the demographics and economic characteristics of the
country are ideal to fuel the current “hockey stick” growth.
Three main areas that have contributed to widespread
mobile adoption are falling tariffs, lifestyle marketing to all
consumer segments, and low perceived entry cost.
TABLE 1.1 Internet and Broadband Subscriber Goals Set by DOT
Source: Department of Telecommunications, Government of India,
“Broadband Policy 2004", October 14, 2004
Competition is the Key
The competition amongst 4, 5, 6 and at times 7 operators
per region resulted in prices reaching the lowest per
minute tariffs worldwide. This has led to an innovative
customer orientation encouraging introduction of new
services, subscription schemes and in some cases advanced
technologies and usage capabilities. The competition has
FIGURE 1.2 Telecom Subscribers in India, March 1995 - March 2007
Mobile
Fixed
Source: TRAI
FIGURE 1.3 Internet and Broadband Subscribers
Source: TRAI, April 2007
FIGURE 1.4 EIU Rankings of Subset of Developing and APAC Countries
Source: Economist Intelligence Unit, “The 2007 E-Readiness Rankings: Raising the Bar",
2007. Note: Since these are rankings, a lower number is of higher value.
also driven general knowledge and awareness of features
and benefits, which has further helped adoption.
Utility Derived from End Services
The next focus area was the positioning of mobile services
across all segments of customers. Initially, the emphasis
was on driving customer adoption from those who could
afford tariffs of INR 16 (USD 0.35) per minute for both
outgoing and incoming calls. Over time, new messages tailored to the masses accompanied the increasing affordability of the services. Telecom operators successfully positioned the mobile phone as a necessity which improved
quality of life and increased the earning capability of even
laborers.
Affordability and Access for All
The last piece of the puzzle was to ignite growth by dramatically lowering entry costs by introducing phones in
the sub-USD 50 segment. These ultra low cost handsets
(ULCH) accounted for 50% of all handset shipments
nationwide last year. This allowed a sophisticated customer
segmentation to occur, catering to high end users, aspirational consumers, mass market as well as the low end. A
mature second-hand market for refurbished handsets also
helped further decrease entry costs.
Added to this increased affordability is further expansion
of network coverage across category B and C Circles,
which are growing at rates much higher than Metros and
category A Circles, albeit from a lower base (Figure 1.5).
1.4 Fostering Future Growth
Before one becomes complacent about growth in the
Indian telecom sector with the assumption that all is well,
some major hurdles stand in the way of achieving widespread high speed voice and data connectivity. Today, quality of service (QoS) in existing cellular networks is deteriorating in a number of areas due to a dire lack of spectrum, while voice average revenue per user (ARPU) continues to fall at a rapid pace and challenge operator margins. Additionally, an environment to foster value-added
services has not been promoted, and thus content and
applications for mobile and internet are still relatively in
their infancy.
Observing the current state of broadband, major initiatives need to be taken to boost growth. These steps need to
be across a variety of areas, from infrastructure, through to
access devices, and including content, to promote adoption. Finally, while the industry must consider how to
accelerate broadband penetration, it must also ensure that
this is not at the cost of continued growth in existing platforms.
7FIGURE 1.5 Monthly Subscriber Growth Rate, March 2007
DOT target is for 500 million subscribers by the end of
2010, and if the current pattern continues, BDA believes
that this is achievable.
Therefore, when thinking about how to move forward and
promote growth in India’s telecom landscape, these lessons
must be closely followed. Any new service will only be successful when:
Robust competition is promoted to induce innovation and tariff rationalization
New services can deliver social and economic values to the users
Services are structured in such a fashion that they
are affordable and accessible for all segments
Source: TRAI April 2007, BDA Analysis
0.4
0.3
0.2
DoT's Criteria (Max)
30-Sep-06
31-Dec-06
Bihar
UP East
UP West
Punjab
Kerala
TN
Karnataka
AP
Gujarat
Maharastra
0
Mumbai
0.1
Delhi
Packing Density (Subs in Million/MHz of Spectrum)
FIGURE 1.6 Mobile Spectrum Packing Density of GSM Operators
0.5
31-Mar-07
Source: TRAI, COAI, AUSPI
FIGURE 1.7 Mobile Spectrum Packing Density of CDMA Operators
Source: TRAI, COAI, AUSPI
1.4.1 Cellular Mobile
A lack of spectrum capacity and related deteriorating QoS
are straining the cellular telephone market and putting the
entire industry at risk of stalling. These are the biggest factors impacting the consumer experience of not only cellular telephony, but also of those using the internet for the
first time via mobile handsets, and of others attempting to
experience more advanced mobile data solutions.
Operators nationwide have crossed the benchmarks established by the DOT for the number of subscribers and correlated spectrum quantity. As can be seen by the circlewide averages in Figure 1.6, which include even the operators with the lowest subscriber bases, GSM operators have
surpassed the benchmark in each of the twelve circles from
varying categories. CDMA operators are also in a critical
situation in some circles (Figure 1.7). While it is true that
spectrum shortage is primarily being felt in cities where
there is a proportionately higher density of users, the
regions feeling these problems will continue to increase as
subscriber base grows and spectrum remains unavailable.
TRAI has described the problems faced by the industry in
QOS as a “crisis". The anomaly of the situation is that
while the technical data submitted by operators demonstrates fairly high levels of compliance, the consumer survey data shows that in the most recent survey only one
operator nation-wide passed the required benchmarks.
The historical subscriber-based criteria for spectrum allocation has also lead to a situation which favors subscriber
base inflation, and thus reduces the priority of data based
and value added services.
Another major challenge that India faces is the situation of
low ARPU in mobile services, which is amongst the lowest
globally due to the world’s lowest per minute tariffs.
Though operators are in general, financially healthy due to
high volumes and cost efficiencies, investments in expensive assets remain a challenge due to long ROI cycles.
Delivery platforms have to be optimized to allow customers to cost effectively access a variety of services and
applications over the same network.
The industry has reached a critical point. Further mobile
growth will depend on whether operators have access to an
enabling environment to deploy the technologies and services of their choice. Most important in this equation is
appropriate spectrum management, which will have a
direct bearing on how far the operators can expand existing 2G services and deploy more powerful data applications. Additionally, appropriate promotion of rural coverage will also help in widening reach.
1.4.2 Broadband
The earlier studies have identified the various factors that
impeded broadband growth. Focusing our analysis in line
with the framework mentioned in Figure 1.1, the obstacles
in each area can be identified and then resolutions sought.
Infrastructure for Access
The lack of a variety of access connectivity platforms, high
backhaul costs and thus high resulting consumer price
were previously cited as the biggest hurdles in this space.
Part of the problem was also due to the delay in deploying
infrastructure caused by the time, process and cost for
acquiring right of way (ROW) both on public land and
even to enter private premises like residential complexes.
Since then, we have seen domestic and international leased
line tariffs slashed by TRAI by 29 - 70% across various
capacities and distances.1 The industry has thus witnessed
prices for consumer broadband access reaching levels of
INR 250 (USD 5.52) per month for a 256 Kbps connection. Yet accelerated growth has not materialized.2
Given the limited amount of copper deployed by fixed line
operators, including the incumbents BSNL and MTNL,
the number of subscribers that can be accommodated is
limited and is unlikely to exceed 9 million.3 Wireless
options are also limited due to various constraints in spectrum and licensing.
Therefore, growth in the broadband segment, like in the
case of cellular voice communications, will require high
speed networks on diverse competing platforms.
Promoting competing technologies and players is critical
to achieving that goal.
In the current circumstances, the most feasible solution is
to aggressively grow existing and emerging Advanced
Wireless Systems (AWS). These AWS platforms include 3G
(WCDMA, HSPA, CDMA 2000 1x EV-DO Rev 0, CDMA
2000 1x EV-DO Rev A), WiMAX (IEEE 802.16d, IEEE
802.16e) and Wi-Fi (IEEE 802.11). These technologies are
discussed in more length throughout the analysis in this
paper.
While these technologies have historically been classified
for the urban elite, economies of scale worldwide are driving costs to affordable levels, and offer policy options that
will enable adoption across the segments.
Access Devices
Even though the PC continues to be the predominant
internet access device (IAD), it has some inherent limitations like high initial cost, complexity to learn and use,
high energy consumption and lack of mobility. Portability
is somewhat enabled in a laptop, but is more expensive
than a PC. Even the advent of alternative internet access
devices has not completely addressed the challenge of finding a solution to mass market adoption. The mobile
phones, therefore are likely to be the platform of choice for
many accessing broadband internet for the first time, since
they offer important advantages in price, flexibility and
ease of use.
1.5 This Report
In the following analysis, we closely investigate the nature
and power of wireless technologies which are already available or soon will be. We discuss at length various factors
that impact deployment, adoption and use of wireless data
services in India. These factors include technology and
price as well as policy and regulation. Each of these elements can dramatically impact the extent to which the
potential of new wireless technologies can reach the user
and India’s economy at large.
We will demonstrate how, working in tandem, Indian
Industry, Government and Consumers can drive the next
wave for India.
Content
For the consumer, neither the technology nor the device
for access is going to matter at all if the content and services being accessed is not relevant and useful.
It is clear that each category of consumer will also have
very different needs and assign different value to the various content and services being offered. Therefore solutions
for high end consumers, the middle class in cities and
towns, the mass market and rural users need to be considered separately. Additionally, solutions for large or medium sized enterprises will be quite different from those of
SMEs / SOHOs. As seen in the lessons from past experience from 2G growth, services and content for each of
these categories need to either deliver a convenience /
increase in quality of life or yield some utility.
Endnotes
1
TRAI, April 2005; TRAI September 2005
2
BSNL Home 250 DSL plan: INR 250 (USD 5.52) per month plan, includes a 256
Kbps - 2 Mbps connection and 1 GB of upload / download, but requires monthly modem rental of INR 60 (USD 1.32) and upfront payments totaling INR 850
(USD 18.76) for installation and security deposit
3
TRAI, April 2004
2
ECONOMIC IMPACT
OF ADVANCED
WIRELESS SYSTEMS
The Maitland Report, commissioned by the ITU in 1984, highlighted the link between socioeconomic development and access to communication services. Since then significant amount of money has
been invested across the world, and in India, in ensuring access to
telecommunications. This has happened through private or public
funding, through investment or subsidy, and through direct government intervention or independent private sector movements. As
with any investment, there is a need to quantify the return.
Significant anecdotal evidence collected in India and around the
world has shown that communication services improve access to
information, economic opportunities, educational and health services, and most of all, to the social networks of family and community. In this section of the report, we focus on how advanced wireless
services (AWS) specifically can contribute to India’s economic
development. We examine the possible economic impact of AWS on
GDP growth, employment, consumer spending, and investments
and revenues.
It is important to understand that any economic impact assessment
is only indicative. It is practically impossible to determine exactly the
economic outcome of investments in AWS, or even other general
infrastructure. However, it is still useful for investors and regulators
to have estimates of the magnitude of potential impact. In order to
arrive at good indicative figures, we conduct a multi-layered examination of how the introduction of AWS, which includes 3G and
other broadband wireless access platforms, might improve economic conditions. We will focus on three technologies and their impact
on socio-economic indicators. These technologies are personal
computers, broadband service, and mobile telephony. AWS works,
at least in a simplified form, as a combination of computing, highspeed internet service, and of mobile telephony. The impact of AWS
will depend on the scenarios in which it is introduced and follows
three “orders” of impact: direct, auxiliary, and indirect.
2.1 Three Orders of Impact
The introduction of any technology has a variety of economic impacts. We have classified these impacts into three
KEY TAKEAWAYS
The introduction of broadband wireless
and 3G services will have a significant
impact on India’s economy, estimated to
the tune of USD 50 billion.
Advanced wireless services (AWS) will lead
to higher investment, generate additional
revenues, and create employment in the
telecom sector.
It will be important for India to adopt AWS
soon in order to take full advantage of the
economic and social development benefits
of new technologies.
orders depending on the ‘distance’ of the impact from the
provision of AWS itself. While detailed examinations of the
potential impacts constitute the remainder of this chapter,
the following provides a short explanation and the estimated value.
First-order impact is the direct effect of introduction of
AWS on the telecom industry. This includes the investments, revenues, and employment tied to the deployment
of AWS networks. It is likely that these benefits will include
increased direct employment in telecommunications service provision, and total economic impact of approximately USD 20 billion over three years.
Second-order impacts focus on the auxiliary sectors of the
economy that will benefit from the introduction of AWS
networks. Examples of these include equipment manufacturers, vendors, hardware and software producers, application service providers, and content providers. We estimate,
based on the VAS and ITES industries today, that the possible benefits of AWS in the second-order will be greater
than USD 3 billion annually.
Third-order impacts focus on the economy as a whole,
including the often-cited estimations of the effect of
telecommunications investments on GDP and employ-
ment growth. The consumption of ICT services through
the entire economy is accounted for in this category.
The impact of AWS on the Indian economy as a whole is
expected to be at least USD 50 billion over the first 10
years after its introduction.
FIGURE 2.1 Telecom is Approximately 20% of Total Infrastructure Spending
2.2 First-Order Impacts:
Revenues, Employment,
Investment
India’s annual telecom services gross revenue has now
exceeded USD 20 billion, exhibiting a CAGR of over 20%
since 2002, and it currently constitutes approximately 2%
of GDP.4 In addition to this growth trend, it is useful to
mention that there is also an increasing level of spending
on telecom networks, although it holds fairly steady at
about 20% of total infrastructure spending, which is
approximately USD 22 billion, or INR 1 trillion in 2007
(Figure 2.1).5 In other words, this means that annual
investments and revenues in the telecom sector total more
than USD 40 billion and both are expected to increase over
time.
Revenues are likely to increase with the growth in net new
additions expected in both mobile telephony and broadband services.
Source: Government of India Union Budget 2007-08
FIGURE 2.2 ARPUs are Declining Significantly
FIGURE 2.3 ISP Performance Since 2005
Source: TRAI
Even as revenues are growing, ARPUs across India are
declining over time primarily due to falling tariffs (Figure
Source: TRAI
2.2). From the perspective of assessing economic impacts,
this is significant since increased subscriber base in mobile
telephony will likely continue to be accompanied by
reduced ARPUs. However, it is important to remember
that the sector is still demonstrating price elasticity, and
hence, we expect sectoral revenues will continue to grow in
the future as the subscriber base increases.
Current ARPU levels of ISPs have held steady at about
USD 4.64 (INR 210) over the past two years, while minutes
of use on dial-up services have been stable at approximately 180 minutes per user per month (Figure 2.3). ISP dialup revenues topped USD 375 million (INR 17 billion) at
the end of 2006, whereas revenues from broadband services are still too early to determine.6 While it is difficult to
discern a clear trend for future ARPUs of ISPs as broadband usage expand, the size in addition, stability of ISP
revenues and use indicate that the market is holding steady
and has the potential to expand in the future as usage or
coverage increases.
As an indicator of the potential of IP based services in the
future, it is valuable to point out that internet telephony
minutes reached 88.08 million during the quarter ending
December 2006, which is 4 times the traffic in the same
quarter in 2005 (Table 2.1). This represents 17% of total
ILD minutes for the quarter as opposed to 8% in 2005.
FIGURE 2.4 FDI in Telecom has Crossed INR 110 billion (USD 2.4 billion)
Source: DOT
TABLE 2.1 ILD Traffic in Billions of Minutes
Source: TRAI, Economic Times
TABLE 2.2 Direct Employment in Indian Telecoms10
Given the growing use of internet-based services for voice
traffic and even an increase in MOU of dial-up services
across India, we expect that once the internet services market establishes itself, with AWS being one of the main
channels to achieve this, the growth rates will reach relative
levels similar to 2G telephony.
Source: SSKI Research
Another benefit for the economy from the growth of telecom services, especially in mobile telephony, which only
recently saw the USD 11 billion Hutch-Vodafone acquisition, is the significant, even if fluctuating, foreign direct
investment into the sector (Figure 2.4). With the increase
in FDI limit to 74%, it is likely that additional investments
will continue to flow. We expect that FDI levels should
approach about USD 10 billion over the next three years
if AWS is encouraged, especially if new networks like AWS
have to be deployed. This estimate is based on the investments seen in other countries for the deployment of 3G
services (up to USD 150 billion throughout Europe, USD
3 billion by Sprint-Nextel),7 for NGN services (USD 18
billion each by BT and Verizon),8 and mobile WiMAX
(USD 2.5 billion by Sprint-Nextel).9
As a final measure of direct economic impact, it is also useful to consider the direct employment generated by the
telecom service sector. In 2005, this stood at 429,400 with
Government companies employing approximately 90% of
total direct employment (Table 2.2). Between 2004 and
2006, however, it is interesting to note that public sector
employment reduced by 3%, while private sector employment increased by 11%.
With the expansion of the private sector in the provision of
ICT services, direct employment will increase with the
introduction of AWS platforms. Given that a significant
number of employees will have to be assigned to deploy,
operate, and manage AWS systems and networks, we conservatively expect that about 10% of total employment in
this sector will deal with AWS and related services. Since
salaries in the ICT sector are above-average, it is likely that
those directly employed combined with the indirectly
employed, who will be earning a total of about USD 10,000
per year, will bring employment income to approximately
USD 1 billion per year, and accelerate job creation in the
high technology and services sector.
FIGURE 2.5 Components of the Mobile VAS Market (2006)
Source: IAMAI, December 2006
FIGURE 2.6 Services Balance of Indian Trade (USD billion)
Combining investments (domestic and foreign), the additional revenues from the sector, and the additional
income for employees, the total first order impact of
AWS is estimated to be of the order of USD 20 billion
over the first three years of its introduction.
2.3 Second-Order Impacts:
Auxiliary Service Revenues
and Growth
AWS will have two types of second-order impacts. The first
type is from supporting industries such as value-added
services (VAS), which includes mobile content and data
services to the Indian market. This market is growing at
approximately 40% per year and is expected to revive the
declining APRU levels of operators. The other type of second-order impact is the positive effect of ICT infrastructure availability on general export of services in the economy. Connected with growth in these auxiliary sectors are
its revenue and employment effects. We will not consider
employment effects because of a lack of data to make
sound arguments; hence, we will concentrate on the effect
of AWS offerings on revenues of these auxiliary sectors.
Source: Economic Intelligence Unit
TABLE 2.3 Correlation Between GDP per Capita and ICT Prevalence15
Source: BDA Analysis. It is critical to remember that correlation only
indicates the strength of a relationship between two variables and not
causality. Hence, these coefficients, where zero represents no relationship
and one represents a perfect relationship, only indicate the usefulness of
these ICT indicators as predictors of levels of GDP, but not as causes.
2.3.1 Value Added Services
At present, voice accounts for 90% of revenue for telecom
services. However, operators are using value-added services (VAS) revenues to balance the receding ARPUs faced by
the Indian mobile industry. As of December 2006, average
ARPUs had fallen about two-thirds over the past four years
to reach INR 281 (USD 6.19).11 On the other hand, data
ARPU has almost doubled over the same period.
According to the Internet and Mobile Association of India
(IAMAI), the mobile VAS industry in India reached INR
2,850 crores (USD 630 million) at the end of 2006, and is
estimated to grow 60% to touch INR 4,650 crores (USD
1,026 million) at the end of 2007. According to IAMAI, the
VAS space is currently completely dominated by entertainment and peer-to-peer SMS services (Figure 2.5).12
The non-SMS space is approximately 60% of the total, and
with the introduction of AWS, it is more likely that services like gaming, Application to Person (A2P), and MMS will
find widespread use with the higher data speeds and proliferation of mobile content. Hence, even according to
IAMAI the introduction of AWS like 3G will be required to
drive this industry further.
2.3.2 Service Exports
The past decade has seen India grow its IT-enabled service
sector considerably. The Economist Intelligence Unit predicts that India will be services export-positive into the
next few years, with the services balance crossing USD 70
billion by the start of the next decade (Figure 2.6).
By the end of 2006, the services sector had reached a
growth rate of 10.7% and continues to be a driver of economic activity. It is estimated that every Rupee spent in ITITES translates into a total output of INR 2 for the economy, and for every job that is created in this sector, four jobs
are created in the rest of the economy. The ITES-BPO
industry is continuing its robust growth in 2007 as well,
with 46% growth in top line to reach INR 878,647 million
in the quarter ending March 2007. Over time, India’s ITES
industry has graduated from offering only basic data entry
tasks to value-added activities like Human Resource (HR)
administration, Knowledge Process Outsourcing (KPO)
and Legal Process Outsourcing (LPO).13 This trend her-
alds increasing revenues over time for ITES.
If the US Dollar becomes weaker against the Indian Rupee,
it will be even more important to maintain a competitive
advantage for the IT-enabled sector. High-end AWS can
offer critical support as Indian firms shift from executing
low value added work to high-end tasks. As discussed in
Chapter 7, Rural Shoring can be a valuable opportunity for
India. With appropriate training, a significant number of
rural Indians can join pool of workers for BPO services.
This is currently difficult due to the lack of dependable
connectivity to the rest of the world, and most importantly, to the suppliers or coordinators of the work. AWS can
provide inexpensive and dependable broadband connectivity, to help nucleate the rural BPO industry and help
generate employment and revenues in traditionally underserved areas.
Taken together, the second order impact of AWS on auxiliary sectors is expected to reach about INR 5,000 crores
(USD 1.1 billion), considering the potential of growth in
the provision of VAS and in the ITES sector.
2.4 Third-Order Impacts:
Quantitative and
Qualitative Findings14
The most widespread order of the impacts is the third,
which gauges the impact of AWS on the economy as a
whole. Due to the enormity of the measurement problem,
it is useful and practical to study the impact of AWS using
TABLE 2.4 Correlation with GDP per Capita for Income Groups
ICT Density
High Income
Upper Middle Lower Middle
PCs
0.70
0.38
0.40
Broadband
0.43
0.10
0.58
Mobile Phones
0.35
0.07
0.78
Source: BDA Analysis
macroeconomic indicators.
As seen in Table 2.3, across the world, the prevalence of
ICTs in an economy is a good indicator of GDP per capita.
From this, we can argue that a country with a higher density of PCs, broadband subscribers, or mobile phone subscribers, would also have a higher GDP per capita. Yet, even
based on this, it is still not possible to make a causal link.
For a more accurate analysis, especially for India, it would
be better to focus on the correlation of such development
based on the different types of economies worldwide. For
example, the correlations between the same ICT indicators
and GDP per capita for countries grouped into “high
income", “upper middle income", and “lower middle
income” are as shown below.
This outcome raises some interesting points. First, the
range of coefficients for upper middle income countries
are relatively low, which indicates that it is difficult to suggest a strong connection between ICTs and GDP per capita in these economies. Second, for income groups other
than lower middle, the coefficients for PCs and broadband
are higher than that for mobile phones, while the situation
is the reverse for lower middle-income countries, one of
FIGURE 2.7 Relationship of Mobile Teledensity Increase with GDP per Capita for High-Income Countries
FIGURE 2.8 Relationship of Broadband Subscriber Increase with GDP per Capita in Lower Middle-Income Countries16
Source: BDA Analysis . The regressions used in Figure 2.7 and Figure 2.8 have an R2 value that is indicative of the strength of the relationship between the x and y-axes. A
value of 1.0 will indicate a perfect relationship, while values of 0.2 and higher represent strong to very strong relationships. Values below 0.1 represent weak to no relationships.
which is India. Hence, it is possible to say that more developed nations, with higher GDP per capita numbers, are
more likely to have better PC and broadband penetration,
while for developing nations, mobile teledensity predicts
better GDP per capita. While a direct link is difficult to
establish, it can be said that ICT technologies are playing
some role in the determination of economic well-being.
To understand possible impact of higher ICT penetrations
on GDP per capita, it is useful to look at the trends across
these countries. Figure 2.7 and Figure 2.8, suggest that
increase in teledensity or broadband subscribers lead to an
increase in observed GDP per capita.
The above suggests that high-income economies benefit
more from increase in ICT penetration than upper middle-income countries. On the other hand, lower middle
countries, again including India, seem to benefit significantly from these ICTs, especially from broadband, from
which they have the highest impact. One possible explanation for this is the differing role of infrastructure in different types of economies. In high-income economies, ICTs
are probably substituting or supplementing other existing
ways of performing the same activities, whereas in lowermiddle economies, ICTs are typically enabling certain
TABLE 2.5 Observed Change in GDP per Capita for Different ICTs
Source: BDA Analysis.
FIGURE 2.9 India’s GDP per Capita and Mobile Teledensity
activities for the very first time. Upper-middle economies
in this analysis might not accrue significant benefits
because some of these specific countries examined have
been undergoing political or economic transformations
over the past few years.17
Shifting focus to India, it becomes clear that the rise in
GDP per capita has accompanied the rise in mobile teledensity. Over the past few years, the effect of telecom on
the Indian economy as a catalyst and a motivator has also
increased. By the end of 2006, the market capitalization of
the three largest private service providers had crossed USD
70 billion, and telecom industry is clearly a key driver in
the capital markets.18
Computing the third order impact of AWS on the entire
economy is not easy. However, given the significant impact
of 2G voice telephony on the economy in terms of
increased GDP and economic opportunity, AWS can be
expected to have up to three to four times the benefits
based on the quantitative regressions above. Of course, this
will happen over time - the time between the introduction
of 2G and the economic benefits was about a decade.
Hence, it is possible that over the decade following the
introduction of AWS, the Indian economy will see benefits of at least USD 50 billion or more from these technologies and the services they offer.
2.5 Social Impact
It is also useful to understand how ICTs are benefiting
socio-economic development using qualitative data. In
order to conduct this analysis, we present three short cases
from different perspectives. The first is a case where ICTs,
and specifically mobile telephones improved social conditions and provided connectivity. The second shows how
data access has reduced transaction costs and improved
agricultural livelihood. Finally, we look at how the digitization of public services and use of computers can improve
the quality of life for citizens and the efficiency of government functioning. These examples, though a step removed
from broadband, provide sufficient clues to benefits that
large scale ICT - including though not limited to mobile
data-services use can potentially bring.
GrameenPhone: In Bangladesh, GrameenPhone (GP) has
been able to assist a number of communities without
access to telephones by introducing GSM-based village
phones owned and operated by village locals, largely
women. These phones are purchased using micro-credit
loans. (Rates are generally twice the wholesale rate charged
by GP plus taxes and airtime fees, but repayment rates are
still above 90%.)
Research by the World Resources Institute finds that GP
increased incomes of village residents. While 8% of calls
are made by farmers and business people to get better
prices from middlemen, the remaining 82% of the time
was used to discuss a wide range of financial issues, including approximately 42% of all calls, to facilitate remittances
to family members from Bangladeshis away in cities or
overseas. With the cost of traveling to another town to
make a phone call roughly 1.93 to 8.44 times the cost of
making the call on a phone located within one’s own village,19 the savings were substantial.
e-Chaupal: ITC, an Indian conglomerate with interests in
agri-business and tobacco, among other sectors, invested
in a network of computers with internet access in rural
farming villages, which it called e-Chaupals. These centers
serve both as a social gathering place for exchange of information and as an e-commerce hub for the procurement
process for soy, tobacco, wheat, shrimp, and other cropping systems. The e-Chaupal system supplements the minimal voice telephony networks present in many rural
towns by introducing access to data that would otherwise
not be accessible to farmers. The system has effectively
reduced transaction costs for both the farmer-sellers and
the procurer, ITC, by 70%.20 Further details are available in
the Case Study in Chapter 7.
eSeva: The eSeva project was started as a pilot in the
twin cities of Hyderabad and Secunderabad, fully funded
by the Government of Andhra Pradesh. It provides services such as registration of birth and death certificates,
registration of vehicles and learners’ driving licenses. After
a successful pilot, the project expanded to 33 centres operating in the twin cities. Presently, the e-Seva centres provide about 50 government services within 60 seconds
to 120 seconds, including utility payments, for which
citizens are not charged.
Up through 2003, the number of transactions for the year
doubled and the payments increased six times; 8.27 million transactions estimated to be worth INR 32.8 billion
took place in the e-Seva centres. e-Seva has demonstrated
how data infrastructure can enable efficiencies and
improvements in governance practices.21
2.6 Conclusion
Endnotes
Based on the limited quantitative data available, the total
economic impact of AWS services on the Indian economy
is estimated to be of the order of USD 70 billion in the first
decade of introduction. Of this, USD 20 billion will come
from increased investment, revenues, and employment
generated by AWS services as they take root. The data and
analysis available is unable to capture the full range of possibilities, but based on the evidence, and the Indian experience with 2G voice telephony in a competitive market,
these estimates could well turn out to be conservative.
Given this immense potential impact and the qualitative
benefits also discussed in this section, it is clear that India
can expect a significant and important return on investment in AWS technologies.
4
TRAI, World Bank
5
Government of India Union Budget 2007-08
6
TRAI
7
Fitch Ratings, Telegeography
8
Economist
9
Sprint Nextel, http://www2.sprint.com/mr/news_dtl.do?id=12960
10
SSKI Research
11
TRAI
12
Internet and Mobile Association of India, “Mobile Value Added Services in
India: A Report by IAMAI & eTechnology Group @ IMRB", December 2006
13
Cygnus Business Consulting and Research, 2007
14
ICT and economic data here is for 2005 unless mentioned otherwise
15
It is critical to remember that correlation only indicates the strength of a relationship between two variables and not causality. Hence, these coefficients,
where zero represents no relationship and one represents a perfect relationship,
only indicate the usefulness of these ICT indicators as predictors of levels of
GDP, but not as causes.
16
The regressions used in Figure 2.7 and Figure 2.8 have an R2 value that is
indicative of the strength of the relationship between the x and y-axes. A value
of 1.0 will indicate a perfect relationship, while values of 0.2 and higher represent strong to very strong relationships. Values below 0.1 represent weak to no
relationships.
17
In this analysis, most of the upper-middle income economies are undergoing
significant political and economic shifts: Estonia, Russian Federation, Slovak
Republic, Chile, Mexico, Panama, Lebanon, Gabon, Seychelles, and South
Africa.
18
Company reports
19
World Resources Institute, What Works: Grameen Telecom’s Village Phones,
20
World Resources Institute, What works: ITC’s e-choupal and profitable rural
21
Asia-Pacific Development Information Programme,
June 2001
transformation, August 2003
http://www.apdip.net/resources/case/in07/view
3
AWS TECHNOLOGY
OPTIONS
BSNL and MTNL currently own the majority of telephone copper
cable in the country. With this existing infrastructure, less than 9
million households can be connected via broadband. On the other
hand, cellular phones based on various wireless technologies have
revolutionized telecommunications in India. Wireless industry
growth has been much faster than expected, with over 166 million
subscribers achieved by March 2007. However, due to the
Government policy focus on expanding telephone subscriber base
which lead to cellular operators concentrating on voice services only,
value added services and broadband connectivity has received very
little attention. Thus India needs a way to provide widespread internet access to usher in economic growth, better education and
healthcare and improved entertainment services, as done elsewhere
in the world. The solution must be wireless to avoid the overwhelming cost and resources that would be required to deploy new fixedline broadband internet infrastructure nationwide.
KEY TAKEAWAYS
WCDMA, EV-DO and mobile WiMAX are
capable of providing voice and data communications in mobile conditions, but with
differing QoS and data rates. While mobile
WiMAX is designed to support data communications and efforts are ongoing to
optimize it for VOIP, WCDMA / HSPA and
EV-DO are backward compatible evolutions
of voice centric GSM and CDMA2000 networks and have been designed to support
data in addition to voice, while also leveraging existing core network deployments.
Spectrum harmonization has been the key
to ensuring economies of scale and worldwide roaming. 3G systems have come a
long way in this regard and the WiMAX
Forum is currently making efforts towards
3.1 Wireless Broadband
Platform Overview
ensuring that both 802.16d and 16e platforms achieve the same.
WiMAX is based on TDD duplexing modes,
which is simpler to implement in electronics, while 3G systems are based on FDD
and have an advantage in link budget, and
Mobile network operators are faced with important capital expenditure decisions about wireless broadband technology that would be the most appropriate to fulfill their
strategic business objectives and provide a clear network
evolution path. Consequently, a clear understanding of the
prevailing strengths, weaknesses and tradeoffs between
leading alternatives for mass-market implementation is
needed. There are various wireless technologies that promise to provide high speed data services such as 3G,
WiMAX, Wi-Fi, and a few proprietary systems like iBurst,
IP Wireless or Flash-OFDM.
therefore range, in coverage limited deployments like rural areas.
3G platforms are able to deliver spectrum
reuse factor of n=1, thereby increasing
spectral efficiency.
WiMAX and Wi-Fi are well-suited to support
bursty traffic, and are both IP based technologies which can leverage an IP core network from the start.
3.1.1 3G
Third Generation (3G) is the term used to describe the latest generation of mobile services which provide advanced
voice communications and high-speed data connectivity,
including access to the internet, mobile data applications
and
multimedia
content.
The
International
Telecommunication Union (ITU), working with industry
standards bodies from around the world, has defined the
technical requirements and standards along with the use of
spectrum for 3G systems under the IMT-2000
(International Mobile Telecommunications-2000) program. The ITU requires that IMT-2000 (3G) networks,
among other capabilities, delivers improved system capacity and spectrum efficiency over second generation (2G)
systems, and that they support data services at minimum
transmission rates of 144 Kbps in mobile (outdoor) and 2
Mbps in fixed (indoor) environments. The currently
deployed CDMA 2000 1X and EDGE platforms, which are
included among 3G systems under the IMT 2000 program,
are treated as among the 2G technologies already in use,
i.e., GSM and CDMA 2000.
Developed by the global GSM community as its chosen
path
for
3G
evolution,
Universal
Mobile
Telecommunications System (UMTS) uses a Wideband
Code Division Multiple Access (WCDMA) air interface,
which has lead the industry to refer to the technology simply as WCDMA. The 3GPP standardization body produces
technical specifications for this family of advanced systems
based on the evolved GSM standard. High Speed
Downlink Packet Access (HSDPA), the evolutionary path
of WCDMA enhancements, is a software-based upgrade
that boosts the air interface capacity of WCDMA networks
by 2 times and delivers 7 times the level of downlink data
speeds because of additional improvements in signal processing. Enhancements to the uplink data speed known as
High Speed Uplink Packet Access (HSUPA) are standardized in 3GPP and can deliver an enhancement of 15 times
the uplink data rate of HSDPA and 7 times the peak sector
capacity.
CDMA 2000 1xEV-DO (Evolution-Data Optimized) is the
next generation for CDMA 2000 systems. CDMA2000
1xEV-DO introduces new high-speed packet-switched
transmission techniques that can deliver peak data rates
beyond 2 Mbps in a mobile environment. Rev A is an evolution of CDMA2000 1xEV-DO Rev 0 that increases peak
rates on reverse and forward links to support a wide variety of symmetric, delay-sensitive, real-time, and concurrent voice and broadband data applications including
VoIP. The next evolutionary step after Rev A is Revision B
(Rev B), which consists primarily of aggregating multiple
EV-DO Rev A channels to provide higher performance for
multimedia delivery, bidirectional data transmissions and
VoIP-based concurrent services. The CDMA 2000 platform and its various upgrades are standardized as part of
the 3GPP2 project.
Both the standardization organizations for WCDMA and
EV-DO, 3GPP and 3GPP2, have already detailed upgrade
paths for evolution beyond the platforms discussed above.
The WCDMA upgrade path beyond HSUPA is to Long
Term Evolution (LTE), and the path for the CDMA EV-DO
family is to Ultra-Mobile Broadband (UMB). Both of these
platforms are currently being standardized, and are therefore not discussed in detail in this paper.
3.1.2 WiMAX
Worldwide Interoperability for Microwave Access
(WiMAX) is a wireless digital communications system,
based on IEEE 802.16 standards. WiMAX is intended for
wireless metropolitan area networks in licensed or licenseexempt bands, delivering point-to-multipoint fixed,
nomadic, portable and mobile access. To meet the requirements of different types of access, two versions of WiMAX
have been defined: fixed WiMAX (802.16d) and mobile
WiMAX (802.16e). In both instances the emphasis of the
standards is to define the radio communication norms,
which are translated into the medium access control
(MAC) layer and the physical communications (PHY)
layer.
Fixed WiMAX
Fixed WiMAX is based on the IEEE 802.16d standard. It
supports fixed and nomadic access in Line of Sight (LOS)
and Non-Line of Sight (NLOS) environments. WiMAX
enables the delivery of last mile wireless broadband access
as an alternative to cable and DSL, and can also be used for
backhaul and network bridging applications. In some networks it will be attractive to use a WiMAX point-to-point
link to backhaul traffic from a WiMAX base station
towards the core network. In other cases, WiMAX will be
used to provide LAN-to-LAN bridging solutions for enterprise networks or simply providing IP connectivity.
Customer Premises Equipment (CPE) will primarily take
the form of indoor and outdoor modems with varying
antenna types and laptop PCMCIA cards. 802.16d was
approved in June 2004. In this paper, the terms 802.16d,
16d and fixed WiMAX are used interchangeably.
Mobile WiMAX
Optimized for dynamic mobile radio channels, Mobile
WiMAX is based on the 802.16e amendment to 802.16d
and provides support for handoffs and roaming for subscriber stations moving at vehicular speeds, and thereby
specifies a system for combined fixed and mobile broadband wireless access. 802.16e was approved in December
2005. Operations for 802.16e are limited to licensed bands
suitable for mobility below 6 GHz. A better link margin,
support for mobility, improved indoor coverage, flexible
management of spectrum resources, and a wider range of
terminal form factors are some of the advantages offered
by 802.16e products over 802.16d. Due to the way the standard has developed over time, 802.16e is not backwards
compatible with 802.16d, and therefore interoperability at
the handset or CPE would require separate radios inside
the terminal. In this paper, the terms 802.16e, 16e and
mobile WiMAX are used interchangeably.
The WiMAX Forum is an industry group which offers a
means of testing and certifying manufacturer’s equipment
for compatibility through approved certification labs, and
is also dedicated to fostering the development and commercialization of the technology platform.
to a backhaul point. In many ways, a wireless mesh network resembles an idealized version of a top-level internet
backbone in which physical location is less important than
capacity and network topology. At least one wireless device
(or node) is connected to an internet connection and each
data packet is bound for the same destination but not necessarily using the same sequential path of nodes. The principle is similar to the way packets travel around the internet - data will hop from one device to another until it
reaches a given destination. Dynamic routing capabilities
included in each device allow this to happen.
3.2 Technical Operating
Parameters
3.2.1 Operating Frequency
3.1.3 Wi-Fi
Wi-Fi is a term developed by the Wi-Fi Alliance to describe
wireless local area network (WLAN) products that are
based on the IEEE 802.11 standards. The most popular
and widely used standards are IEEE 802.11a, IEEE 802.11b,
both standardized in 1999 and IEEE 802.11g, standardized
in 2003. The target environment of the standard includes
both indoor and outdoor areas. 802.11 defines two pieces
of equipment, a wireless station and an access point (AP),
which together act as a bridge between the final wireless
link and the backhaul broadband network. Wi-Fi networks
provide wireless broadband connectivity with data rates in
a local area of approximately 100 feet. A region covered by
single or multiple access points has come to be defined as
a “Hot Spot". The Wi-Fi Alliance tests and certifies the
compatibility of Wi-Fi devices.
Wi-Fi networks have gained tremendous success in delivering wireless broadband access, however, traditional Hot
Spots rely on having access to a broadband network for
backhaul. In a wireless mesh network, a backhaul connection is not required for every access point, since the mesh
maintains radio connectivity between the various access
points to create a seamless path for data to travel through
Coverage: Coverage is directly related to the operating frequency - the higher the frequency, the lower will be the
coverage area, assuming all other factors are same. This is
because path loss over a distance is inversely proportional
to the square of the operating frequency. Therefore, a
lower operating frequency is desirable for providing larger
coverage and easier indoor penetration due to lower penetration loss. Table 3.2 shows how the coverage reduces at
higher operating frequencies, with all other factors
remaining absolutely equal, when using base-case coverage
of 10 km for a deployment in the 400 MHz band.
In a real world deployment, factors including antenna gain
and transmit power, when using the same core technology,
are adjusted based on the operating frequency so that
results do not vary so drastically. Furthermore, the performance of different technology platforms themselves
will vary greatly based on how various parameters in the
signal processing layers are implemented. Therefore, while
the above may be a good theoretical benchmark, arriving
at a reasonable yardstick for comparing different systems
in a variety of bands would require much more sophisticated testing and simulation.
In India, TRAI has recommended that 3G networks be
TABELE 3.1 Operating parameters for the different AWS
Source: GSM World, CDG, IEEE 802, WiMAX Forum, Wi-Fi Alliance
deployed in the 2.1 GHz, 800 MHz and 450 MHz frequency bands. Globally, WCDMA networks have been deployed
in 2.1 GHz and 850MHz bands and developments are in
progress for 900 MHz deployments, as well. EV-DO systems have been deployed in the 800 and 1900 MHz bands,
though some deployments in 450 MHz, 1700 MHz and
2100 MHz also exist. As shown in Table 3.3, the radio frequency allocations for WiMAX are in the 2.3 - 2.5 GHz, 3.3
- 3.5 GHz and 5.8 GHz bands. Fixed WiMAX has been
deployed and trialed in 3.3 GHz, 3.4 GHz, 3.5 GHz and 5.8
GHz and Mobile WiMAX in 2.3 GHz - 2.5 GHz, and there
have been various standardization plans for each of these
frequencies. In India, TRAI has recommended that in the
near term the 3.3 and 3.4 GHz bands be allocated for BWA
applications.
One of the reasons for WiMAX focusing on higher frequencies than existing 3G platforms is that since it is based
on the OFDM system, it needs a broad band of frequency
in the range of 15-30 MHz for ensuring optimal performance. Such quantum of spectrum for a number of competing operators will be typically difficult to find in contiguous slots in the lower frequency bands until existing technologies/users are refarmed to other frequencies or communication platforms. Therefore, these systems have to be
initially focused on higher frequencies. As indicated above,
systems deployed in lower frequency bands will tend to
have an advantage of larger coverage area, provided other
parameters are equal.
TABLE 3.2 Relative coverage for different operating frequencies
Global Harmonization: Global harmonization of spectrum bands and standards across the GSM and CDMA
families of technologies has been a fundamental factor
behind the success of the mobile telecommunications
industry. In order to ensure economies of scale and worldwide roaming, spectrum harmonization is the key.
Evidence of this is the more than 2 billion consumers on
GSM platforms and more than 300 million on CDMA
platforms who benefit from low cost access and a plethora
of mobile services and terminals resulting from their
economies of scale. Additionally, equipment interoperability and international roaming make it possible for consumers to use their mobile phones seamlessly across operators and countries.
The frequencies for IMT-2000 were identified by the ITU
in 1992 to foster the same economies of scale witnessed in
2G platforms. WCDMA systems are operating in the 2.1
GHz and 850 MHz bands with developments for 900
MHz, while CDMA EV-DO networks have been deployed
in 450 MHz, 800 MHz, 1700 MHz, 1900 MHz, and 2100
MHz bands. The initial focus of mobile WiMAX has been
in the 2.3GHz and 2.4GHz bands to avail from global harmonization benefits. However, in India the 3.3 GHz and
3.4 GHz bands have been recommended for BWA applications by TRAI, and thus the WiMAX Forum is aggressively trying to convince the Government of the merits of harmonization. Mobile WiMAX has also been proposed for
adoption in the group of IMT 2000 technologies. While
the evaluation process is currently ongoing, if accepted
Mobile WiMAX deployment would be limited to TDD
TABLE 3.3 WiMAX Spectrum in Different Regions
Source: BDA Analysis.
Note: 10km coverage for 400 MHz operating frequency is the base-case assumption.
Source: Lehman Brothers
bands within IMT2000, since the focus of Mobile WiMAX
has been primarily on TDD.
3.2.2 Duplexing Mode
3G is being deployed in FDD mode, while WiMAX is at
present certified only for TDD, although both technologies
could in principle be supported in the other mode. An X
MHz FDD band generally means a paired band with X
MHz for downlink and X MHz for uplink. In a TDD system, a Y MHz band refers to a Y MHz band in total, where
that quantum of spectrum is used both for uplink and
downlink.
TDD: TDD systems are more suited to asymmetric traffic
(such as higher download dominated traffic) and can offer
flexibility through pre-determining an upload:download
ratio at the time of deployment. This flexibility is useful for
handling high volumes of “bursty” traffic patterns, whereas spectrum allocation and the DL:UL ratio in FDD cannot be modified, and may lead to underused spectrum in
these traffic conditions. TDD hardware should, in principle, be less expensive than FDD, leaving aside volume
effects, since the transmitter and receiver operate at the
same frequency and thus the costs associated with separating the transmit and receive antenna are avoided. As TDD
uses the same frequencies for uplink and downlink, smart
antenna technologies (e.g., beam forming, adaptive antenna systems) that are suited to improving performance for
fixed and nomadic users are more effective since UL channel estimation by the base station can be used to achieve
DL signal optimization.
FDD: FDD is better suited to handling symmetric traffic
(such as voice or interactive applications in which the user
is transmitting content as much as receiving it).
FDD can be implemented with lower power consumption
than TDD for the same coverage area, the radio planning
is easier, and the interference protection better. FDD does
not require a guard time between the DL and UL transmissions, while TDD requires a guard time which is greater for
longer round trip delay, i.e. larger distance between the
base station and the end terminal. This also leads to FDD
being able to have a larger cell radius without having to
adjust frame configuration. There is no need, as in TDD,
for time synchronization of base stations across the network, and even across operators, to avoid overlapping
transmission and reception. Base station synchronization
increases network complexity and costs, especially in large
scale and/or multi-operator scenarios, and requires the
DL:UL ratio to be the same across all base stations and sectors.
Since FDD systems use different frequencies for transmit
and receive, when using smart antenna technologies, the
user terminal has to provide the channel response for the
DL direction, which increases the latency and reduces the
performance of the antenna signal optimization (beam
former).
One of the major differentiators between FDD and TDD is
how the link budget, and thus the utilization of resources,
is considered. While FDD takes advantage of a full time
slot for the uplink and downlink simultaneously, TDD, as
per definition, splits its time between uplink and downlink. Commercial deployments of TDD systems are very
likely to be in 3:1 DL:UL configurations. For a given
amount of spectrum, FDD systems are thus able to achieve
higher link budget than TDD systems, thus improving
coverage, particularly in coverage limited situations such
as semi-urban and rural areas.
It is worthwhile to note that globally most personal communications systems so far have been deployed in FDD
mode.
3.2.3 Core Network
The answer, widely agreed across the industry, for future
core network flexibility and efficiency is the all-IP core network. Not only does this technology approach result in
cost savings versus legacy core circuit switching technology, it also provides long term multi-service carriage capabilities as any service, such as voice, data, or multimedia,
can be delivered using the common IP transport, to any
device, over any access network. This also does not force
the operator to segregate backhaul into dedicated bandwidth for circuit based services and packet based services.
While not calculated in our analysis, according to Huawei,
EMOBILE saved 90% in core network costs by using an
IP-based RAN reusing existing broadband resources in
their HSDPA network launch.26 WCDMA and CDMA
EV-DO can be connected to legacy GSM and CDMA
2000 1X core network or an all-IP core network. GSM
and CDMA operators today, when operating EDGE or
CDMA 1X network deployments use one backhaul portion for circuit switched traffic and one for IP-based
traffic, and when upgrading to WCDMA or EV-DO may
remain with this type of configuration as there is no
compromise on voice communications. HSDPA, on the
other hand, can interface with an all-IP core network.
CDMA2000 technologies are also compatible with IP
and ready to support network convergence. WiMAX
and Wi-Fi are both IP based technologies and can leverage an IP core network from the start.
3.2.4 Frequency Reuse Factor
WCDMA and EV-DO support frequency reuse n=1, i.e.
all cells/sectors operate on one frequency channel to
maximize spectrum utilization. However, due to heavy
interference in frequency reuse n=1 deployment, users
at the cell’s edge may suffer low connection quality.
WCDMA and EV-DO address the interference issue by
adjusting the loading of the network. In WiMAX, the
cell edge interference problem is potentially larger
because the interference would be in the control signals
in the OFDMA channel. This is addressed by reconfiguring the sub-channel usage so that users close to the
base station operate on a zone where all sub-channels
are available, while users at the edge operate in a zone
with only a fraction of all sub-channels available. This
would reduce the throughput at the edges. In this configuration, the full load frequency reuse of n=1 is maintained for center users to maximize spectral efficiency,
while fractional frequency reuse is achieved for edge
users, to improve edge user connection quality and
throughput. This solution to inter-cell interference will
be part of the certification process in the future. This
solution implies that at the cell edge spectral reuse will
be n=3, if the most common 3 sector deployment scenario is being considered. Given that the cell radius
decreases in capacity limited systems and for deployments in urban and dense urban areas, the “cell edge”
will constitute a larger percent of total area covered than
the “central region", driving spectrum reuse closer to
n=3.
3.2.5 Antenna Solutions
Multiple antenna systems have been recognized as an
effective means to improve both system coverage and
capacity. Both EV-DO and WCDMA / HSPA support
simple transmit / receive diversity and the HSPA standard has an option to support multiple input multiple
output (MIMO) antenna systems. WiMAX is based on
smart antenna friendly OFDM / OFDMA technology.
OFDM / OFDMA converts a frequency selective wideband channel into multiple flat narrow band sub-carriers and allows smart antenna operations to be performed on sub-carriers. Complex equalizers are not
required to compensate frequency selective fading.
Mobile WiMAX supports a full range of smart antenna
technologies to enhance performance including beamforming, space time coding and spatial multiplexing,
but none of them have been commercially released in an
integrated fashion yet. In CDMA based systems, support
of advanced antenna technologies requires complex
hardware.
3.2.6 Voice Over Internet Protocol
VoIP make use of IP/UDP/RTP protocol, resulting in
packet overhead. This increases the bandwidth required
to transport a voice call over IP compared to transporting it over optimized circuit switched channels in the air
interface, but allows operators to migrate to a unified
core network. VoIP is also not optimized for delivering
guaranteed quality of service since IP is typically implemented in a best efforts fashion.
Furthermore, in all IP systems, as the number of users
increase the overhead increases, deteriorating network
performance in terms of throughput and latency. Lower
network latency in HSPA allows using more time in the
air interface to optimize performance, e.g., packing
multiple VoIP packets into a single frame. Short frame
size, fast PHY retransmissions and fast scheduling
allow the delay to be minimized. HSPA and EV-DO have
been addressing the problem of latency and overhead
through solutions of increasing effectiveness in each of
their releases.
Uplink and downlink capacity required for voice application is equal, and the 3:1 DL:UL TDD ratio in WiMAX is
less suitable because the level of voice calls that can be supported will be limited by the maximum uplink capacity. A
loaded WiMAX system is yet to be tested for voice capacity and quality in a real world deployment, but various
efforts are being made by vendors to address the increased
overhead for voice applications.
3.2.7 High-Level Modulation
Using high-level modulation like 64QAM and 256QAM is
an effective way to increase peak data rates in a communications platform. Peak data rates defined for a platform are
generally based on the assumption that such high-level
modulations can be achieved. On the other hand, when
using higher modulation, sampling the received signal
becomes difficult and signal recovery is not possible unless
the received signal strength is high. Such signal strengths
are typically only achievable in locations very close to the
base station or in direct line of sight where path loss is
minimal and interference is low. This may be possible in a
controlled environment, but in real world deployments,
the signal will be highly distorted due to distance and
interference from other users, neighboring cells, reflections, and various other things. Hence under today’s state
of technology, achieving 64QAM, or even higher, in a real
world scenario is very unlikely, whereas lower level modulations, such as 16QAM, are expect to be achieved. WiMAX
documentation defines peak data rate with 64QAM modulation and HSPA and EV-DO Rev 0 use 16QAM.
3.3 Conclusion
The frequency bands being considered in India for 3G
services (2.1GHz, 800 MHz, and 450 MHz) are in line with
ITU recommendation, and are therefore an advantage to
3G systems over WiMAX, which has been offered the 3.3
GHz and 3.4 GHz bands in the immediate term, with plans
for further spectrum only in the future. Also, in order to
ensure economies of scale and worldwide roaming, spectrum harmonization is the key. 3G has come a long way in
this regard and the WiMAX Forum is currently making
efforts towards achieving the same.
While there are many differing aspects to the systems discussed above, one of the other core variations is the
duplexing mode implemented: FDD for 3G versus TDD
for WiMAX. FDD and TDD both have their own advantages and disadvantages, and deployment would depend
on the availability of spectrum, traffic scenario and user
environment. While TDD clearly is simpler to implement
due to use of the same bands for transmit and receive,
FDD has advantages in power consumption and maximum range of a cell site.
Spectrum usage is better in systems with a reuse factor of
n=1, which has been achieved with CDMA-based systems,
though the WiMAX Forum is also working towards
addressing potential interference problems in densely
packed networks. While WiMAX enjoys the flexibility
associated with an all IP-based system, and the economies
of scale of electronics associated with that, it does lead to
some inherent initial disadvantages for voice due to
reliance purely on VoIP.
In the following sections, deployment scenarios and maturity of the platforms will be discussed in more detail,
which we believe are characteristics that are more important than theoretical comparisons in influencing real
world deployment decisions.
Endnotes
22
2X1 SIMO configuration is considered.
23
The minimum possible bandwidth supported by the standard is 1.25 MHz, but
24
The values are theoretical peak data rates and actual achievable data rates would
25
Considers a 10 MHz channel, however, if bandwidth is narrower the efficiency
initial releases will focus on bandwidths of 8.75 MHz and 10 MHz.
be lower by varying degrees. Please refer to section 3.2.7 for more information.
will decrease.
26
2007 Huawei Global Analyst Conference
4
STATE OF DEPLOYMENT
All the three technologies, 3G, WiMAX and Mesh Wi-Fi are capable
of delivering broadband connectivity along with voice communications with differences in their respective efficiency and quality.
The three technologies also differ on various factors in their relative
level of maturity when compared to their presence in the global
market, their number of worldwide commercial networks or
planned deployments, the respective number of devices
(modems/handsets, etc.) available for usage, and interoperability of
various network elements and user devices.
4.1 Third Generation (3G)
4.1.1 3G Subscribers
The subscriber base for 3G networks has witnessed a
tremendous growth in the last three years. The cumulative
subscriber base for 3G (WCDMA and EV-DO) grew at a
CAGR of 130.53% during that period to 148.8 million
subscribers worldwide in 2006, as compared to 28 million
subscribers in 2004.
The rapid subscriber growth for 3G has maintained its
momentum into 2007. As of March 2007, 3G had a cumulative subscriber base of 173 million,27 with an addition of
83 million subscribers since March 2006. WCDMA subscriber growth has maintained a monthly CAGR of 6.38%
in the first three months of 2007, while those on EV-DO
platforms have grown at a monthly CAGR of 4.10%.
According to the industry promotion groups for the two
platforms, CDMA Development Group (CDG) and GSM
Association (GSMA), the global growth of 3G subscribers
is expected to maintain its trend for 2007 and 2008 (Figure
4.2). While WCDMA subscribers are expected to reach 333
million in 2008, recording a CAGR of 113.6% since 2004,
the number of subscribers for EV-DO is expected to reach
158 million, averaging a CAGR of 90.4% over the same
time period.
According to the GSMA, HSPA subscribers are expected to
at least triple their growth each year by 2008 and double
subsequently to 2010 to reach 169.7 million by 2010
KEY TAKEAWAYS
The 3G subscriber base has witnessed a high
growth in the last few years, achieving a cumulative subscriber base of 173 million as of
March 2007 and forecasted to be 491 million
by 2008. Currently there are 155 commercial
WCDMA and 77 EV-DO networks worldwide.
3G phones have improved considerably in their
features and performance since the first handset was launched. High-end 3G phones are
capable of running complex applications, while
mid-level 3G phones are quickly becoming comparable to high-end 2G phones in their features. Also, standalone high-end 2G phones are
diminishing, as they come equipped with 3G
technology. There are already 264 HSDPA
devices and 469 EV-DO devices available.
There were approximately 0.27 million 802.16d
WiMAX and Pre-WiMAX subscribers by July
2006. By June 2006, there were 14 commercial WiMAX (802.16d) networks deployed
across the world, again with the highest number in Asia-Pacific. Including trial and planned
networks, there were 107 networks globally
(802.16d and 16e).All major telecom operators
in India are already planning or testing fixed
WiMAX networks, while Sprint and Clearwire in
US are already testing 802.16e WiMAX.
Currently, there are about 28 fixed WiMAX certified wireless broadband network products
available, while
integrated into
devices are not
after 2007.
Globally, there
third generation CPEs to be
laptops and other portable
expected to be available until
were about 113,770 Wi-Fi
hotspots by 2006 being used for wireless local
area networking. Western Europe has the bulk
of deployments, while in India, VSNL is currently running 300 hotspots and BSNL plans to
have 300 hotspots rolled out soon. Wide area
Wi-Fi deployments using mesh technology for
Municipal deployments have seen mixed
results. On the other hand, there are already
several hundred Wi-Fi enabled devices available commercially.
FIGURE 4.1 Worldwide 3G Subscribers - 2006-07
FIGURE 4.4 Commercially Launched 3G Networks (March 2007)
Source: CDMA Development group, GSM World
FIGURE 4.5 Commercially deployed HSDPA networks
Source: GSA
Source: CDMA Development group, GSM World
FIGURE 4.2 WCDMA and EV-DO Global Cumulative Mobile
FIGURE 4.6 EV-DO Network Progress Worldwide
Broadband Subscribers 2004-2006
Source: CDMA Development group, Strategy Analytics, GSM World
TABLE 4.1 2G and 3G Handsets Pricing Categories
FIGURE 4.3 Global HSPA Subscribers, 2006-2011
Source: GSMA28
Source: CDG
(Figure 4.3).
4.1.2 3G Networks
3G was first deployed in Japan in October 2001 and since
then 3G systems have been commercially launched in 108
countries worldwide. WCDMA is today the most extensive
3G network with 155 commercial networks of which 110
have been upgraded to HSDPA. EV-DO networks have
been commercially launched by 77 operators of which 7
are Rev A networks.29
The increase in the 3G subscriber base can be attributed to
the growing number of WCDMA and HSDPA networks
being deployed worldwide and the improved 3G devices
which have overcome the shortcomings of the initial
releases (discussed in more detail in the following section).
By March 2007 there were 155 WCDMA networks
launched in 68 countries. Since the migration from
WCDMA networks to HSDPA is a simple software
upgrade, most operators have already done that. By April
2007 there were 110 commercial HSDPA networks in 57
countries along with 165 HSDPA network commitments
in 77 countries (Figure 4.5). Currently there are also close
to 14 HSUPA networks undergoing tests, across the world.
addition to all the other issues mentioned above. Ericsson’s
3G handsets also offered shorter battery life than intended
while Japanese vendors like Panasonic and NEC also had
similar problems. These difficulties affected the operators
and lead to delayed launches or in many cases cancellation
of 3G services. The UK’s top operator BT postponed
rolling out its 3G services in 2001 due to software problems with NEC handsets.
Over time, the maturing handset technologies finally led to
decreased handset problems and consequently higher
adoption by consumers.
TABLE 4.2 Attribute Descriptions
In addition to the existing EV-DO networks, there are a
total of 83 EV-DO trials and deployments in progress
(Figure 4.6).
4.1.3 3G Handsets
Potentially the most significant factor driving subscriber
adoption of 3G platforms is the increase in availability of
improved 3G devices. The range, efficiency and the availability of the devices is one of the major attributes for high
consumer acceptance and subscription growth of any
technology.
Early 3G handsets were launched in 2001 and were reported to be bulky, with short battery life, and were prone to
overheating. Well known examples for these were Nokia’s
first 3G phone, the 6550, which faced software problems in
FIGURE 4.7 2G and 3G Handsets Comparison Across Categories
3G handsets have been following an evolutionary trend
similar to 2G devices since the time they were introduced
in the market. At present, 3G and 2G handsets can be
broadly classified into three different categories: HighEnd, Mid-Level and Low/Entry Level phones. 2G and 3G
handsets were evaluated on various attributes, as listed in
Table 4.2 . These are the most identifiable characteristics
for a handset and each one of the attributes has been rated
on a scale of 1 to 10, with 10 being the highest or most
favorable.
The different segments of handsets cater to the different
needs of subscribers worldwide. High-end 3G handsets are
capable of running complex applications using high speed
processors (typically speeds of 350+ MHz). They also have
high levels of storage capacity, and tend to provide external storage capacities of up to 7 GB. High-end 2G and 3G
handsets provide excellent display quality and resolution
as compared to medium and low end handsets. They are
also full of features on the application side, with complete
information management, productivity, internet and email browsing tools, along with entertainment software for
media streaming, similar to a PC. Increasingly, standalone
high-end 2G phones are diminishing in number as they
adopt 3G technology. Nokia has recently started selling its
new handset the N95 with the tagline, “This is what computers have become."
The medium priced handsets mix features of the high-end
handsets while maintaining a balance between the processing speed and battery talk-time and targeting mid-market
price levels. These offer less memory and limited applications to be run on the phones, and hence are better in
terms of hours of talk-time available. Mid-level 3G phones
tend to be comparable to high-end 2G phones in their features, such as processing power, applications, weight, etc.
However, mid-level 3G phones cost less than high-end 2G
phones. The primary purpose of this category is to enable
usage of higher-end VAS, including internet browsing, emails, media streaming. This can be useful to people with
specialized form factors, such as those with emphasis on
imaging or on music. It is interesting to note that most
high-end 2G phones have already graduated to supporting
3G, but can end up belonging to the mid-level 3G category in terms of features.
Likewise, some of the low-end 3G phones are of equivalent
level to mid-level 2G functionality and can be used for features such as browsing internet, accessing email, listening
to music, etc., although they are not capable of running
FIGURE 4.8 Nokia N95
FIGURE 4.11 Examples of Low-End 3G and 2G Phones
heavier applications or leveraging external networks like
Wi-Fi. Two major attributes where low/entry level handsets lead are the weight and talk-time. Consequently lowend phones are the lightest between the three segments
and in many cases even capable of providing better talktime. Low/entry level 2G handsets are capable of providing
voice communications only, though, and typically monochrome.
650 WCDMA products by over 60 suppliers were available
in market by March 2007.30 The number of HSDPA
devices available in the global market has also been on the
rise. There were about 264 HSDPA devices from 64 suppliers available as of May 2007, up from 128 devices just four
months earlier in January 2007. The devices comprise of
phones, PC data cards, notebooks (with embedded
HSDPA chips), wireless routers, USB modems and even
devices such as, personal media players and digital cameras. There were also at least 20 user devices already
launched for which support could be upgraded to HSUPA,
delivering 2.1 Mbps peak throughput for the uplink when
those networks are deployed.31
FIGURE 4.9 Examples of High End 3G and 2G Phones
FIGURE 4.10 Examples of Mid-Level 3G and 2G Phones
FIGURE 4.12 Commercially Available HSDPA Devices
Source: GSA HSDPA devices survey
As of May 2007, 443 EV-DO Rev 0 and 26 EV-DO Rev A
devices were introduced globally by 30 vendors.32 The
case study
MAXIS
Maxis Communications operates as a telecommunications provider for mobile, fixed and international gateway services in Malaysia, India and Indonesia. In Malaysia it operates in three key segments,
comprising the provision of mobile services, fixed services and international gateway services.
3G was introduced in Malaysia in 2005 by Maxis and Celcom. With close to 42% of market share for
total subscribers, Maxis is the largest operator in the Malaysian market, including more high-end customers than its competition due to a healthy share of the corporate market. Maxis has a strong management team and network with its brand rated as one of the best in Malaysia.
Maxis launched HSDPA coverage in about 300 sites in the Klang Valley and Penang at an initial
CAPEX of RM 200 million (USD 55 million) with the objective of entering the residential broadband
market. The new service included both Internet access and voice telephony services with different
rate plans for voice and data. In each case, the subscriber needed to either buy a ZTE wireless
modem for RM 299 (USD 82) or rent one for RM 18 (USD 5) per month.
Non-voice services accounted for about 21% of total Malaysian mobile revenue. Maxis made a strategic decision to move from being a basic mobile and data services provider to a complete infotainment
company. With number portability on the horizon Maxis wanted to ensure it was perceived as value
provider rather than just focusing on low price service offerings.
Source: MCMC, Company reports
Figure 4.15 - Market Share, Year End
2006 Total Subscribers: 21.9 Million
Figure 4.16 - 3G market share,
total 500k, Year end 2006
Maxis Competitors / Challenges
Although Maxis is the largest 3G player in the Malaysian market, it still had challenges to face owing
to the changes in the Malaysian mobile landscape with competition becoming more intense.
Malaysian mobile penetration is expected to reach 80% by end of 2007 and reduction in prices as
well as termination fees were among the many challenges faced by operators. Operators such as
Maxis had to figure out a way to retain customers without offering handset subsidy. Along with the
above problems, various customer segments had evolved differently and thus were growing at different rates. Operators needed to find a way to attend the needs of these segments satisfactorily.
Source: Maxis Website
Initiatives by Maxis
While continuing to
increase 2G coverage,
there was a need to
increase 3G coverage in
other areas and expanded beyond the Klang valley to all major town centers, such as Johor
Bahru, Kuantan, Kota
Kinabalu and Penang
Island.
Maxis targeted the poor
internet and broadband
penetration regions for
3G broadband by the
use of 3G data cards.
Maxis re-launched and
transformed the prepaid
Hotlink
brand
to
become the de facto
mobile
infotainment
brand.
They released innovative offers and launched
plans such as 3G prepaid, Total Plan and Easy
Plan, promoting data
Table 4.3 Maxis’ Service Plans
usage from non-package
users with aggressive pricing.
‘Music Unlimited’, a fully-integrated music portal, was launched offering more than 100,000 mobile
tunes, making Maxis one of the leading music retailers in Malaysia. Also, the music and games content
on the portal was further enhanced by launching 24 new products.
Maxis entered into a strategic alliance with financial services provider MayBank to offer its consumers
the ability to make payments from their mobile handsets. The service, Maxis’ M-money, is the first complete mobile money service offered in Malaysia.
Results
As a result of the above initiatives, the number of 3G subscribers grew three fold (even though from a small
base) over 12 months ending December 2006. Maxis reached a milestone with the launch of Maxis TV - a
“First in Malaysia", which offers 20 channels. Within 3 months of launch, it attracted 38,000 subscribers.
Maxis were also the first to launch 3G prepaid with a great deal of success. Maxis expects that 3G handsets will become cheaper in next 2 - 3 years and would enable higher uptake of 3G services.
FIGURE 4.13 EV-DO Devices April 2007
Source: CDG
FIGURE 4.14 3G Device Shipments
number of EV-DO handsets in use worldwide are expected to grow from 67 million in 2007 to 193 million by
2010.33
4.2 WiMAX
Based on BDA analysis of global trends, we believe that the
number of shipments for all 3G devices is expected to
increase to 500 million in 2010 from 152 million in 2006 at
a CAGR of 35%. WCDMA is expected to account for the
majority of those shipments, at a CAGR of 20%, though
HSDPA device shipments will be growing at a much faster
rate, with a very high CAGR of 255% because of the smaller base today. CDMA-EV-DO device shipments are
expected to grow to three times their 2006 levels.
The total number of 802.16d WiMAX and Pre-WiMAX
subscribers stood at 0.27 million in July 2006 (Figure
4.17). Asia-Pacific had the highest share of 41.3% out of
the total global subscribers, followed by North America
which accounted for 20% of the total subscriber base.
Even though 3G spectrum is yet to be released in India, a
number of 3G enabled handsets are already being used
with the existing 2G network. A total of over 35 3G handsets are available in India as of Q1 2007. The Indian GSM
handset market leader Nokia currently offers more than 20
3G models in India, including handsets such as the E70,
E65, E61, N95, N93, and N93i. The lowest cost of Nokia’s
3G handsets, the 6630, is available at INR 11,800 (USD
260). There are also three EV-DO handsets already available, with one each from Motorola (RAZR V3c MS500),
Samsung (SCH-E380) and ZTE (D80).
The deployment of WiMAX (802.16d and 16e) technology
is taking place in different parts of the world but the first
large scale 802.16e WiMAX commercial launch is expected
at the end of 2007 by Sprint Nextel in USA.
Projections for 3G subscriber base are included in Chapter
9, as part of the overall AWS platforms projection. In terms
of the global vendor base, there are many substantially
sized 3G vendors such as Alcatel Lucent, Ericsson,
Motorola, Nokia Siemens Networks, Nortel, LG and
Samsung, who offer handset as well as network equipment
to the industry. Additionally, there are large chip manufacturers like Qualcomm, Texas Instruments, Sequoia, NEC
and Panasonic who contribute to the core technology. This
demonstrates the level of industry investment and support
for the platforms.
Since their launch in 2001, 3G platforms have reached significant levels of maturity and efficiency in terms of their
key operations and global adoption. The current ecosystem for 3G is strong and has undergone various stages of
deployment and testing. With commercial networks in 110
countries, millions of subscribers and hundreds of devices,
3G has already reached a highly stable point in its operations.
In Asia-Pacific the total WiMAX (802.16d and Pre802.16e) market was valued at USD 106.4 million in
2006.34
By June 2006, there were 14 commercial WiMAX
(802.16d) networks deployed across the world, again with
the highest number in Asia-Pacific. Including trial and
planned networks, there were 107 globally (802.16d and
16e).
In April, Clearwire, a WiMAX operator in the USA,
declared having completed a successful first phase of its
mobile WiMAX field trials using 2.5 GHz spectrum and
infrastructure equipment based on the 802.16e standard.
The trial, which covered about 15 square miles, was conducted in coordination with Motorola and Intel, focused
on coverage, capacity and speed, and made use of a mobile
WiMAX laptop card. As the next steps, Clearwire is in the
process of expanding the trial to cover 145 square miles
and including more users and devices to give insight in
how a mobile WiMAX network would perform under
higher customer load.35
All major telecom operators in India are already or are
planning to test fixed WiMAX for the Indian market. As of
March 2007, operators like Bharti Airtel, Idea Cellular,
Reliance, Aircel and Sify have already deployed fixed
WiMAX networks and are expanding.36 BSNL plans to
connect 1,000 towns and MTNL is planning a large scale
commercial launch in Mumbai.
Approximately 28 fixed WiMAX Forum certified wireless
case study
CLEARWIRE
Broadband penetration in the USA is close to 40%, with a total of 58.1 million households. 5% of the market is
catered to by satellite, wireless and other technologies, of which Clearwire is estimated to have about 8.9%.41
Since 2004, Clearwire provides wireless high-speed Internet service and VoIP, primarily for residential customers
across 34 markets. The network covers about 3%, 8.5 million, of the total U.S. population, using a proprietary preWiMAX technology with equipment from NextNet. Clearwire also covers approximately 1 million people in Europe
in Brussles, Belgium, and Dublin.
Clearwire is a spin-off from Sierra Technologies and is headquartered in Washington. It has a market capitalization
of USD 2,367.86 million and 1,245 employees, with an ARPU of USD 35.8.
Source: San Francisco Chronicle, March 2007, OECD
Figure 4.18 - US Broadband Market
Source: Company Filings
Figure 4.19 - Clearwire’s US Subscribers, 2004-0
06
Figure 4.20 - US Revenues, 2004-0
06
Clearwire Pricing
Source: Clearwire Website
Figure 4.5 - Clearwire Pricing
Clearwire competitor/Challenges
Clearwire’s direct competitors include:
AT&T - DSL plans from speeds of 768 Kbps (USD 14.99/mo) up to 6 Mbps (USD 34.99/mo)
EarthLink - Municipal Wi-Fi service in select markets (USD 21.95/month)
Towerstream - services in dense areas such as Seattle, San Francisco, Los Angeles, Chicago, New York,
Boston, etc.]
Sprint Nextel - EV-DO service at unlimited high-speed wireless data access (USD 59.99/month)
Verizon - EV-DO service with unlimited data plans (79.99 a month or USD 59.99 for existing voice customers).
Additionally, well established players with significantly greater resources and subscriber base have given subsidies
and competitive offerings. Clearwire also has technical issues in migrating to mobile WiMAX as the equipment is
not yet available, and there is a lack of interoperability with other networks. Clearwire also suffers from some skepticism in the market about its business model, causing its stock to fall by 11% in its first week of public trading and
by 21% by end of March 2007. Recently the company sold its manufacturing subsidiary, which contributed 33% of
its sales in 2006, to NextNet. Clearwire accumulated a deficit of USD 458.6 million and total debt of USD 755.7
million as of December 31, 2006.
case study
WIBRO
Three WiBro Licenses were issued in Jan 2005 in Korea, one each to Korea Telecom (KT Corp.), SK
Telecom and Hanaro Telecom. Hanaro Telecom surrendered its license in April 2005 and KT Corp.
and SK Telecom launched commercial services in June 2006. WiBro in Korea operates in the 2.3 GHz
band. The service was launched on subways and some roadways in Seoul and Seoul metropolitan
area (Incheon and 13 cities in Gyeonggi province).
SK Telecom invested close to USD 186 million and KT Corp invested USD 492 million in the WiBro
networks, yet, service uptake was much slower than expected. By the end of 2006, the total users
were just above 1,000. Alarmed by the situation and poor market response, KT halted its network
Source: wireless-watch.com
TABLE 4.21 WiBro Subscribers- Korea
expansion.
Issues which lead to a slow uptake of WiBro services
No WiBro handsets were available at the time of commercial launch of the service.
Samsung was the sole supplier for WiBro handsets and failed to deliver promised devices on time.
Handsets suffered from problems including overheating and high battery consumption.
Handset unavailability restricted service to laptop users (PCMCIA cards for access to limited full
scale mobility), and also inhibited home users from switching to wireless internet.
Network coverage for both SKT’s and KT’s WiBro networks was limited to small pockets only in
case study
Seoul. The commercial networks from these operators initially provided the same coverage as their
pilot projects. SK Telecom’s WiBro pilot project covered just six “hotzones” in the whole city.
WiBro suffered from price competition as usage based pricing models were adopted by the operators instead of the flat-rate tariff model offered by high speed landline ISPs, and pricing levels
were higher than the average prevailing broadband service fee. SKT’s tariff was around USD 31.50
per month while KT’s was USD 17 per month, whereas Koreans pay about USD 12 per month for
download speeds of at least 1 MBps, while in many parts of the capital wireless broadband was
free through Wi-Fi hotspots.
It faced external competition from high speed cellular services such as 1xEV-DO, W-CDMA and
HSDPA. About 31,000 HSDPA phones had already been sold in the Korean market while WiBro
handsets were still facing technical and availability issues.
WiBro faced steep competition with cannibalization of operator revenues as operators competed
with their own fixed line and wireless broadband offerings. In 2006, SK Telecom announced plans
to increase HSDPA investments to USD 858 million, up from the previously quoted figure of USD
604 million. These investments were directly competing with its investments in WiBro. In June
2006, KT had 12.5 million fixed-line internet subscribers and its move to provide wireless internet
led to competition within its own services. KT also offered HSDPA services, with subscriptions
increasing by 243,000, a 240% rise in 48 days, after its full nationwide launch.
Relaunch
KT launched the “fully commercial” service in April 2007 with plans to cover 20 urban areas in the
near future, and with services to be made available across the whole of Seoul, as the city alone has
a population of about 10 million, a fifth of the total population of Korea. KT is removing its WiBro subscription fee of USD 31 (30,000 won) in order to build its subscriber base. The move is expected to
continue through May 2007.
SKT has plans to extend its WiBro “hot spots” to cover 23 cities by end-2007.
To cope with the handset issues, Samsung is developing WiBro handsets that compete successfully
with EV-DO handsets in terms of battery life, while at the same time more WiBro-enabled devices are
becoming commercially available, including laptops, PDAs and dual-mode handsets from LG and
Samsung. To match the competition between WiBro and HSDPA, operators are moving towards coexistence of the two competing technologies. In April 2007, SKT launched a dual-mode device to support both HSDPA and WiBro access. Full scale interoperability between WiMax and WiBro is expected
to happen by end-2007, which will ensure seamless wireless internet connectivity for overseas travellers and foreign visitors.
broadband network products are available at present.37
These devices are available from companies such as
Airspan Networks, Alvarion, Aperto Networks, Axxcelera
Broadband Wireless, Proxim Wireless, Redline
Communications, Selex Communications, SEQUANS
Communications, Siemens, SR Telecom and Wavesat. Out
of the 28 fixed WiMAX certified devices currently available, 13 are base units, 8 indoor CPE’s and 7 outdoor
CPE’s. The majority of these include capabilities to operate
in the 3.3 - 3.4 GHz frequency band for India; though 3
devices specifically mention not covering this range.38
Motorola, Samsung and Nokia are developing the 802.16e
WiMAX handsets.39
FIGURE 4.17 WiMAX Subscribers by Region, July 2006
The first generation of WiMAX Forum Certified CPEs
available in late 2005 / early 2006 consisted of outdoor
installable subscriber stations similar to a small satellite
dish. The second generation of CPEs available in 2006 were
indoor self-installable modems similar to a cable or DSL
modem. The third generation CPEs are forecasted by the
WiMAX Forum to be integrated into laptops and other
portable devices, and are expected to be available after
2007.40
In the short span of time that WiMAX has been present in
the mainstream market, a sound ecosystem has been
formed with an increasing base of companies. WiMAX
Source: Senza Fili Consulting
TABLE 4.4 WiMAX Deployments, June 2006
Source: Broadband India: A role for WiMAX, ISPAI, Telegeography June 2006
equipment is being manufactured by companies such as
Alvarion, Airspan, Aperto, Axxcelera Broadband Wireless,
Proxim Wireless Corporation, Redline Communications,
Selex Communications, Sequans, Siemens, SR Telecom,
Telsima, Wavesat Inc, Motorola, Navini, Nortel, IP Wireless
and Samsung, along with major support from the big chip
maker Intel.
FIGURE 4.22 Global WLAN Hotspots Worldwide
4.3 Wi-Fi
Wi-Fi has gained tremendous acceptance around the
world. It provides high speed access to nomadic users
within a fixed network in a variety of organizations including businesses, educational institutions, SOHOs, and
households.
The number of hot-spots across the world has seen rapid
growth recently. There were 113,770 Wi-Fi hotspots by
2006, and most were in the Western Europe (Figure 4.22).
Figure 4.23, shows the top 10 hot spots in terms of the
number of access points, of which 7 are located in the US.
An Infonet hotspot in El Segundo, CA has 12,000 access
points, while the 8th, 9th and 10th hotspot providers were
Orange in France with 4,028 access points, Trustive in
Netherlands with 2,500 access points and DoCoMo in
Japan with 747 access points. The number of Wi-Fi hotspots in the United States is forecasted to grow from 3,020
at the end of 2002 and 12,080 in 2003 to greater than
72,000 in 2007.42
A newer development in Wi-Fi has been the growth of
Municipal Wi-Fi systems, in which many US cities have
deployed citywide municipal wireless networks. Rhode
Island was the first state to adopt such a wireless network
and is expected to complete network deployment within
2007. By Sept 2006 there were 281 city/county-wide wireless broadband networks in operation in the USA, with
380 more wireless projects lined up under different stages
of planning and deployment.43
Wi-Fi has seen an increasing acceptance in developing
nations as well. As depicted in Figure 4.24, many of these
Source: Asiacom
nations are also planning wireless cities.
Google’s endeavor in this space is probably amongst the
most cited examples of Muni-Wi-Fi, as they are attempting
to provide coverage in their hometown of Mountain View,
California. As per their 5 year non-exclusive contract,
Google has promised to fund the construction and ongoing operations of the Wi-Fi network in exchange for being
able to use city streetlight posts, upon which Google would
affix nearly 300 Wi-Fi radios. The network would provide
wireless users with services such as real-time road traffic
conditions, regional shopping guides, etc. on the login
page of the local Wi-Fi network, which would be covered
with profit-generating links and advertisements. To access
the networks the residents would have to supply their own
signal amplifiers, which would cost between USD 50 and
USD 100 each. Google estimated that each of their Wi-Fi
transmitters would cover 3 blocks and about 300 - 400
transmitters would be needed to cover the entire city wirelessly.
Municipal Wi-Fi / Metro Wi-Fi networks are still in their
early stages of development. Users across the network have
reported problems such as connectivity, speed, device variations leading to unreliable connectivity and wide variabil-
FIGURE 4.23 Top 10 Hotspots Globally as of 2005
Source: Broadband Wireless Exchange, Economic Times
FIGURE 4.24 Metro Wi-Fi Worldwide
Source: Broadband Wireless Exchange, Economic Times
TABLE 4.6 Wireless Broadband Networks in the US
FIGURE 4.25 Most Prevalent Problems of Metro Wi-Fi Networks
Connectivity
45%
Reliability
30%
Speed
21%
3%
Ease of Use
0%
10%
20%
30%
40%
50%
Percent of respondents
Source: www.muniwireless.com
Source: Tropos Networks Survey, 2007
ity in technical parameters for Wi-Fi client devices, etc. In
a recent survey done by Tropos Networks, users mentioned
connectivity as the top problem for Wi-Fi usage, followed
by reliability, speed and ease of use (Figure 4.25).
India seems to still be in the early stages of Wi-Fi hotspot
adoption. At present, VSNL runs 300 Wi-Fi hotspots across
India and plans to enter into Wi-Fi roaming agreements
with foreign companies such as StarHub, Singapore. BSNL
has declared publicly plans to have 300 hotspots in the
next few years.
Regardless of the difficulties Wi-Fi may be facing in scaling
to become a wide-area network, the economies of scale the
platform has reached are as large as that of the mobile
phone industry. There are over 63 Wi-Fi certified laptop
products, 700 External Wi-Fi Adapter Cards, 631 Internal
Wi-Fi Adapter Cards, 875 Access Points for Home or Small
Office (Wireless Routers) and 233 Enterprise Access
Points, Switch/Controllers or Routers currently available
in the market. The number of laptops in use globally with
built-in Wi-Fi is expected to reach 141 million by 2008.44
the next two years on mobile WiMAX, which will be
launched by the end of 2007. The Wi-Fi ecosystem is also
very strong, but is geared towards LAN deployments
rather than WAN. This makes Wi-Fi less capable than both
WiMAX and 3G to effectively cover cities and provide high
quality voice and high bandwidth data services.
3G systems have a time to market advantage over mobile
WiMAX. With over 200 commercial networks and 173
million subscribers, 3G is already a widely accepted broadband technology. Wi-Fi is also widely deployed and available; however, metro Wi-Fi is yet to prove its robustness.
Mobile WiMAX is still in its embryonic stage and there are
no commercial deployments to date. Fixed WiMAX is
being deployed for fixed and backhaul applications, and
has seen a substantial amount of success in that application.
While this type of platform is very well suited to
SME/SOHO, household and hotspot usage, unless connectivity over a larger area can be achieved reliably, Wi-Fi
would not be able to compete against other AWS platforms
as a primary metro area access network.
Endnotes
4.4 Conclusion
WCDMA and EV-DO have a strong ecosystem with a large
number of big vendors involved in the equipment and
device manufacturing, and 155 WCDMA and 70 EV-DO
networks have been commercially launched. WiMAX is a
fairly new technology with the 16d standard finalized in
June 2004 and 16e only in December 2005. However, it still
has a large number of vendors committed to the research
and development of products and deployment of networks. Many operators around the world have started
fixed WiMAX services, primarily to enterprise users.
Sprint Nextel (USA) has shown major commitment to
WiMAX by announcing a spending of USD 2 billion over
27
GSM World
28
How to realize the benefits of mobile broadband today, GSM Association
29
GSA, CDMA Development Group
30
GSA
31
GSA
32
CDG
33
CDG
34
Senza Fili Consulting, ITFacts.biz
35
Fierce WiFi, www.fiercewifi.com
36
Voice and Data March 2007
37
WiMAX Forum
38
WiMAX Forum
39
Lehman Brothers Research
40
WiMAX Forum
41
Leichtman Research Group
42
CDMA Development Group
43
www.muniwireless.com
44
Wi-Fi Alliance
5
ROLLOUT ECONOMICS
From Chapter 1 we conclude that wireless broadband is the only feasible solution for providing broadband to the masses. However laying out a wireless network is still a capital intensive task. Operators
need to be willing to invest for this new network rollout.
The existing cellular radio equipment and core network needs to be
replaced or upgraded to allow for more voice capacity and high
speed data communications. Also, backhaul needs to be upgraded to
accommodate this higher capacity. Additionally, new spectrum
bands or more spectrum in the same bands needs to be acquired. It
is an expensive business - contenders need to have enough cash to
absorb the costs of deploying networks and services to provide coverage across a wide area on launch and then augment capacity once
the platform gains momentum.
As discussed in Chapter 3, there are many different AWS technologies, like 3G (WCDMA and EV-DO) and WiMAX (802.16d and 16e)
which can be adopted in India. They all differ in throughput, quality of service, availability in the market, maturity, and other technical
aspects. However, a complete analysis of a platform requires that one
views it from not only a technical perspective as was done previously, but also with a commercial lens. This type of analysis raises the
challenges and advantages each technology will yield to operators
and their customers.
The realized revenues per bit of utilized capacity are typically lower
in a broadband environment than they are for the narrowband serv-
KEY TAKEAWAYS
Our economic analysis shows that given
the performance and cost of different AWS
technologies, 3G platforms, in particular
HSDPA and EV-DO Rev A, offer the most
favorable outcome. Both technologies provide the lowest capital investment requirement for rollout compared with the total
network capacity achieved, which is driven
by the need for the least number of BTS
sites.
Currently proposed disparate spectrum
costs in India for 3G and BWA can skew the
results somewhat, but the outcome
remains unchanged because of other cost
advantages offered by 3G technologies.
When considering an upgrade scenario for
an existing operator rather than a purely
greenfield deployment, 3G platforms reap
advantages due to cost savings in both
active and passive infrastructure. The
backwards compatibility also allows operators to deploy a single network for multiple
services and transition users from existing
networks to new ones without forcing an
abrupt shift.
WCDMA and EV-DO handsets are already
crossing below the critical USD 100 mark,
FIGURE 5.1 ARPU of Operators in India and Elsewhere, USD per Month
and HSDPA and EV-DO Rev A devices will
also do so in the near future. WiMAX 16d
CPE prices are also falling rapidly, demonstrating the superiority of this technology
platform for fixed solutions.
For rural areas, a greenfield 3G network,
offering both mobile voice and broadband
data, is likely to be more economical than
deploying two independent networks to
offer these services, while also giving users
the freedom to roam.
ices of voice communication and SMS. Wireless data operators
would therefore face a bigger challenge to achieve reasonable returns
on their investment. With their ARPU even in traditional 2G networks among the lowest in the world (Figure 5.1), Indian operators
will need all the cost efficiencies possible.
To attract users, entry level prices of AWS platforms must be competitive with those of DSL. BSNL offers a plan for INR 250 (USD
5.52) per month for a 256 Kbps connection with monthly modem
rental being charged at INR 60 (USD 1.32) and upfront fees totaling
INR 850 (USD 18.76).45 These considerations would apply even in
areas currently without DSL, if operators deploy AWS platforms for
mass adoption. This means that a low per capita CAPEX and OPEX
would be critical if AWS services are to penetrate the less affluent B
and C circles.
In the current environment in India, more than 65% of
total site cost is attributable to passive infrastructure for a
greenfield ground base tower deployment, and 50% for a
rooftop site.46 Furthermore, the largest component of
OPEX is the diesel required to power generator sets to supply backup, and in many cases the only, power for a site.
Therefore, the CAPEX in passive infrastructure and the
OPEX for ongoing costs will scale linearly with the number of sites. Given that both these elements account for a
high percent of total costs, an option with fewer sites will
help operator economies.
Model Assumptions
The model created for our analysis assumes the following
parameters:
5.1 Radio CAPEX Analysis
5.1.1 Analysis Model
In our analysis, we assume that operators deploying 3G or
WiMAX networks will initially need to provide sufficient
network coverage and will not be capacity limited. Only
when the number of subscribers increase over time will the
network capacity need to be considered, i.e. additional cell
sites, equipment and/or spectrum will be necessary. We
also compare costs on the assumptions that the evaluation
is for a greenfield operator.
The key driver for network deployment and maintenance
is the number of cell sites. This translates into CAPEX for
the following elements:
Site preparation
Installation and commissioning
Base station equipment and controller
Aggregation elements (RNC - radio network controller, ASN - access service network)
The number of sites also impacts OPEX for the following
elements:
Site lease and maintenance
Power backup
Backhaul
Coverage Area: We are basing the analysis on a city similar
to New Delhi. The target covered area for launch is 700 sq
km, which is 50% of the total area of the city. The population density is approximately 20% dense urban, 30%
urban and 50% suburban. Results of the analysis are not
sensitive to the size of the city, but are impacted by the
density characteristics of the area to be covered and can
affect the coverage performance of AWS platforms significantly.
Planning: Signal coverage planning which has been considered is for one wall penetration with indoor usage of
services. Rather than examining voice capacity, the analysis focuses on data throughput since higher data throughput will translate into higher voice capacity. Certain technology implementations do have minimum packet sizes
which can be wasteful when only voice is important. Also,
when the number of voice users per site increases, the
overheads associated with managing the users may
decrease the overall usable data throughput.
Passive infrastructure cost: Our analysis shows that the
cost of passive infrastructure on a per site basis remains the
same for each technology. Since we have considered pricing of indoor BTS solutions in our comparison, our
research indicates that power and air conditioning requirements are similar across the platforms. Since mounting is
on either roof top sites or ground base towers, infrastructure investment is directly proportional to the number of
sites required for each platform. The cost of backhaul on a
per Mbps basis also remains the same, though some technologies may end up having higher or lower total installed
network capacity once coverage is achieved, requiring
higher backhaul bandwidth to leverage the full capacity
amount available. This can be increased by the operator
over time as required. Therefore, the initial installed backhaul capacity per site is assumed to be the same. OPEX of
the site, based on the above parameters, is therefore also
equal.
Technical Parameters
The technical parameters presented in table 5.1 are as discussed in Chapter 3.
Cost Considerations
The costs for various network components are based on
analysis of the Indian environment. Our investigation has
shown that vendors are willing to be aggressive to capture
market share in India, but that applies equally to vendors
across the different technology platforms.
TABELE 5.1 Technical Parameters of AWS Platforms under Consideration
The items which have the greatest impact on the total cost
of network equipment are maturity of technology and volumes sold, resulting in economies of scale. All of these are
very closely interrelated, but discussed separately for clarity.
Maturity of the technology: This relates to how long the
standard has been in the market with commercial products
shipping. The more mature a platform becomes, the more
integrated its internal components and circuitry become.
This not only reduces component costs, but also impacts
development efficiencies, and thus impacts R&D investments which have to be amortized over volumes sold.
More maturity also results in, typically, a broader choice of
solution providers whose various components can interoperate while still providing similar features.
Volumes sold: Higher volumes, as always, drive lower per
unit costs. The cost lifecycle of equipment in electronics
always shows a decline in cost of items whose volumes
increase, and the decline is linked to the rate at which volumes being deployed increase.
Economies of scale: Both of the above factors result in
achieving economies of scale for equipment. Achieving
both maturity and volumes typically requires following
FIGURE 5.2 Results of Analysis
global standards to leverage the global market.
5.1.2 Results and Takeaways
The model demonstrates the following:
WCDMA / HSDPA and EV-DO systems provide
the most efficient number of BTS sites and CAPEX
requirements. The advantage in number is significant as it will drive linearly the passive infrastructure cost as well.
Fixed WiMAX has the highest cumulative network
capacity but cannot support mobility.
HSDPA and EV-DO are the clear winners in this
simulated real world analysis as they provide a good
balance of mobility and capacity at the most optimum radio network CAPEX.
To provide sufficient network coverage and deliver
cost efficiencies to operators, initial roll out can
start with WCDMA and EV-DO Rev 0 systems.
These can then be upgraded to HSDPA/HSUPA
and EV-DO Rev A/B with low cost software
upgrades when the required network capacity
increases.
5.1.3 Comparison of Various Platforms in
Real World Deployment
CDMA EV-DO
EV-DO networks are available for a wide range of frequencies like 450 MHz, 800 MHz in addition to the higher
bands like 1700 MHz, 1900 MHz and 2100 MHz.
Deployment in lower frequencies leads to better coverage
and penetration and hence lower costs.
CDMA 2000 1x EV-DO is an easy upgrade path for existing CDMA telecom service providers who are using the
CDMA 2000 1X systems. Indian CDMA operators have
deployed no more than 4 carriers while BTS equipment
can typically accommodate up to 8 carriers in the same
cabinet. An EV-DO upgrade only requires installing 3G
CDMA carrier cards in vacant slots in a BTS with spare
capacity. Where such spare capacity is available the CDMA
upgrade path costs the least of all potential solutions since
the only additional investment required is for enhancement of transmission / backhaul and core network capacity.
With EV-DO, the peak data rate of traditional CDMA systems increases by almost 15 times from 144 kbps (under
mobile conditions) to over 2 Mbps. EV-DO peak data rates
are achieved with modulation of 16QAM and are therefore
quite feasible in the field. EV-DO Rev A further increases
capacity and throughput for only marginal additional
investment.
WCDMA
For GSM operators, deploying WCDMA is not trivial but
a large number of operators have already made the transition. WCDMA vendors have also indicated outsourced
managed services for new platforms to share the overall
cost with the operators.
While WCDMA networks will typically require new BTS
units, the same passive infrastructure can be leveraged.
Many vendors have created low profile, low power consumption indoor BTS units that can co-locate in existing
sheds with 2G equipment. Vendors also have solutions
which allow GSM cards to be swapped or upgraded to
WCDMA / HSDPA, similar to the transition of CDMA to
EV-DO, but those are not likely to be widespread in GSM
RANs in India because of their fairly recent introduction
and higher cost.47 Therefore, GSM operators will need to
bear the full CAPEX of new electronics when they upgrade
to WCDMA.
WCDMA has already achieved substantial economies of
scale since it was launched commercially in 2001. This has
driven standardization throughout the network and lowered costs very quickly. With data capacity as an integral
part of the platform, GSM operators can offer integrated
data service more efficiently than earlier. As with EV-DO,
peak data rates are achieved with modulation of 16QAM.
WCDMA also allows spectral reuse of n=1, and thus significantly improves spectral planning requirements over
GSM.
HSDPA provides a substantial capacity boost over
WCDMA with marginal additional cost, yielding higher
site data capacity than Rev A and significantly greater than
what 802.16e is anticipated to deliver in the same amount
of spectrum.
802.16d
802.16d is a technology for LOS, near LOS and non-LOS
fixed applications. It has a high peak data rate based on
achieving 64QAM connectivity. It is not practical to
achieve this in NLOS and indoor situations in the field, so
either capacity will be impacted or cell radius. Also, due to
spectrum reuse factor n?1, the overall spectral efficiency
will be impacted in a multi-cell real world scenario. A high
link budget can be achieved due to OFDM advantages, but
deployment in a high spectrum band in India limits overall coverage. In the medium to long term, greater
economies will reduce cost and improve capacity. 802.16d
is already being used effectively for point-to-point and
point-to-multipoint solutions, like last mile connectivity
to SMEs.
INR 80 crore (USD 17.6 million) for 3G spectrum at 2.1
GHz for Delhi, and INR 10 crore (USD 2.2 million) for
BWA spectrum at 3.3 GHz. All other parameters remain
unchanged from the previous model.
802.16e
Since 802.16e is not commercially available, economies of
scale are absent, and investment required are consequently high. Like 802.16d, its coverage will suffer due to its
deployment in high spectrum bands in India.
The analysis demonstrates the following:
The reserve price set for 3G spectrum is 8 times that
for BWA spectrum. The contribution of Mobile
WiMAX spectrum to the total CAPEX is therefore
lower. However, as discussed earlier, WiMAX still
requires substantially more sites for coverage and
raises the passive infrastructure part of the total
CAPEX. Thus, mobile WiMAX may not be at an
overall advantage.
Based on the results, Fixed WiMAX seems most
cost effective due to the lower spectrum cost.
This analysis overall demonstrates that factors
external to technology performance and cost, such
The peak data rates that can be achieved are high, but similar to 16d are based on 64QAM which would be difficult
to achieve in NLOS, indoor scenario and even more so
while mobile. This reduces spectrum capacity or cell
radius. Secondly, spectrum reuse factor n?1 also reduces
spectral efficiency in a multi-cell environment. As discussed in Chapter 3, the WiMAX Forum has proposed a
concentric circle solution to overcome the carrier interference problem in neighboring cells. Even with this solution
implemented, reuse factor will approach n=3, especially in
dense and highly loaded networks.
TRAI proposes one EV-DO carrier per operator (1.25
MHz) in 800 MHz and 5 MHz of spectrum in 450 MHz.
The pricing of the 450 MHz band is benchmarked at 50%
of the second highest bidder for the 2.1 GHz band.
Considering that the availability of 450 MHz is not clear
and the spectrum recommended to be offered in 800 MHz
is limited, these bands have not been considered for comparison in the spectrum price impact analysis.
FIGURE 5.3 CAPEX with Spectrum at Reserve Price Included
5.1.4 Impact of Spectrum Costs on
Overall CAPEX
A big portion of the overall CAPEX is the cost of acquiring
spectrum since price of spectrum is high in most countries. The TRAI recommendations for AWS in India
include:
450 and 800 MHz (CDMA EV-DO)
2.1 GHz (CDMA EV-DO or WCDMA)
3.3 - 3.4 GHz bands (BWA including WiMAX)
To determine the impact of spectrum cost on the overall
CAPEX, the spectrum pricing has been assumed as per the
TRAI recommendations. These include a reserve price of
as spectrum pricing, can play very critical and dramatic roles in determining the full techno-commercial viability of a platform and even skew
results.
5.1.5 Effect of Overlay
The biggest commercial advantage of 3G networks is that
they can be introduced as an overlay to existing infrastructure. The exhausted capacity of 2G/2.5G networks and lack
of additional spectrum in cities and other dense areas
makes 3G an important instrument to quickly shift traffic
and ease the burden. This smooth transition is enabled by
the fact that 3G is backwards compatible with existing cellular networks, allowing users to migrate easily to 3G networks as they are rolled out and to fall back on 2G networks when roaming in areas where 3G signal has not
reached. Therefore users will not be required to maintain
multiple devices for multiple services.
BDA analysis reveals that in existing 2G/ 2.5G networks,
12-14% of users nationwide consume greater than 40% of
network capacity. Operators have already exhausted 2G
spectrum and are struggling to maintain acceptable QoS.
Migrating high end users to the 3G network could create
additional capacity in 2G/2.5G networks for 3 times as
many users as are migrated out. These factors are discussed
in more detail in Chapter 9. In less dense and new areas,
2G/ 2.5G users will continue to grow without compromising on QoS.
With simple voice and SMS being the biggest drivers of the
industry today, the majority of users in India do not use
any advanced features. In addition, while the cheapest 2G
handset in India can be bought for less than USD 30, a 3G
handset costs about USD 100. Low end users can therefore
continue to use voice and low data rate services that can be
supported by the existing network, while high end users
who migrate quickly can access 3G enabled high speed
mobile data and video clips/video streaming, etc. As traffic
on 3G networks increases, more backhaul capacity would
be necessary. However, as discussed in the previous sections, these cost elements are minimal compared to the
total cost of greenfield rollouts.
A 3G overlay can reduce deployment costs, over 10 years,
to barely 2/3rd that of pursuing only 2G/2.5G.48 Increased
spectral efficiency of 3G can justify the upfront investment, an advantage even greater for CDMA operators
whose CAPEX for upgrades is considerably lower.
5.1.6 Rural Areas
In rural areas, the biggest challenge is to provide coverage
that includes seamless voice along with data connectivity.
Rural coverage using different technologies, given their
spectrum of operation in India, are: WCDMA: 9km, EVDO: 9.9km, fixed WiMAX (802.16d): 13km, and mobile
WiMAX (802.16e): 4km.49 In coverage-limited rural areas
802.16d’s design with outdoor directional antennas for
point to multi-point fixed and portable links is a significant advantage. The 802.16d standard was written to
address both LOS and NLOS conditions. Its main advantage comes from its large coverage area, achieved by having
higher link budgets than its mobile peer, allowing the
radius of a BTS to extend beyond 13 km. But 16d does not
support mobility, and its voice performance is untested in
heavily loaded conditions. As discussed in Chapter 3, VoIP
in AWS platforms can decrease performance if not handled properly. Also, both versions of 3G will enjoy a
CAPEX advantage over mobile WiMAX.
EV-DO’s lower spectrum band gives it a very large coverage, with a range of around 10 km. The advantage of
requiring fewer cell sites is shared by WCDMA / HSDPA,
as well. Furthermore, 3G, as an FDD technology, does not
have severe restrictions on link distance due to time synchronization issues, which limit the range of TDD technologies especially at higher capacities.
We believe that 3G is best suited for mobile broadband
because it provides a unified platform single deployment
solution with integrated voice capabilities. Voice is still a
key application in most areas, and increasingly as coverage
expands, users would want access to personal solutions,
which 3G enables seamlessly without compromising data
capabilities. Furthermore, 3G devices are backward compatible which would enable rural subscribers to use the
same device when roaming elsewhere in the country.
A WCDMA / EV-DO system can be upgraded to HSDPA /
Rev A as increased usage necessitates greater capacity. A
conducive regulatory regime will make redundant a separate greenfield 2G network for voice and another separate
network for wireless broadband data, as it will be expensive and prohibitive.
In case an operator does not plan to offer broadband data
applications in rural areas, it still may make sense to do an
analysis of whether the additional cost in deploying 3G
over 2.5G networks can be recovered through revenues
resulting from superior data and higher voice capacity.
Our research has indicated that 3G equipment prices in
India are going to quickly near 2G / 2.5G levels and handsets will follow soon thereafter.
5.1.7 Infrastructure sharing
Passive Sharing
Passive infrastructure sharing includes sharing of all “passive” components of the site, including the land, tower,
shelter with A/C’s, generator, batteries, etc. Passive infrastructure accounts for more than 65% of per site costs in a
greenfield ground base tower deployment, and by sharing,
operators can save CAPEX and OPEX. Passive sharing will
also provide much-needed savings in rural deployments
because as the number of operators increases, the site
investments and operating costs do not increase proportionally. Furthermore, the introduction of specialized
infrastructure provider companies would lead to introducing efficiencies and economies of scale in the sector, leading to further costs savings for operators.
Even with aggressive site sharing going forward, we estimate that potentially 150,000 new towers will need to be
rolled out by 2010 to support rapid subscriber growth and
meet government targets.
Active Infrastructure Sharing
Active infrastructure sharing allows sharing of antennas,
feeder cables, radio access network and transmission systems. Active sharing in network rollout, especially with
new technologies, allows operators to share this CAPEX.
This is especially relevant for rural areas where sites are
more coverage limited than capacity limited. Transmission
capacity can also be shared, eliminating the need for each
operator to bring connectivity to the same site.
In-building solutions (IBS) are deployments that provide
mobile coverage inside buildings, where the coverage,
capacity or quality is otherwise not satisfactory. Active
sharing between several operators will save costs and minimize any disturbance to the building and tenants from a
multitude of radio equipment and related electronics and
cabling being deployed in the same building. The radio
equipment in the building could even be owned by neutral
host providers, building owners, or government authori-
ties.
Network sharing has been attractive in sparsely populated
regions, where teledensity is very low and the business case
for network deployment is weak, or in the case of IBS.
Network sharing enables operators to effectively share the
burden of providing coverage to such areas.
Many operators in different parts of the world are already
sharing active infrastructure components. Vodafone and
Orange share their UMTS network in the UK (announced
Feb 8, 2007) and Spain. In rural Spain, in towns with population less than 25,000, both the operators plan to share
about 1,000 sites by 2007 and 5,000 over the next 3 years.
Telstra has a deal with Hutchison 3G Australia to jointly
own and operate the latter’s existing 3G radio access network and fund further development. The deal allowed
Telstra to enter the 3G market and improve opportunities
for wireless services and mobile communications in
Australia.
5.2 Handset Economies
India is a price sensitive market and handset / terminal
cost is a critical component. The ultra low cost handset
(ULCH) market was virtually invented for India, and has
been increasingly driving sales and mobile uptake by
decreasing the ownership cost for customers. ULCH
includes handsets costing less than USD 50. From January
2006 to December 2006, the market share of ULCH shipments has consistently been around 50% (Figure 5.4).
Given that the highest growth rates in mobile telephony
today are from category B and C Circles, handset cost will
continue to be a critical factor to eventually achieving mass
market growth.
3G Handsets
As of March 2007, there are 115 million WCDMA subscribers around the world. Due to economies of scale the
ASP of handsets has decreased from USD 660 in 2001 to
USD 230 in 2006. The ASP will fall further with increased
WCDMA subscribers resulting from ongoing global GSM
network upgrades to WCDMA. GSM Association’s “3G for
All” campaign aims to make third-generation mobile services accessible to a much wider user base. By agreeing on a
common set of requirements, 12 participating operators
will enable handset manufacturers to achieve major
economies of scale quickly in manufacturing, logistics and
marketing. LG, which was awarded the bid, has announced
that the LG-KU250 handset will be available at a wholesale
price of 30% less than the typical entry-level 3G phone and
fully-competitive with multimedia second-generation
handsets on sale today. Today, WCDMA entry level phones
can be bought for USD 130, and LG is targeting the USD
100 price point.50
Prices for CDMA2000 EV-DO handsets were approximately USD 100 for the cheapest models (Verizon
CDM8940 3G EV-DO USD 140, Kyocera 3G EV-DO
Handset USD 100). The global ASP at the end of 2006 was
USD 220, half that of the introductory prices of USD 450
in 2002.
As stated in Chapter 4, there are already 264 HSDPA
devices launched. The ASP of HSDPA handsets was USD
330 at the end of 2006. With operators upgrading their
WCDMA networks to HSDPA, many subscribers are
upgrading to HSDPA to avail the higher throughput benefits. With economies of scale, the ASP of WCDMA handsets will come to the same level as EV-DO handsets (Figure
5.5). HSDPA prices are also falling as a result of more than
100 commercial networks. Many operators are providing
handset subsidy to motivate user migration to 3G net-
FIGURE 5.4 Percentage of ULCH Shipments in India
works.
HSDPA and EV-DO networks can be used for dedicated
data communication links as well. In addition to the
declining costs of data cards and desktop modems due to
increased volumes in sales, operator subsidy is also helping
wireless broadband adoption. An HSDPA USB modem
(Huawei E220) can be acquired for free with a 12 month
minimum term contract of GBP 45 per month with
Vodafone UK.
WiMAX
The first generation of WiMAX Forum Certified 16d CPEs
were outdoor-installable subscriber stations akin to a small
satellite dish. These became available in 2005 and were
priced around USD 500. The second generation of CPEs
are indoor self-installable modems similar to a cable or
DSL modem and are priced around USD 300. Third-generation CPEs that can be integrated into laptops and other
portable devices are expected to initially cost approximately USD 100 and would be available beyond 2007.51 There
are many companies providing pre-WiMAX 16e wireless
broadband services, for which portable modems are available in the range of USD 300 - 500.
Wi-Fi
Wi-Fi has made deploying LANs easier than ever. A Wi-Fi
FIGURE 5.5 Weigthed Average and Relative ASP of 3G Handsets
router connected to broadband backhaul and a Wi-Fi
device is all that is needed to set up a wireless home network. The device price for Wi-Fi routers and cards has seen
a downward trend over the past few years due to realizing
substantial economies of scale. The average cost for Wi-Fi
routers is in the USD 100 - 150 range, but basic Wi-Fi
routers already cost less than USD 20. PC cards prices are
in the range of USD 50 - 100. Subsidies from service
providers are unnecessary and economies of scale have
reduced prices more than typically seen in the cellular
industry. The cost of adding Wi-Fi to a laptop is currently
around USD 20.52 USB Wi-Fi adapters cost on average
around USD 125. But as discussed in Chapter 4, Wi-Fi will
be a complementary broadband platform in local areas like
homes, offices and hotspots. Many AWS devices would be
multi-mode with Wi-Fi connectivity possible in addition
to wide area broadband technologies like 3G or WiMAX.
5.3 Conclusion
tion them from existing networks to new ones without
forcing an abrupt shift.
Even in rural areas, a greenfield 3G network, offering both
mobile voice and broadband data, is likely to be more economical than deploying two independent networks to
offer these services, while also giving users the freedom to
roam.
HSDPA handset prices are still high, whereas WCDMA
and EV-DO handsets are falling below the critical USD 100
mark. WiMAX 16d CPE prices are also falling rapidly,
demonstrating the superiority of this technology platform
for fixed solutions.
For all the technologies, smaller and cheaper handsets will
become possible as chipmakers like Broadcom,
Qualcomm, Texas Instruments, Intel, Samsung, etc. launch
single chip solutions. Over time, economies of scale and
advances in each platform will lower ASPs of most CPEs,
but the speed with which this happens will depend on the
level of maturity. Recent trends indicate that WCDMA and
EV-DO should be able to reach price levels for the mass
market in India within one year.
A critical determinant of economic feasibility of technologies is whether economies of scale exist to make large scale
deployment attractive for operators as well as users.
Maturity of AWS platforms plays a critical role in this
regard. Most AWS technologies have made major advances
in the past years, but those which have been commercially
available have reaped the most benefits.
The economic analysis shows that given the performance
and cost of different AWS technologies, 3G platforms, in
particular HSDPA and EV-DO Rev A, offer the most
advantages. Currently proposed disparate spectrum costs
in India for 3G and WiMAX can skew the results somewhat but the outcome remains unchanged because of
other cost advantages offered by 3G technologies.
Endnotes
When considering an upgrade scenario for an existing
operator rather than a purely greenfield deployment, 3G
platforms reap further advantages due to cost savings in
both passive infrastructure, through sharing, and backhaul, because of the ability to reuse the existing core network with only capacity upgrades. This backwards compatibility is also important because it allows operators to
deploy a single network for multiple purposes and transi-
47
Vendor and operator interviews.
48
Signals Research Group, BDA Analysis
49
BDA Interviews
45
BSNL Home 250 DSL plan: INR 250 (USD 5.52) per month plan, includes a 256
Kbps - 2 Mbps connection and 1 GB of upload / download, but requires monthly modem rental of INR 60 (USD 1.32) and upfront payments totaling INR 850
(USD 18.76) for installation and security deposit
46
The passive infrastructure component of a site includes the land/building rooftop,
civil construction, tower, shelter, and electrical works including a back-up generator and battery, where required.
50
GSMA
51
WiMAX Forum
52
WiMAX Forum White Paper - Empowering Mobile Broadband: The role of
Regulation in Bringing Mobile Broadband to the Mass Market, March 2007
6
ACCESS DEVICES,
APPLICATIONS AND SERVICES
MOVE TO MOBILE WIRELESS
The growing consensus across India is that in the “New Economy”
access to knowledge is critical for economic success and the internet
is seen as the key enabler. The Personal Computer (PC) continues to
be the dominant device the world over to access the internet.
Increasingly other emerging internet access devices (IAD) combined
with applications and services, being adopted through new connectivity platforms, are challenging traditional paradigms.
6.1 Internet Access Devices
6.1.1 PC’s as the Dominant Internet
Access Device
The PC, for many households, is a familiar and extremely
functional technology, and today remains the predomi-
FIGURE 6.1 Comparison of PC Penetration per 1,000 Population Across Developing Countries
KEY TAKEAWAYS
The PC continues to be the predominant IAD, and the assumption that
users must purchase one, to have
access to the benefits derived from
internet services and applications
remains the biggest bottleneck, followed by price.
High PC prices and complexities in
learning and maintenance have led to
the emergence of alternate access
devices including set top boxes with
computing power, low-cost PCs, network computers, and eventually the
mobile phone as the primary IAD.
However, most of these devices are in
their infancy and face many challenges of their own.
Due to their reach and affordability,
mobile handsets remain the most
prevalent communication device. Highend mobile handsets with better processing speeds, memory, increased
interactivity capabilities through better
displays, and always connected modes
gives them an edge over PCs and
other alternative IADs. This has led to
a shift from a pure voice to a converged device capable of offering
internet access and other applications
on the move.
BDA believes that the mobile handset
will be the primary IAD for millions of
Indians as they adopt AWS platforms
and experience broadband access
for the first time using this type of
interface.
Source: Lehman Brothers, 2006
nant IAD.
ious locations, or even while on the move. This trend is
also helped by the increasing affordability of the laptop,
and the decreasing price difference from a full-featured
desktop computer. Over the last 18 - 24 months, the average price of entry-level laptops has dropped from a range
of USD 1,500 to USD 2,500 to a range of USD 700 to USD
According to Lehman Brothers, the state of PC penetration
in India as compared to other Asian developing countries
is very low. Even countries like Malaysia and Thailand have
relatively higher PC penetration, attributed to their higher
income levels and strong local PC manufacturing industries.
Despite a slow start, the total number of PC’s sold in India
have grown from 4.2 million units (2003-04) to over 5.6
million (2005-06), and laptops have grown from 170 thousand (2003-04) to 880 thousand (2005-06) units. The
CAGR for desktop and laptop sales for the period March
2004 to March 2007 has been 8.4% and 70.4%, respectively.
FIGURE 6.2 Forecast of PC Sales in India, Thousands
The PC market is characterized by declining prices and
easy financing availability. Current price levels for PCs
have decreased to INR 15,000 or less from a range of INR
25,000 - INR 30, 000 in 2003. However, even after a steep
price decline, the future of the PC market depends on how
quickly and strongly new demand drivers evolve. The
desktop, specifically, is already starting to lose ground to
laptops, which will eventually capture the majority of the
market. This clearly indicates that there is an emerging
need for having the ability to access applications from var-
FIGURE 6.3 Forecast of Indian PC Sales
FIGURE 6.4 Desktops vs Laptops Installed Base
1%
100%
8%
12%
90%
80%
21%
22%
100%
379
90%
70%
80%
60%
70%
30%
1,132
2,637
4,942
8,275
13,485
20,740
33,456
42,073
60%
50%
50%
40%
6,197
40%
65%
9,927
14,109
19,761
26,140
30%
30%
20%
20%
42%
10%
10%
0%
2004-05
0%
2006-07
Desktops-Business
2010-11(F)
Laptops-Business
Laptops-Household
2006-07
2007-08(F)
Desktops
2008-09(F)
2009-10(F)
2010-11(F)
Laptops
Desktops-Household
Source: MAIT, BDA Analysis
2005-06
Source: MAIT, BDA Analysis
1,100. A minimal price difference of USD 150 between a
high end desktop computer and laptop is driving many
desktop buyers to opt for notebooks.53
With shipments reaching 18 million units (March 2011),
the total installed base of desktops and laptops during the
same period will jump to 62.8 million from 14 million as
of March 2007, of which nearly 70% will be desktops and
30% laptops.
The business sector accounted for 90% of laptops and 75%
of desktops sales in 2006, driven by the need to access business information “on the move". This division is likely to
change to 73% of laptops and 59% of desktops sales coming from these segments by 2010-11 as the consumer segment will acquire larger share of desktop and laptop sales.
BDA analysis yields forecasted sales growth of 24% annually to reach over 18 million units for FY 2010-11.
The growth of PCs has been based on its primary merits:
High level of functionality and upgradeability
Convenient and versatile input and display
Internationally accepted standards
Increasing processing speeds and universal use
across consumer and business segments
FIGURE 6.5 Comparison of Various IAD Characteristics
On the other hand, when considering how to extend the
benefits of digital technology through cheap and simple to
use access to information for everyone, the PCs may not be
the best tool because of some inherent disadvantages:
Still relatively high prices for perceived benefit
Complexity of use due to technical interface and at
times language barrier
Reliability of the operating platform and protection
from potential problems
Reliability of the hardware
Inability to be in an “always connected mode” and
limited scope for mobility, though somewhat
addressed by very light high-end laptops
Energy / power hungry
For these reasons, the general opinion of the industry has
become that in its current form, the PC will not be able to
penetrate the “bottom of the pyramid". New devices which
address the major drawbacks of a PC will take over this
role, overcoming the notion that adoption of internet services is linked to adoption of computers.
6.1.2 Alternate Access Devices
Keeping in mind the inherent problems with traditional
PCs discussed above, emerging platforms attempting to fill
the role of alternative IADs have emerged to search for
computing solutions for the masses and to access the internet. All these approaches assume the internet as a common
application, and that computing will become more distributed in nature than it is currently, but not reverting to the
architecture from years ago of basic terminals and mainframes. The following are few of the emerging IADs challenging the PC:
Set-top boxes with computing power combined
with TV sets as the monitor
Low cost PC’s like the One Laptop per Child
(OLPC) initiative
Network computers or thin clients
Mobile phones as universal access device
Each of the alternative IADs will be discussed as per the
characteristics mentioned in the above chart (Figure 6.5).
Set-Top Boxes with Computing Power
A set-top box (STB) with computing power is a device that
enables a television set to become a user interface to the
internet and also enables the TV to receive and decode digital television (DTV) broadcasts.
TABLE 6.1 STB with Computing Power Characteristics
The set-top box is a crucial part of the broadband service
delivery chain as it can also include the modem communication technology for a broadband signal, thereby reducing the total device cost for the various elements. In the
past STBs have been relatively basic devices, simply providing a way for users to decode and select the desired
channel. But over the past few years, technology companies have experimented with leveraging the presence of the
STB and the fact that it is connected to a TV to function as
a simplified low cost IAD. This solution could be particularly relevant for India given the high level of TV penetration of over 112 million households in the country as of
2006.54
Developments in chip processing power and declining
costs of these electronics have enabled STB-based IADs to
approach USD 100 price points, and even lower, in some
cases.55 The STB uses special technology to render a computer display image on the TV, and typically the remote
control serves as the keyboard and mouse.
The key to presenting these services to the TV viewer has
not yet been found. Even the though the TV and STB are
increasingly offering more interactivity, such as Video on
Demand, time-shifted TV, multiple viewing angles and
program information, for interaction like e-commerce and
information access, the television set is likely the wrong
platform.
the research and development of a USD 100 laptop
designed to be accessible to children in poorer countries.
Even with a commercially viable product, there are still
many hurdles this device faces to achieve widespread
adoption. After much evaluation, the Indian government,
one of the largest potential customers for the device, has
also decided that it is not interested in buying them.
Low Cost Desktops / Laptops
While the initial price remains a challenge for PC penetration, low cost PCs might be a way forward for vendors.
There have been several initiatives in this regard from as
early as 1992, with companies that have been discussing a
sub-INR 10K PC (USD 220). Most such efforts failed due
to poor go-to-market strategies as well as lack of relevant
applications for such a device.
While the notion of the OLPC Project is still very interesting, the device remains with many drawbacks, and is quite
limited in the extent of things which it can be used for.
One initiative which has gained momentum over the past
few years is from the One Laptop per Child Project
(OLPC), which is a non-profit organization dedicated to
Network Computers / Thin Clients
Novatium, a Chennai-based company, makes the NetPC, a
product that uses a normal computer monitor attached to
a thin client device, which is then attached to a broadband
network. The thin client is a computing device based on
cheap cell-phone chips and comes without a hard-disk
drive, extensive memory or prepackaged software, thereby
making it a low cost reliable electronic device. The thin
TABLE 6.2 One Laptop Per Child Project Laptop Characteristics
Advantages
TABLE 6.3 Network Computing Device Characteristics
Disadvantages
client can be configured this way because computing is
done at a central server, where processor power and storage can be concentrated and shared across many users.
By pushing processing, storage and applications to a core
server, the NetPC is able to enable many advantages for
both home and enterprise users. In addition to that, it
enables the first real managed services model in computing. But until high broadband speeds are deployed widely,
these devices will not be able to function in the mass market.
Other initiatives
The Human Resources Ministry (HRD) of India has
undertaken an initiative to manufacture laptops at almost
half the price of the cheapest mobile - USD 10. If the target is achieved, it plans to churn out close to a million laptops catering to e-governance initiatives and school children. The ministry is working with a group including
institutes like the Indian Institute of Technology (IITs),
Indian Institute of Science (IISc), and Vellore Institute of
Technology (VIT).
6.1.3 Mobile as the Universal Internet
Access Device
Mobile phones provide numerous advantages for the most
effective use of ICTs. For many people in India, low total
cost of ownership (TCO), driven by a combination of low
entry price and microprepaid top-ups for usage, makes
mobile phones an affordable communication device.
Advances in computing power and interactivity on mobile
phones are driving them to become more than just voice
communication tools, but complete IADs. Mobile phones
are in a much better position than PCs and other IADs to
bring internet and broadband to the mass market.
The gap between PCs and mobile phones is closing fast
with innovative solutions bridging these two worlds. As
discussed in Chapter 4, technology convergence and
increasing processing power have turned mobile phones
into small computers. With penetration rates higher than
those for PCs, mobile phones offer many users their first
experience of applications such as web browsing and email. Even basic handsets are beginning to have simple
web-browsers, calculators, games and other computing
functions. Mobile phones are cheaper, simpler and more
reliable than PCs, and the combination of ultra low costs
are already putting them into the hands of the population
at the bottom of the pyramid.
User experience on mobile phones has also improved
tremendously by the boost in the memory power and
screen clarity of the device. Increased memory has lead to
further addition of applications on the mobile handset,
and when combined with the increased processing power
also allows processing of more complex applications, such
as media streaming and imaging. Mobile technology also
has advantages from an infrastructure perspective because
of the advantages of wireless networks not requiring the
device to be tethered to one location.
The mobile phone as an IAD has a bright and promising
future, but it still faces a number of hurdles. Usability
issues, largely due to the lack of interoperability of applications and services between traditional computers and
mobile devices, present one of the biggest problems. One
FIGURE 6.6 Processing Speeds: PCs vs Mobile
Source: Reliance Infocomm
example is that web sites are not formatted with the small
screen size of mobile devices in mind, and also typically do
not employ techniques to allow a phone’s web browser to
make the necessary adjustments. However, content is
increasingly being repurposed and users are also changing
to realize that a phone experience is not a PC experience; it
is more akin to a personal and interactive lifestyle experience.
Globally, especially since in emerging markets consumers
are more likely to own a mobile phone than a computer;
mobiles are becoming primary communication devices. In
India, more than 60 million units were shipped in CY2006,
compared to only 5.6 million PCs and 880,000 laptops.
Hence, the penetration of the mobile is unmatched, and its
emergence as the prevalent IAD is already being seeded
and gaining traction. This is not a temporary phenomenon, since India is likely to reach beyond 450 million
mobile phone subscribers by end of 2010.
Furthermore, the increased penetration of multimedia
rich handsets has led to users moving from pure voice
communications to higher-end services over their handhelds. This is a phenomenon seen across all mature telecom markets and a trend which is also going to be more
significantly visible in India as the number of GPRS,
EDGE, CDMA 2000 1x and 3G enabled handsets are con-
FIGURE 6.7 Memory Capacity: PCs vs Mobile
Source: Reliance Infocomm
tinuing to grow over the next 3 - 4 years, creating a seeded
user base with the necessary tools to access such services.
TABLE 6.4 Advantages and Disadvantages of Mobile as IAD
Given the above, we believe the time is appropriate for
Indian consumers to be introduced to new data offering
on their mobile phones, as from a device perspective they
are ready to experiment with applications that will encourage them to use these devices for more than just talking,
but also as IADs.
6.2 Wireless Data Moves into
the Mainstream
6.2.1 International Experience
With voice tariffs dropping further due to increased competition, operators such as Cingular Wireless and others
have invested in 3G networks to boost revenue and profits
by offering high speed wireless data offerings. Between Q1
2006 to Q1 2007, major carriers have seen their non-voice
ARPU increase by 30 - 60%, driven by the fast adoption of
CDMA2000 1x EV-DO and WCDMA service.56 Cingular
Wireless, for example, is already seeing its declining voice
ARPU being offset by increasing data ARPU, and whereas
data services revenues in Q3 2005 for Verizon Wireless
contributed 8.4 % of overall revenues, they contributed
14.1 % in Q3 2005 (Figure 6.11). Verizon’s revenue contribution from non-SMS applications reached close to 60 %
of total data revenue. Additionally, Sprint Nextel has seen
strong growth in sales of wireless data cards, driving
growth in annual data revenues over USD 4 billion.
FIGURE 6.8 Mobile Sales Projections versus Desktops and Laptops
Source: IDC, Voice and Data, BDA Analysis
FIGURE 6.9 Handset Sales Forecast, moving towards 3G
2
19
100
27
90
3
80
2
9
70
60
(%)
Globally wireless operators are investing heavily in network upgrades that enable a range of mobile data services
to be offered, hoping to offset stagnation in voice revenues
with these new services. A number of consumer surveys
reveal that mobile data is already moving into the mainstream. According to BDA analysis, wireless revenues in
developed markets like the USA would be driven largely by
mobile data adoption in the long run with voice revenues
flattening in the very near future, and data revenues
accounting for increasing percentages of total revenues.
13
33
50
53
40
30
20
30
10
0
10
2007(F)
GSM
GPRS
EDGE
2011(F)
W-CDMA
cdma 2000 1x RTT
cdma 2000 1x EV-DO
KEY TAKEAWAYS
In Europe 3G operators such as Vodafone, 3 and Telecom
Italia Mobile have also witnessed similar trends. Telecom
Italia Mobile’s data revenues as a percentage of overall revenue have grown at 57% year on year.
India could experience the same stagnation in voice revenues by 2010, with high ARPU urban India getting saturated, new users are being added from the lower ARPU
segments, and competition is forcing continued lowering
of tariffs. What would then help operators sustain their
business is to drive usage of wireless data among both
urban and rural users. India maintains a significant advantage over other countries due to its younger population
base, who are more likely to be early adopters of mobile
data services. Studies support the point that, mobile data
users are younger and their attitudes also expose a deeper
engagement with their mobile phones and services, being
satisfied with all aspects of their mobile data experience
versus those who are only voice users. It would not be hard
to imagine that most of them are and would be willing to
pay a premium for entertainment content on their mobile
phones as well.
Japan is a perfect example where operators have pushed
hard to drive wireless data adoption. The state of network
infrastructure in Japan in 1999 was very similar to the
urban Indian market today. Mobile penetration was higher than that of computers, resulting in almost a saturated
market for mobiles. Broadband infrastructure was also not
very good. It was in this context that the largest mobile
operator, NTT Docomo, launched its I-Mode service in
1999 and is now among the top 10 carriers worldwide in
terms of wireless data revenues (Figure 6.13). The result of
NTT’s move is that in Asia, Japan leads the way in terms of
wireless data adoption. Consumer messaging revenue now
only accounts for 30% of data revenues, while the rest is
from multimedia applications, browser traffic, and mobile
data applications. While the fact that the Japanese market
is much more advanced than India when it comes to technology adoption, the situation in 1999 still lends a good
reference point.
China is another example of a country where mobility has
become an important feature for internet access.
According to the China Internet Information Center
(CNNIC) statistical survey report on the status of the
Globally operators are facing
declining voice ARPUs and wireless data has emerged as a new
revenue stream for them, which
they are leveraging to offset this
trend
The rapid growth of mobile wireless data adoption in both developed and developing nations like
USA, Europe and China act as an
industry forecast for other developing nations such as India, where
socio-economic conditions favor
wireless internet over fixed internet access
Indian consumers have shown an
increased interest and enthusiasm
in adopting new wireless data
offerings and have already stared
using advanced services
SMS and Ringtones on mobile
phones are applications that have
been accepted by the mainstream,
however major developments have
now led to data capability on
Advanced Wireless platforms to
enable wireless operators to offer
rich content that was once only
possible on wired networks
Wireless has been the primary
access network for voice, and the
platform on which many users in
developing economies have had
their first phone calls, and is likely
to play the same role for broadband internet, as well
FIGURE 6.10 North America Wireless Revenue Forecast 2004-2010
FIGURE 6.11 Wireless Data ARPU and Percentage of Service Revenue
Source: Company Reports
FIGURE 6.12 Growth of Data as Percentage of Overall Revenue
FIGURE 6.13 Top 10 Carriers by Wireless Data Revenue, June 2006
Source: Wireless Intelligence, 2006
Source: Chetan Sharma Consulting
FIGURE 6.14 China Internet Users by Access Technology
Source: CNNIC, March 2007
FIGURE 6.15 Mobile Phone Internet Users Base: Urban and Rural China
Source: CNNIC, 2007
FIGURE 6.16 Primary Internet Access Technology by Country
Source: Ipsos, Consumer Internet Usage Survey, 2005
internet in China, by the end of 2006, 17 million users in
China, i.e. almost 12% of their total internet user base,
were already accessing the internet via mobile phones.
BDA believes this number may be understated since China
Mobile had officially announced 41.8 million active WAP
users by December 2006 and China Unicom had over 4.39
million active WAP users. According to a CNNIC report
on WAP usage in China,57 mobile users in China have
developed a habit of surfing online with WAP and are
enthusiastic about using the services. However, online
surfing procedures need to be simplified, and users often
complain about WAP’s narrow bandwidth, high costs and
lack of rich content. Chinese operators such as China
Mobile and China Unicom know that high speed data connectivity platforms are going to become prevalent soon, so
they are being proactive in building a substantial user base
by giving users exposure to use mobile internet.
The primary drivers behind adoption have been due to the
emergence of free WAP portals offering e-mail, chat and
messaging services and even free access to high value data
like stocks and commodities pricing. According to CNNIC
there are over 65,000 WAP sites localized for use by
Chinese mobile phone users.
Over 81.4% of mobile phone internet users live in urban
areas and as high as 18.6% of these users live in rural coun-
FIGURE 6.17 Active GPRS Subscribers
Source: Informa, 2006, BDA Analysis
tryside (Figure 6.15). This clearly indicates that mobile
internet is no longer a phenomenon just confined to urban
areas, but people in rural areas are also getting familiar
with using mobile internet.
6.2.2 Wireless Data Adoption in India
While emerging use of wireless data in the rest of the world
may offer insights, cultural, socio-economic, literacy and
technology adoption differences may impact wireless data
adoption rates in India. “Build it and they will come” may
not be enough for mobile internet, as adoption rates
depend on several parameters including competitive alternative local internet access charges, billing models, need
for mobility, and types of applications and services being
accessed.
The various international experiences discussed above
have important implications for India, a hitherto voice
centric market with wireless data penetration largely in the
form of SMS. SMS leads current mobile data applications
in India, with a user adoption rate of 92%. However,
according to a study conducted by Ipsos in November and
December 2005, among a random sample of 6,544 adults
in urban Brazil, Canada, urban China, France, Germany,
urban India, Japan, Mexico, Russia, South Korea, U.K. and
U.S., 23% of the Indian urban population was already
using the internet wirelessly, whereas only 5% of the
respondents indicated that they were actually using their
mobile phones for accessing information and news on the
web (Figure 6.16). Clearly, wireless access has caught on in
India albeit through traditional devices like PCs and laptops for access.
Ipsos Insight’s 2005 “The Face of the Web” study also
revealed that globally, 28% of those mobile phone owners
surveyed used their phone to browse internet, up from
25% in 2004. More significantly, though, this increase was
driven by adults aged 35 and older joining younger users in
this habit. This older age group is starting to explore more
on their cell phones. Whether it’s text messaging, e-mailing
or internet browsing, the research has found that they are
using their cell phones for more than just voice calling.
Even with wireless internet usage among India’s urban
population, GPRS subscriber levels have been historically
low compared with the overall increasing mobile tele-density in the country. Some operators in India are promoting
trial and adoption of wireless VAS by removing monthly
rentals for GPRS connectivity. Thus, in Q3 2005 to Q3
2006, GPRS subscribers grew by 2.5 times, albeit from
their admittedly low base, to constitute 2.0% of GSM
mobile users (Figure 6.17).
Data offerings from CDMA operators have seen success as
well with Reliance Mobile World, a Java-based application
from Reliance Communications which enables mobile
internet over CDMA handsets. The company claims over
1.5 billion page views per month from its mobile users.58 It
offers 150 data applications including hourly news
updates, high quality headline video clips, downloadable
multi-lingual ring tones, and seasonal updates including
festival specials, city and TV specials, exam results, astrology, mobile banking, bill payment, stock information,
commodity prices, railway and air ticket booking. Tata
Indicom doubled the number of Brew applications downloaded from its network between the months of May and
June 2006 with two-thirds of the activity coming from
users of the Kyocera Prisma low-cost handset.59
A consumer survey of mobile data users conducted by BIS
Shrapnel in 2006 in 14 Indian cities demonstrates that
while SMS is still the highest used mobile data application,
the introduction of GPRS in 2002 has led to 10% of the
user base adopting WAP, 15% adopting MMS and 11.5%
adopting GPRS-based data access (Figure 6.18).60
6.2.3 Users in India Want More Than Just
Voice and SMS
FIGURE 6.18 Mobile Data Adoption Channels
Source: BIS Shrapnel, 2006
The growth in mobile VAS has indicated that the Indian
subscriber is not averse to adopting new multimedia entertainment and information applications on mobile phones,
especially in urban India. According to IAMAI, the mobile
VAS industry in India was estimated at USD 633 million at
the end of 2006, and is expected to grow 60% to touch
USD 1,013 million at the end of 2007. Associated with this
growth, mobile data revenues are expected to increase
from 7% of total operator service revenues to approximately 20% by 2009, implying an opportunity of over
USD 4.8 billion.
The BIS Shrapnel User Survey also found that almost 50%
of surveyed consumers mentioned that they would likely
to use mobile internet, mobile e-mail and MMS in the next
12 months (Table 6.5). These figures are a substantial
increase from current usage levels. Mobile banking and
location-based services also ranked well, with 33% and
31.5%, respectively looking favorably towards adoption.
It is clearly evident that the shift has begun in India
towards using mobile handsets as IADs and usage of inter-
FIGURE 6.19 Forecast of Mobile Data Revenue as Percent of Total Operator Revenue
net applications from handsets. The next step in accelerating this pattern and penetrating the various consumer segments is to look at which content, services and applications will drive adoption. As more drivers for this adoption
exist, larger numbers of users will migrate, leading to many
users experiencing internet and broadband for the first
time on mobile handsets. Mobile data adoption will be
triggered once consumers are exposed to the vast array of
content and applications enabled by high speed data connectivity. Even those applications which users are already
keen to adopt would yield better user experience on higher speed AWS platforms.
6.3 Conclusion
Source: IAMAI, BDA Analysis 2006
PCs continue to be the primary IAD, however high prices
and complexity in learning and managing them have led to
the search for alternative platforms. Currently most of the
alternate devices are in their infancy, and none have been
as successful as the mobile handset, in terms of availability, usability and accessibility. With increasing memory,
processing speed, and interactivity coupled with “on the
move", “always on connectivity", mobile handsets are not
TABLE 6.5 Percent of Surveyed Users Who are Likely to Use Various Mobile Data Services in the Coming Year
Source: BIS Shrapnel, 2006
far behind PCs. This makes the mobile phone the most
likely to become the universally acceptable IAD.
Globally operators are moving towards AWS, and are
focusing on wireless data as the new revenue driver, while
voice ARPUs continues to decline. Rapid wireless data
adoption in the USA, Europe, Japan and China are demonstrating the possibilities.
Indians, fresh from their experience and comfort with
SMS, are also moving towards adopting value added services like CRBT, music, video downloads and other application on the mobile handsets. As mobile penetration continues to grow and wireless becomes the prominent connectivity platform, consumers would be willing to experiment with new wireless data offerings through their
mobile phone, which will become the primary IAD for
millions of Indians who would experience these services
for the very first time in this format.
Endnotes
53
Express Computers, 2003; Voice and Data, 2007
54
NRC, KPMG Industry Research
55
Interviews, BDA Analysis
56
Company reports
57
CNNIC WAP Report, March 2007
58
Reliance Communications Company Report
59
3G Today,2006
60
Cellular Handset User Survey, BIS Shrapnel, 2006
7
APPLICATIONS AND
SERVICES ON ADVANCED
WIRELESS SYSTEMS
The movement towards AWS platform alone cannot spur the growth
and adoption of broadband across India, even in large urban / semiurban areas. Bandwidth will simply become a commodity if not
enhanced by relevant applications and services. While different segments of the market will drive adoption of various applications, the
demand for seamless connectivity on the move will remain core for
driving AWS adoption.
AWS will enable applications and services that transform education,
health-care, entertainment, Government, the economy and the quality of life for Indian citizens. The deployment and usage of AWS will
significantly impact the global competitiveness of nations and businesses in the future. To date, efforts have been focused on infrastructure build-out and determining appropriate competition and regulatory policies, however it is also important and appropriate to consider the factors impacting consumer uptake. For consumers these
include concerns over cost, lack of education on usage, disappointment with the quality and type of content available, and lack of confidence in the internet due to security and privacy concerns.
The limited pool of users with broadband at home today, together
with a larger set of users who access high speed internet at their
workplaces, provide some indication of the types of applications
that could emerge on a mass-market basis to drive further user
adoption. The factor which is most likely to accelerate the need for
high speed data connectivity platforms is the creation and deployment of simple and effective consumer applications at prices that
meet the needs of the market. Local content development should be
encouraged through incentives or recognition. The revenue-sharing
pattern among the service operators and the content providers is a
pain point which needs to be resolved. Developing new business
models around new or existing applications and services that consumers want and businesses need will accelerate demand and usage,
and we aim to highlight some of these initiatives in the following
section of this report.
Below is a snapshot of various applications, which according to
BDA’s analysis will drive the adoption of AWS across consumer,
enterprise and Government segments, in urban and rural areas.
KEY TAKEAWAYS
Online and mobile gaming
In South Korea, cyber cafes with advanced connectivity, computers and facilities were the origin for rapid
uptake of online gaming, whereas such locations are
not widely present in India.
Traditionally, online gaming companies have focused
on growing their businesses in urban areas. However,
a large opportunity in rural areas can be unearthed if
included in various initiatives by Government to enable
infrastructure and connectivity through rural kiosks.
While gaming through PCs or consoles is targeted
towards a limited audience, mobile platforms will help
drive mass adoption of gaming services.
High penetration of feature rich multimedia phones in
India provides a ready platform for mobile gaming to
flourish.
Mobile gaming is already a quickly growing component
in the overall mobile VAS pie.
AWS platforms and availability of game enabled handsets will help in the delivery of premium mobile games
and higher connectivity speeds to create a more
immersive consumer gaming experiences.
Online digital music
Globally, digital sales of music are growing rapidly
while causing a decline in traditional offline sales.
India is following the same path, with digital music
sales expected to surpass offline in 2007, itself.
Ringtones and CRBT are already very popular,
accounting for approximately 40% of data revenues
for the large operators.
Preference for digital music is expected to lead users
of AWS platforms to full track and even album downloads, rather than just clips.
Web 2.0 and location based services
Early adoption of social networking communities (SNC)
amongst those who already have access to internet
and broadband has been promising. Wireless SNC has
not seen much success, though, due to platforms
expecting users to interact via SMS.
Location based services have been very popular internationally. Lack of structured location information
combined with complicated and multi-lingual addressing in India has made structuring and accessing such
information difficult.
TABLE 7.1 Summary of Applications and Services
Current State
User Segments
Online Gaming is a nascent market in India
compared to international developments in
this area
PC has been the dominant device for experiencing online gaming
Handset capabilities can help translate the
PC experience over the mobile phone
Urban users have been the early adopters
With no specific literacy level required,
online and mobile gaming can also cater to
rural segments
High number of downloads of games via
cellular mobile networks indicate user willingness to pay for games
Music
Music sales in offline stores continue to
drop globally, including India
Growing availability of next-generation
music-capable phones driving digital music
sales
Online Music may find its adopters among
urban India
Mobile Music has the potential to be
adopted by the aspiring middle class and
rural India in absence of PC and fixed
broadband
Ring tones and CRBT already contribute
35% of the mobile data revenues in India
with users already willing to pay for them
Commerce and Banking
Internet banking is already popular for PCbased balance inquiries, account statements and transactions
Mobile banking over SMS or WAP has had
low adoption levels
Both urban and rural users will see benefit
in adopting banking and commerce online
and on their mobile phones
Social Networking and User Generated Content
There has been recent success in the emergence of various SNC websites such as
Orkut, MySpace and YouTube
Has been predominantly consumed through
fixed access
Urban Indian youth will be the driver for
such services
Recent attempts by start-up mobile-based
SNC sites in India asking users to interact
via paid SMS have seen little to no success
E-Governance
E-Governance initiatives being taken by
various Government sectors
Early pilots have seen success, though few
have scaled
Access to services is through a fixed medium, and typically PC-based
Focused on the bottom of the pyramid who
have limited or no access or interface to
Government departments
Successful implementations in India reflects
that rural India does find value in and is
willing to pay for such services
Health
Urban and Rural disparity in access to
Health Services
E-Health applications in India are still in a
nascent stage
High importance of such services for underserved rural India
Gaming
Scalability / Importance
Prior Experience
BDA Assessment
Anti-Gaming mindset and poor enabling
infrastructure have stifled online gaming
growth
New innovative models in partnership with
BSPs have helped drive scale
Mobile Gaming can help in reaching the
mass market
The rapid adoption of broadband in Korea has
been driven by the popularity of Online
Gaming
Mobile Gaming facilitated by AWS could outpace online gaming
Many users will experience gaming for the very
first time over their mobile phones rather than
a PC
Online Music adoption is slow in India, with
low PC and broadband penetration
Scale can only be achieved by promoting
mobile music
The desire to acquire digital music has driven
the adoption of AWS platforms in mature
economies such as Japan
KDDI’s Chaku-Uta Full song download service
is amongst the most popular
Mobile Music in India is expected to surpass
online music sales as well as physical CD sales
in the near future
Bundled music packages and flat rate pricing
services will allow users to graduate to full
song downloads
Security Concerns, technical limitations, poor
infrastructure and connectivity, and lack of
intuitive user interface have affected reliability and scalability
Experience from mobile banking (WIZZIT) in
South Africa demonstrates how the
“unbanked” can benefit
IRCTC has had overwhelming popularity and is
India’s first mass market e-commerce success
More advanced services will be possible over
AWS platforms, and will spur broad-based
usage due to improved user experience
Dominance of English on the internet, and
lack of localized content has resulted in slow
uptake of such services beyond urban centers
Orkut’s success in India has reinforced the fact
that social networking could help drive consumer broadband uptake
SNC and User Generated content demand high
bandwidth networks for convenient interactivity and sharing of multi-media
Indian culture also promotes community, and
SNC is likely to be a natural extension of that
Quantitative scale in terms of number of
rural kiosks has been achieved
Poor rural telecommunications network,
power problems in various states, and network connectivity are inhibitors
Singapore’s governmental online presence
through e-citizen portal has driven widespread
adoption and benefited both the Government
and citizens
Government must first transform back-end to
integrate various departments and systems,
and be prepared to interact with citizen
Mandating use of e-applications will provide
the first exposure to ICT for most citizens, and
develop a comfort level for further adoption
E-Health still a relatively new domain in
health care practices, and only a few e-health
initiatives are being run in India
Smaller hospitals cannot afford the cost associated with connectivity and equipment
The Cell-Life project in South Africa uses
mobile phone software for the collection of
data necessary for ensuring effective adherence
to anti-retroviral treatment among HIV-AIDS
patients
E-Health services will require a high quality live
video and audio transmission for which technology barriers need to be overcome
Initiatives will continue to be driven by
Government support since commercial viability
of such applications is doubted
TABLE 7.1 Summary of Applications and Services (continued)
Current State
User Segments
Education
Numerous problems exist with the conventional education system in India, especially
teacher absenteeism
Early applications emerging for fixed access
and handset-based experience
Agriculture
Lack of information on effective agriculture
practices and the power of middle men
have led to huge losses for those who are
dependent on agriculture
Fixed access for E-Agriculture has already
started being deployed for community use
Rural Shoring
Early movers are experimenting with outsourcing business process work to rural
areas
Fixed access using PCs today, though could
be other stripped down or network-based
IADs
Messaging
SMS is the most successful, universally
accepted, mainstream mobile data service
SMS based services are being reinvented to
improve productivity, effective non intrusive
B2B and B2C communication
Being reinvented for improving productivity
Low cost per unit increases willingness to
pay across this segment
SME / SOHO are expected to grow as they
experiment with these services further as
mass communication service
Mobile E-Mail
Adoption is driven by declining handset
and data download prices
Most high-end and mid-level mobile handsets can now support mobile e-mail
Blackberry currently the most used, leading
service adoption
Key segments adopting mobile e-mail are:
mobile workers, senior level executives,
field workforce
Trend is moving towards mid-level executives and SME/SOHO users
Enterprises are willing to pay for these
services due to declining usage prices and
increased productivity
Conferencing (Audio / Video)
Conferencing services are widely used by
enterprises for collaborative interaction
across geographies simultaneously
Conferencing services are considered a very
important tool for productivity, hence higher willingness to pay for both AC/VC by
large / medium enterprises.
Both Urban and Rural India
Indians are more likely to spend more on
education
Rural India would greatly benefit from such
applications
Farmers would be very willing to pay a
nominal cost to access information on
farming practices, weather forecasts and
also to bypass middleman
Rural workers, while parent companies are
headquartered in urban areas
Would be an earning opportunity for rural
workforce
Scalability / Importance
Prior Experience
BDA Assessment
Using e-learning, faculty availability is not
restricted by geography or time
Limits to scalability are the requirement for
interactivity to deliver high quality education
Wireless technologies have helped empower
rural population in Indonesia by providing
them with affordable voice and internet services
M-Learning is fast emerging as a new platform for education for the future
E-Learning will play a significant role in overcoming the problems with the education system today
Encouraging computer training at schools
with broadband connections has been helpful
To achieve mass scale, AWS networks can
facilitate connectivity
Lack of sustainable ICT infrastructure,
appropriate content, access to ICT facilities
are the biggest hurdles
Absence of appropriate skills among potential users of ICT is also a challengex
ITC e-Choupal has driven agricultural procurement and support to farmers with
impressive results
There is great potential for e-agriculture
applications in India but would need robust
ICT infrastructure
Wireless technologies have the potential to
deal with fixed infrastructure constraints
A number of hurdles exist, including low literacy levels, absence of appropriate skills,
and lack of scalable ICT and other core
infrastructure
Rural BPO initiatives such as those from
Desicrew have helped to generate employment opportunities for local educated youth
Have helped to develop a sustainable business model that can be scalable and replicable in other parts of rural India
Important for the future of the country to
enable income opportunities in rural areas
other than agriculture
Will be a big emerging area of innovative
business practice
Limited interactivity makes it less scalable
This service will evolve into usage of high
end messaging platforms (voice and video)
Highly scalable from PCs to handhelds to
unified communications applications
Easily learned and adopted by common
users
Second most widely used application after
messaging across enterprise segment
For widespread VC adoption, scalability is
limited due to dependency on high cost
CPEs and bandwidth requirements
When integrated with IP enabled infrastructure, conferencing services become scalable
for ad-hoc P-2-P
SMS based sales force application, SMS
based banking services and SMS based IVR
solutions are already being used
MMS based services for insurance and utility
services also exist
More than 3-4 mobile e-mail platform (i.e.
Research in Motion, Windows Mobile, Hutch
Mobile mail etc.) are already available in
India
Apollo Hospitals Group, using video conferencing to offer remote health care services
Various Government agencies like judiciary
also effectively using VC
Very effective in mass, non-intrusive communications.
Mobility, responsiveness, and time saving are
significant benefits
Wireless e-mail improves business measurement parameters (e.g. customer service, real
time response to queries)
Ability to offer communications “on the
move” makes it a highly productive tool
AC already widely used as it is a relatively
low cost service
VC is hindered by high CPE costs and lack of
high bandwidth availability will scale with
individual access to AWS networks
FIGURE 7.2 Consumer Survey Results on Online Gaming Access Points
7.1 Consumer Applications
and Services
7.1.1 Online Gaming and Broadband:
Inextricably Linked
Source: KIPA, 2006
FIGURE 7.3 Organized/Unorganized Internet Café’s in India
Unorganized 97%
Organized 3%
Organized
Unorganized
Source: IAMAI, 2007
FIGURE 7.1 Growth in PC Bangs and Internet Penetration in South Korea
Online gaming, a subset of the global gaming market, is
driven by broadband services. In the following section
we discuss how online gaming in Korea has helped drive
broadband adoption.
South Korea: The Digital Playground
The growth of the online gaming market serves as a successful case study in South Korea’s drive to strengthen its
flagging economy with new technologies. An unprecedented program to build a national broadband network
provided high speed internet connections required for
online gaming to thrive, and lead to the omnipresence
nature of the “PC Bang". The PC bang industry mushroomed in 1998, with 28,000 such establishments currently operating throughout Korea. A PC bang is
equipped with broadband connectivity to high-end PCs
with requisite hardware to enable graphically intensive
games to be played. Moreover, PC bangs even run promotions by offering to pay for online game subscriptions
and provide a place for young Koreans to socialize. The
growth in the number of PC bangs has also helped in
accelerating internet penetration in Korea to over 70 %
(Figure 7.1).
According to the Korea Game Development &
Promotion Institute, gamers at these PC Bangs continue
to pursue gaming even at their homes, thus creating an
impetus for migrating from narrow band to broadband
connections, as it offers better user experience, and eventually evolving to gaming on mobile phones. Thus exposure to online gaming activities in PC Bangs has been a
catalyst for adoption of high speed data connectivity on
the move as well. 61
Source: Korea Game Development & Promotion Institute, 2002
Learning From Korea’s Experience
The online gaming market in India was worth INR 21
crore (USD 4.6 million) as of January 200762 compared
casestudy
to Korea, China, Japan and the USA, which are each worth
over USD 1 billion,63 indicating vast commercial and social
potential of the segment.
INDIAGAMES “GAMES ON DEMAND” CHANGING THE RULES67
Introduction
Indiagames, founded in 1999 as India’s first ever gaming site, develops,
India had over 140,000 cyber cafes (March 2006) with over
500,000 customers being used as traditional access points
rather than dedicated game parlors because of poor connectivity and hardware.64 Currently, only 14% of cyber
cafes in India own more than 10 PCs, while in Korea and
China a significant proportion of cafes have more than 75
PC’s per cafe.65 A consumer survey of 200 online gamers
conducted in 2006 across New Delhi, Mumbai and
Bangalore by the Korea Internet Promotion Agency confirmed the fact that internet cafes are the most popular
destination for young people to engage in playing all kinds
of PC games (Figure 7.2).66
The organized cafe segment includes Reliance’s Webworlds
and Sify’s Gamedromes, which have PCs equipped with
joysticks and other gaming equipment. These locations are
shared by gamers as well as casual internet and e-mail
users so the atmosphere is not quite what is seen in a
Korean PC bang. The organized segment has not scaled
and accounted for just 3% of total internet cafes in India as
of March 2006 (Figure 7.3).
It is easy to get influenced by the success of online gaming
in markets like China and Korea and assume a similar natural progression for the Indian market. However there are
several challenges which still need to be resolved for India
to reach a similar stage. These include infrastructure, local
content, and developing simple games for rural areas while
focusing on international quality levels for urban gaming
centers. Some of the recent initiatives by online gaming
companies such as Zapak and Indiagames are directed
towards development of dedicated gaming zones to provide high speed connectivity and the right gaming experience through these gaming zones.
Association with various digital divide programmes being
run by the Government and other corporates who are
working towards deploying infrastructure in the form of
kiosks will provide a boost to gaming across rural India.
publishes and distributes games for both online and mobile platforms.
Headquartered in Mumbai, with offices in Beijing, London and Los
Angeles, it offers services around mobile, online and console gaming.
Games on Demand Service Description
Indiagames launched the “Games on Demand” (GoD) service for online
gaming in July 2006, offering 300 games at INR 200 (USD 4.41).
Indiagames established exclusive distribution agreements with leading
game publishers and launched this online gaming service with all major
telecom operators like BSNL, Airtel, MTNL, Tata VSNL and You Telecom,
together with partnerships with cyber cafes, covering over 85% of residential broadband users. Users can download games with zero data
charges and enjoy the convenience of being billed for the service in their
existing
broadband
bills.
The
service
is
available
at
www.indiagames.com and offers payment facility through credit / debit
cards, Indiagames pre-paid game cards or ITZ cash cards.
With the GoD offering, broadband service providers have access to a
strong value proposition to migrate existing narrowband internet users
to upgrade and also offer basic telephony users a reason to subscribe
to high speed data connectivity services. This is also a good loyalty tool
and usage driver for both internet cafes and broadband service
providers.
Recognizing that gaming is still nascent in India, GoD offers a 14 day
free trial to encourage users to experiment and only buy if they find
value in the service.
Summary
Over 300,000 registered users with an average of 600 hrs per day
of game play.
Average time spent per gamer varies from 25-50 hours per month,
with the top 100 gamers playing over 100 hours per month, i.e. 5 6 hours each day.
Partnership with over 130 GoD branded cyber cafes in India.
High number of registered users from Tier 1 and Tier 2 cities indicates that gaming is finding its place among the aspiring middle
class and rural India.
Innovative business model in partnership with various broadband
service providers has helped Indiagames establish a robust revenue
stream and gives consumers a reason to adopt broadband.
GoD’s pricing model is also desirable by content publishers since it
overcomes the possibility of piracy while still ensuring reasonable
price levels for consumers who had become used to buying pirated
games for as little as USD 1.
7.1.2 Mobile Gaming: The Next Big
Opportunity
Global mobile gaming revenues, including premium content and cellular transport, are expected to reach USD 4.7
billion by 2010, up from over USD 2.1 billion at the end of
2005.68 Mobile games download is a fast growing component of mobile VAS pie currently contributing 7% of the
total mobile data revenues (Figure 7.4). In 2005-06 revenues from the Indian gaming industry were around INR
150 crore (USD 33.11 million) of which mobile gaming
contributed INR 100 crore (USD 22 million) and CD and
console games contributed INR 50 crore (USD 11 million).69 Mobile gaming also contributes approximately half
of the total revenue to the Indian game development
industry.70 According to NASSCOM, this contribution
could increase to 70% of overall revenues by 2009.
Mobile gaming offers a platform for introducing the mass
market to this form of entertainment. According to IIMAhmedabad there were 33.2 million (2005) Java enabled
handsets in India71 with 11.5% of mobile users subscribing to GPRS in 2006, up from 4% in 2005. The number of
paid downloads for GSM handsets in India are around
600,000 a month, while there are another 15 million free
game downloads in the CDMA space as well.72 The
increased consumer interest in mobile gaming can be
FIGURE 7.4 Mobile Data Revenue by Applications
Source: IAMAI, 2006
gauged by the fact that Nokia’s Mobile Championship in
2004 drew over 26,000 people across the country competing for a cash prize of INR 10 lakh (USD 22,075). This
response has resulted in companies like Indiagames bringing the World Cyber Games, the world’s largest annual
game festival, to India again in 2007.
While console gaming platforms such as Playstation 3
(PS3), priced at INR 39,990 (USD 883) and Microsoft’s
Xbox 360 priced at INR 19,990 (USD 441) are expensive,
dedicated gaming handsets such as Nokia Engage QD or
even a mid-level gaming enabled Nokia 3230 handset,
priced between USD 150- USD 190, are capable of providing users with 3D gaming experience. When combined
with emerging AWS platforms which can deliver more
sophisticated games, and also offer real time interactivity,
it would pave the way for mobile gaming to become the
most preferred platform for a large number of gamers in
India, superseding console gaming by a large margin.
7.1.3 Online Digital Music for Consumer
Broadband Uptake
The increasing interest in online music can be seen with
the diminishing retail sales of music CDs globally.
TABLE 7.2 Global Digital Music Market Size (Millions)
Source: IFPI, 2006
Globally, CD sales have been decreasing since 2000 - the
number of CDs sold has decreased more than 7%, and the
amount of digital albums sold has doubled.73 According to
International Federation of the Phonographic Industry
(IFPI) consumers purchased 65% more digital tracks globally in 2006 than in 2005 (Table 7.2). This trend can be
attributed to the increase in broadband penetration, high
speed mobile data subscriptions, driven by 3G, and sales of
portable MP3 players.
With the evolution of the mobile handset from a basic
voice device to a complete entertainment unit, mobile
music has picked up in India as well. Music centric phones
like the Sony Ericsson Walkman series, Nokia N70, 5300,
and 3250 series handsets, and Motorola ROKR E3 combined with the ease of music download have helped drive
mobile music sales. Almost every operator has launched an
“Easy Music” service that allows subscribers to walk into a
mobile phone outlet, choose their favorite music from a
vast catalogue, and download tracks onto their mobile
phones or other digital devices for as little as USD 0.15 per
Hindi song or USD 0.30 per international song.
Ringtones and Caller Ringback Tones (CRBT) have been
the key to early VAS adoption in India and were the first
mass market mobile music products to offer phone personalization to music fans. The ringtones, including CRBT,
market in India was worth USD 228 million in 2006.74
Mono and polyphonic ringtones currently sell at a 75:25
ratio, while the fastest growing ringtone genre is ringback
tones with about 3.5 million users. Over 400,000 ringtones
are downloaded to handsets every day in India, and generate about 40% of data revenues for India’s big wireless
operators such as Airtel and Reliance Communications.75
The affinity towards subscribing to CRBT and downloading ringtones indicates a potential for users graduate to
downloading full tracks on to a PC or directly on to mobile
phones. A recent survey by IAMAI indicated increased
interest in purchasing music online by Indian consumers
with 24% of surveyed internet users already purchasing
music online and 33% likely to buy in the near future.76
In the absence of access to PCs and broadband, whether
fixed or wireless, digital music growth could remain minimal in the next three years. At present EDGE or CDMA
2000 1x are the best wireless speed options available, which
imply that at about 70 - 135 kbps, a 6 MB music file can
take 6 - 12 minutes. In actuality, with connection speeds
yielding less than 15 kbps, this increases the time to almost
an hour. Introduction of AWS platforms will help drive
this shift as users will be able to acquire complete tracks
directly on to their mobile phones. SoundBuzz77 believes
that growth will be fuelled by mobile music, which will
account for 88% of the music industry’s revenues by 2010,
and has the potential to be adopted by the aspiring middle
class and rural India.
FIGURE 7.5 Mobile Versus Physical Music Sales
The preference for mobile music, largely dominated today
by ringtones, is expected to surpass online music (legally
distributed music downloaded to PCs, iPods or MP3 players) sales as well as physical CD sales starting 2007. The
mobile music industry in India was estimated to be worth
USD 99 million in 2005 and is set to touch USD 799 million by end of 2010, far exceeding revenues of the conventional music industry like compact disks and audio cassettes (Figure 7.5).
Japan and Korea, with their innovations in mobile handsets, services, content and pricing have unmatched experience of how to drive AWS adoption, usage and ARPU, and
KDDI’s EZ Chaku-Uta full music download is one such
example.
Source: Soundbuzz, 2006
case study
KDDI’S CHAKU-U
UTA FULL MUSIC DOWNLOAD - LEVERAGING HIGH SPEED ADVANCED WIRELESS PLATFORMS78
Japan has one of the highest mobile penetrations in the world (76%). KDDI has the 2nd largest market share in Japan
with 28.44 million subscribers (30%). KDDI’s subscriber base can be divided into subscribers using PDC, cdmaOne,
CDMA 2000 1x, and CDMA au WIN based on the CDMA 2000 1x EV-DO platform.
KDDI’s EZweb Mobile Internet services can be used by all cdmaOne, CDMA 1x, and 3G WIN subscribers. KDDI has been
increasing its 3G user base rapidly and reached over 14.5 million WIN subscribers by March 2007 (Figure 7.6).
Service Description
KDDI au’s EZ Chaku-uta full music downloading service is among the top ten best performing non-voice services for
mobile operators. Chaku Uta full is a service distributing full length songs while Chaku-Uta can let subscribers download a part of the song. The selection offered is mainly pop music with an average track size reaching 1.5 MB. The
downloaded content is secured on a miniSD card inserted into the mobile, using CPRM copy protection.
KDDI’s Chaku Uta download services has been a huge success with KDDI subscribers, with a total of 100 million downloads as of February 2007 (Figure 7.7). On an overall basis, paid downloads are about 90% of the total 100 million
downloads. Currently there are about 28 handsets (both CDMA 1X and WIN) that can use the Chaku-Uta service, while
Chaku-Uta Full is available for CDMA WIN users with about 22 handsets available.
Source: KDDI, 2007
Figure 7.6 - Growth of KDDI WIN Subscribers
Source: BDA Analysis, Press Reports
Figure 7.7 - Growth in Chaku-u
uta Song Downloads
Success Strategy and Statistics
To support the content volume that would grow with the availability of high speed data communications, KDDI introduced EZ Flat, the first flat rate packet communications plan in the industry, which enables users to access EZweb
services including Chaku Uta Full for a fixed monthly charge of JPY 4,200 (USD 36.16). Full song downloads cost
about JPY 235 (USD 2). Over 80% of KDDI’s EV-DO users have already subscriber to such simplified flat-rate plans.
KDDI’s CDMA WIN platform offers high-speed access of up to 2.4 Mbps, and has enabled users to experience various rich EZweb content due to its high-speed and high capacity.
Presently, Chaku-Uta Full generates more copyright revenue than all other PC music downloads combined, as reported by JASRAC.79
KDDI’s 3G data ARPU has seen good growth after the launch of mobile music. Total ARPU for 3G users is
37-60% higher than all other users on the network and data ARPU for 3G users is almost double that of all users on
the network.80
7.1.4 Web 2.0 & Location Based Services
FIGURE 7.8 Orkut Users by Geography
Including music and gaming, some of the other key applications that have shown promise to act as a catalyst for
broadband adoption internationally are User-Generated
Content and Social Networking Communities (SCN), and
Location Based Services (LBS).
User Generated Content and Social Networking
With the number of SNC websites growing, India has also
been influenced by the social networking phenomenon,
clearly visible from the number of users registering on sites
like MySpace, Facebook, Orkut, Bebo, etc. or special-purpose social networks like LinkedIn and aSmallWorld.
Social networking is quickly becoming a good way of getting and staying connected with family, friends or business
colleagues.
Over the last 12 months, interest for SNC web sites on
fixed-line internet has been quite visible, especially among
the growing Indian youth population who spend hours
online creating profiles and sharing photos, videos and
blogs. Orkut, specifically, has seen a high number of users
from India (Figure 7.8). Social networking as of now had
just been limited to a niche segment of urban India who
had access to computing and connectivity, however SNCs
also offer an opportunity to lure masses by enabling them
with affordable alternative access devices to create regional social networks and vertical communities to achieve
larger objectives like job search, real estate, travel, etc.
Access to SNC websites is considered to be a free web service, though recent attempts by start-up mobile-based SNC
sites in India asking users to interact via paid SMS have
seen little to no success.
Wireless Social Networking Future
Mobile phones have emerged as the ideal tools for social
networking and building online communities. Not only
are people rarely without their phones, but today’s handsets come equipped with sophisticated tools as well, such
as high resolution cameras, music and video players and
recorders. With 296% growth in sales volume of camera
phones from January 2006 to June 2006, the Indian camera phone market has grown three times that of China’s
70%. 81 Competition among various handset manufacturers in India has shifted towards improving picture quality
and resolution of color displays, while introducing features
Source: Orkut, BDA Analysis, 2007
that make it easier for users to upload pictures and text to
blogs. Most handsets are even equipped with regional language mobile text input software and keypad layouts in the
regional languages as well. With high mobile penetration
and websites trying to build primarily mobile-centric
social networks, this could trigger network effects that
would include an increasing number of users beyond the
urban centers.
Social networking and user-generated content demand
high bandwidth networks for convenient interactivity and
sharing of multi-media, rather than simple text. Indian
culture also naturally promotes building communities,
and SNC is likely to be a natural extension of that as more
of the younger generation starts to move for education and
professional reasons. The early growth of interest in social
networking in India through web sites such as Orkut,
which may soon go mobile, could become key applications
for driving adoption and data usage on new advanced
wireless networks.
Location Based Services
The map industry in India lacks sufficient and clear geographic data, even as the demand for applications such as
location based services rises globally. Lack of organized
addressing schemes and outdated information makes it an
inconvenient process. Location-based applications and
services like web-mapping, street-routing and electronic
Yellow Pages services through mobile devices are still not
developed. However international experiences suggest that
these services are being adopted. The total population of
GPS-enabled location-based services (LBS) subscribers is
expected to reach 315 million by 2011, up from 12 million
in 2006 driven by markets such as Japan and Korea, where
about 20% of all mobile phones had GPS installed as of
2005.82 KDDI has a voice activated navigation system
which guides users to their destinations. It allows user to
search for venues, such as restaurants, by category and
budget and even empowers users to rate their experience.
There are many applications for LBS services. The major
categories are:
Navigation - directions and traffic management
Information - travel & tourism, mobile yellow pages
and shopping guides
Tracking - product and people
Games - mobile games
Emergency - calls for assistance and emergency
location services
Billing - road tolls
Management - fleet, facility, security and infrastructure
Leisure - location based instant messaging and
buddy finder
Advertising - banners and coupons
Internationally, business models developed around LBS
are attractive. Operators such as Verizon offer services like
“Chapperone", which allow parents to find their child’s
location from their own mobile or PC. Some LBS applications are delivered free, while others are charged on a peruse basis. Corporate vehicle, fleet and workforce management will help drive early usage in the corporate and SME
market in India, whereas the urban consumers will likely
see value in personal and child safety services similar to
those from Verizon.
The key to creating compelling services is to customize
them for the Indian market. Navigation on mobile handsets is largely customized for automotive use in America
while in Japan; it focuses on mass transit and pedestrian
navigation. In India, clearly, there is both significant
reliance on mass transit but equally on more individual
modes of travel such as automobiles, motorcycles, scooters
and bicycles. Consumers continue to rely on traditional
methods of enquiring with someone to seek addresses and
place names. These addresses and place names are long
character strings that require complicated key strokes to
input, and sometimes include special or foreign characters
that users can’t directly input on a mobile keypad. The
wide variations of address formats also make it very difficult to implement an LBS solution to handle all addresses,
which leads to frequent failures. These inconveniences and
failures have significantly reduced the attractiveness of
wireless location based services in context to India.
LBS would have a tough time breaking into the Indian
market due to the lack of maps and location specific information. However, having high speed networks will help in
making the information more easily accessible once these
initial hurdles are cleared and when emerging applications
like 3-D mapping and imaging potentially find increased
deployment and adoption.
7.2 Internet and Mobile
Banking and Commerce
7.2.1 Transition from Internet Banking to
Mobile Banking
In a traditional banking environment the interface is with
a teller or an ATM. With internet banking the primary
interaction is with a PC while with mobile banking, the
interface is through a cell phone. Koreans and Japanese
have both used mobile banking extensively and have
reaped the benefits. Around 3.3 million transactions were
reported by Bank of Korea in 2004, while in Japan, mobile
phones linked to credit/debit cards have become a part of
the culture.
Primary Obstacles to M-banking’s Further Expansion
Security concerns, technical limitations, poor infrastructure, connectivity and lack of simple intuitive user interface are some of the factors that have affected adoption.
Banks also need to scale mobile banking infrastructure to
KEY TAKEAWAYS
Mobile banking addresses the fundamental limitations of internet banking
in India by reducing the customer’s
requirement to a mobile handset, thus
integrating the masses into the overall
financial system and ensuring easy
financial inclusion.
Early mobile banking services have
largely been static offering mobile versions of bank-related processes like
balance lookup. The introduction of
AWS will enable higher value userfriendly interfaces and services to be
offered.
Growing handset capabilities and
introduction of AWS networks would
help drive e-commerce towards mcommerce, which is today stagnating
due to heavy reliance on memorizing
short codes
Major advances in m-commerce are
not going to happen until higher-bandwidth networks are deployed which not
only provide a better experience for
users to transact on impulse irrespective of hardware or location con-
7.2.2 E-Commerce in India: Small Towns
are Growth Engines
With more Tier 1 and Tier 2 cities now being wired, the
Indian e-commerce market is staring at the prospects of a
phenomenal growth. In 2005-06, major online shopping
sites such as Fabmall, Rediff, Indiatimes and Sify had lured
Indian consumers to spend INR 11.80 billion (USD 262
million) up from INR 5.7 billion (USD 127 million) in
2004-05.87 Online purchases have nearly quadrupled, from
200,000 transactions per month in 2002-03 to 790,000 in
2004-05.88
With internet making deep inroads into everyday life in
small cities, online shopping is already increasing. Other
areas of online commerce have also caught on. One such
sector is the online recruitment industry, with a market
size estimated to reach INR 241 crore (USD 53.2 million)
for 2006-07 from INR 145 crore (USD 32 million) in 200506.89 The industry is also likely to maintain a year-on-year
growth of over 60%. Online travel is the fastest growing
segment across e-commerce, accounting for 70% of total
e-commerce, according to Makemytrip.com. IRCTC’s success is a leading example of what is possible.
straints.
7.2.3 M-Commerce: Credit Cards on
Mobile Phones Could be a Reality
handle potential exponential growth of the customer base
such that services are reliable.
Among all these challenges are some success stories.
Leading the way is South Africa with MTN Mobile
Banking and WIZZIT both entering their second year of
operations, and Brazil, where m-banking may even surpass
internet banking over the next five years.83 India, on the
other hand, has a long way to go to reach that level, however it is an easier path to tread now that security standards
and transaction protocols have been further developed
and tested.
Shopping on the Mobile - World Experiences
In Korea and Japan, close to 40% of all auctions happen on
mobile phones, and 60% of these transactions are made by
women. These are the two main markets where m-commerce has gained a lot of traction. Indian operators are
continuously working on introducing new models with
Reliance Infocomm and Bharti being the early movers in
the market who offer m-commerce services such as bill
payment and ticket purchases.
Challenges for M-Commerce in India
A lack of new investments, bandwidth constraints, and
supporting technologies are major bottlenecks for m-com-
case study
CASE STUDY: MOBILE BANKING FOR LOW INCOME COMMUNITIES IN SOUTH AFRICA - WIZZIT
WIZZIT is a mobile phone-based banking facility whose target market is the 16 million unbanked or underbanked South
Africans, about 60% of the country’s population. It does not require users to have a bank account and is compatible with
early generation cell phones popular in low-income communities. It allows users to make person to person payments,
transfer money, purchase pre-paid electricity and buy airtime for pre-paid mobile phone subscriptions. In addition to
being able to conduct mobile-to-mobile transactions, WIZZIT account holders are issued Maestro debit cards that can
be used at any ATM or retailer. WIZZIT charges per-transaction fees that range from SAR 0.99 (USD 0.15) to SAR 4.99
(USD 0.78) and does not charge a monthly fee or require a minimum balance. There are no transaction limitations and
the service is purely pay-as-you-go.
Challenges
To introduce a mobile banking service that did not involve any additional expense for the customer together with
enabling customers to deposit / withdraw cash without a physical branch required WIZZIT to have arrangements with
Absa Bank and post offices to accept deposits and also design a secure and convenient mobile banking payment gateway and user interface.
Accomplishments
In June 2006, WIZZIT had 50,000 customers, growing at 3,000 per month with over 80,000 transactions per month.
WIZZIT employed over 2,000 “Wizz Kids", typically unemployed university graduates from low-income communities to
promote the product and help customers open accounts.
Source: “Mobile Phone Banking and Low-Income Customers” Report by CGAP, November 2006
According to a recent survey by the
Consultative Group to Assist the
Poor (CGAP) among 215 WIZZIT
users, 9 out of 10 felt the service is
inexpensive and about 68% had
used it because of sheer convenience, 58% for easy access and
44% because it saved time.84
The cost associated with using WIZZIT is considerably less than the
lowest cost full-service bank
accounts available and Mzansi
accounts (Table 7.3).85
The average numbers of transactions by WIZZIT users were
Table 7.3 Cost Savings on Using WIZZIT
Source: “Mobile Phone Banking and Low-Income Customers” Report by CGAP, November, 2006
close to the number of transactions that other people did by
visiting their banks accounts
(Figure 7.9).86
Cost of Using
Figure 7.9 - Average Basket of Transactions over WIZZIT
The WIZZIT experience demonstrates how simple mobile banking applications could drive mass adoption not just by
urban users but also from low income rural communities. AWS platforms would enhance the mobile banking experience
by eliminating some of the constraints limited m-banking to SMS platforms. It will also enable m-banking applications to
have a friendly user-interface that takes advantage of embedded web browsers in handsets made for AWS platforms.
merce in India. Commerce-capable cellular networks,
which can route real-time transactions over cellular networks to a remote payment gateway and guarantee security over the transaction have also not yet scaled locally. Due
to this and lack of previous exposure, users are concerned
about usability, clarity in terms of the form factor, services
available, and security. Another issue on the user side is the
online receipt of the money paid.
Ray of Hope: Indians are Not Averse to Transacting Over
the Air
M-commerce in India will largely be driven through SMS
initially as this is something users are already familiar with.
E-Charge is one offering introduced by various operators
wherein a subscriber need not physically buy a pre-paid
recharge voucher. Subscribers have the flexibility to
request a recharge over phone with the customers paying
the money to the retailer at each other’s convenience.
The success of E-Charge has demonstrated that m-commerce is prevalent and can grow provided simplicity and
convenience are highlighted on introduction of such business models.
Since m-commerce is still in its infancy, business models
have not yet stabilized, for example, how revenues from
transactions will be shared between the various parties.
However, major advances in m-commerce are not going to
happen until higher bandwidth networks are deployed and
wireless service providers cooperate with each other
instead of promoting competing standards.
7.3 Applications and Services
for Indian Enterprises
7.3.1 Enterprise Segments
Over the last 16 years, reduced trade barriers have resulted
in increasing global opportunities and investments in
India. This has resulted in high growth across all sections
of the economy. It is likely, that if growth momentum in
the enterprise segment continues, more than 130 compa-
nies will join the INR 1,000 crore (USD 220 million) club.
This growth has naturally created a need for better connectivity and communication. Improved communications has
opened new growth opportunities transcending market
boundaries, reducing costs and providing access to a vast
untapped resource pool.
Enterprises are divided into three categories based on
number of employees: Large, Medium and Small (Figure
7.13).
7.3.2 Changing Behavior and Methods
Internationally, bandwidth intensive enterprise applications have been widely available, but growth in adoption
comes mostly when access speeds and usability through
devices have improved. The initial movement towards
high speed links among businesses is already visible in
India as the primary access methods move from narrowband to broadband.
Leased Line and DSL now comprise over 50% of the total
access market, while dial-up use declined by 17% in 2006
from 2005.
However the reach of quality fixed networks to remote
locations and even large urban / semi-urban areas, for
effective access to applications, remains a challenge.
Therefore enterprises are moving to solutions that are not
location dependent and offer flexibility and connectivity
“on the move". This trend is clearly visible in the way
enterprises, as discussed previously, are moving increasingly from desktops to more portable devices like laptops.
As the requirement for connectivity on the move grows, so
will the adoption of applications like wireless e-mail,
access to core business applications (like SCM, CRM,
ERP), and unified communications. This will further
demand a seamless integration of wired and wireless infrastructure.
Moving from Wired to Wireless Scenario
IDC, in its analysis of worldwide mobile populations in
2005, had projected that by 2009 there will be more than
878 million mobile workers worldwide.92 This is driven in
case study
CASE STUDY: IRCTC, INDIA’S E-C
COMMERCE SUCCESS STORY90
Indian Railway Catering and Tourism Corporation (IRCTC), a marketing arm of the Indian railways handling catering and
hospitality-related functions, was given the mandate in 2002 to build and operate an online ticketing reservation system. The IRCTC reservation site allows passengers to buy tickets, pay for them using credit/debit cards and direct debit,
check train fares, routes and availability in real-time and also receive alerts about rail schedules, and have the tickets
delivered to them rather than having to visit and queue at the railway reservation centre. In its first month of operations,
IRCTC sold 3,343 tickets. The revenues from internet ticketing grew 43% in FY2005-06 to INR 5.8 crore (USD 1.28 million). In the month of April 2007, over 900,000 tickets were booked online, which included both e-tickets and i-tickets
(Figure 7.10).91 Sales of rail tickets are highest in metros due to relatively high internet penetration, almost 60% of ticket sales were from the following cities: Mumbai, New Delhi, Bangalore and Chennai, with the remaining 40% from Tier
1-2 cities (Figure 7.11).
Why IRCTC’s System Succeeds
A few key factors enabled the success of IRCTC’s system. They enabled e-ticketing, where passengers could print their
tickets without having to wait for delivery. IRCTC’s service charges also work out to be less than the charges levied by an
agent or a tout, who would charge anything from INR 25 to INR 100 per passenger (USD 0.55 to USD 2.21). IRCTC has
a flat charge for up to six passengers, INR 40 for lower class and INR 60 (USD 0.88 to USD 1.32) for higher class. IRCTC
has also partnered with 10 banks to enable direct debit facilities for account holders. IRCTC’s move has resulted in this
facility already accounting for 29% of tickets
sales in April 2007 (Figure 7.12).
Source: IRCTC, 2007
Challenges Moving Ahead
According to IRCTC the primary reasons for slow adoption of its ticketing
on mobile service has been the bandwidth constraints over the current
GPRS networks. The large number of
parameters needed to be captured
during the ticketing procedure also
demand high end large screen handsets. However IRCTC is confident that
with Java enabled large screen handsets available combined with the
Figure 7.10 - Monthly Sale of Tickets in FY 2005-0
06 to FY 2006-0
07
Source: IRCTC
Source: IRCTC
introduction of AWS platforms,
booking tickets over mobile
phones would become very convenient and user friendly.
IRCTC’s initiatives have shown
how a simple initiative can make
a big impact not only for the customer but for the organization as well.
Figure 7.11 - City Wise Ticket Sales
Figure 7.12 - Share of Payment
(I-TTickets) for April, 2007
Channels for April, 2007
KEY TAKEAWAYS
Enterprise Large / Medium
Large / Medium enterprises in India
are well connected by fixed networks. Integrated communications
part by mobility becoming a mainstream phenomenon
across enterprise segments, and mobile workers representing increasing portions of a company’s overall staff.
As mobility gains momentum, enterprises are discovering
that it’s a challenge to build and deploy applications for the
wide variety of devices in use. While lots of applications
are available to customers, currently their major hurdle is
ease of use and accessibility “on the move".
Some of the major business drivers for enterprise mobility
are reduction in operational costs, shorter turnaround
time, and reduced missed revenue opportunities. Mobile
workforce and collaborative technologies both feature in
the top four priorities for Chief Information Officers
(CIOs) in 2006 according to Gartner’s Annual Global
Survey.93
Advances in technology including increasing capabilities
of handheld devices, as discussed earlier in Chapter 4, have
also been instrumental in driving adoption.
The changing trends demonstrate that once initial challenges are overcome, applications will seamlessly extend to
the mobile environment, and thus make access to reliable
mobile wireless connectivity expected universally.
FIGURE 7.13 Distribution of Indian Enterprises
services are considered important
to improve productivity.
They will be first mover adopters of
mobile wireless services including
enterprise level core applications.
Enterprises view wireless e-mail as a
key near term application but in the
long-term, mobile data usage will be
driven by access to core business
applications on the move with the
requirement for flexible and “on the
move” connectivity, with migration
in the access device from desktops
to laptops and subsequently mobile
handsets.
Businesses will drive demand for
wireless broadband services, especially in industries like retail, manufacturing, and banking since remote
locations are not served well by
wired infrastructure.
Exposure to wireless applications
drive by enterprise usage will create
increasing comfort amongst individuals to become users, as well.
SME / SOHO
SME / SOHOs are a highly value
conscious segment.
A large portion does not presently
use data communications or IT in
any substantial way in their businesses.
Managed services will drive higher
application adoption in this segment, while also helping to reduce
initial investments and dependencies on developing in-house capabilities.
This segment employs a large number of people, including many who
spend most of their time in the field.
Due to this, the need for devices and
Source: NCAER 2004-05
application platforms that involve
low initial costs per employee will be
a big driver in adoption of increasingly feature-rich simple handheld
devices and associated services.
7.3.3 Key Applications
With the advent of AWS platforms, the transition from
voice to data centric applications in the mobile environment will become engrained in how businesses operate.
Driven by the above discussed trends, networks will
increasingly be characterized by multiple devices accessing
multiple services, all over a common unified delivery platform.
Mobile application adoption is still evolving in India, but
there are a few areas where mobile workers will drive the
need for mobile broadband platform access.
Mobility, responsiveness, and saved time are some of the
significant messaging benefits. Already companies like
Rasna, Asian Grainto, Cadila Zydus and other use SMS
based sales force automation, enabling their staff to send
daily reports, updated lead status, file expense reports and
even query product availability.94 Moving forward to more
sophisticated implementations, Mobile SFA (Sales Force
Automation) is being launched by Airtel. This will help
companies to enable their web based applications and ERP
systems to become accessible over wireless platforms so
FIGURE 7.14 Internet Access Method
Messaging
Mobile messaging technologies include handset-based text
messaging (SMS), handset-based multimedia messaging
(MMS) and instant messaging (IM). Messaging is technically easy to exploit and a quick way to access new handset
capabilities such as multimedia. While it is a consumer
success, messaging is being reinvented for effective business use to overcome the lack of high bandwidth network
availability and the high cost of sophisticated devices. We
expect that consumers and organizations will increase
their use of messaging, will adopt more advanced message
content and will augment it with presence information,
such as location and availability, to deliver higher value.
Source: MAIT
FIGURE 7.15 Enterprise Computing and Communications Usage Shift
that the field force can have access to information on their
mobile phones.
Mobile E-Mail
The first visible mobility application after messaging has
been accessing e-mail while on the move through handsets
- a Blackberry or other Smartphone. Applications have
also included other Personal Information Management
(PIM) tools like contacts and appointment manager. With
the prices of devices capable of offering mobile e-mail
declining to sub USD 55, it is increasingly possible for
wireless e-mail capabilities and remote access rights to
penetrate deeper levels of the organization.
According to the Yankee Group, in 2006 nearly 80% of
large corporations globally consider e-mail a driver for
deploying wireless wide-area data solutions, and Gartner
studies supported this by predicting that by 2010, wireless
email will become a commodity and naturally a part of all
advanced organizations.95
Mobile e-mail decreases turn around time, improves customer service, creates efficiencies for mobile workforces,
and increases productivity during what otherwise might
be idle time. This is because users can stay in touch with
their clients, partners and colleagues, receive important
information from the office, and respond - all in real time.
While service providers are promoting such usage through
bundled tariff plans and decreased data pricing, wireless
email solutions can take time for implementation due to
integration being dependent on handset model, supply
chain applications, and service delivery platforms.
Blackberry continues to lead the mobile push mail services market; however Microsoft Windows based platforms
have the lead in number of devices sold, while various
solutions from Ericsson, Nokia and others are in the
process of launching. But even with these developments,
initial handset cost can still be a big deterrent for SME /
SOHO adoption.
Conferencing Services
The conferencing services market in India was initiated by
the need for large enterprises to get in touch with their far
off geographical offices, business partners and customers
on a single platform on a real time basis.
While audio conferencing (AC) is going from strength to
strength in India with nearly 70% revenue share of the
total conferencing services market including video and
web conferencing, higher bandwidth and CPE costs are
hindering large scale videoconferencing (VC) adoption.96
VC is widely used by large enterprises for collaborative
interaction across various geographies for meetings, but is
also being used increasingly for making training and elearning more convenient, effective, and less costly.
For more widespread adoption of VC, high cost CPEs and
bandwidth must decrease. When integrated with IPenabled enterprise infrastructure, VCs can be scaled for
peer-to-peer and ad-hoc group videoconferencing. A
number of consumer applications like Skype are making
peer-to-peer videoconferencing from desks as well as on
the move a possibility. This could be a big driver for usage
as individuals can, at low or no cost and without extensive
overhead and planning, execute a VC instead of simply a
phone call.
There is a shift simultaneously for group video conferencing on PCs to migrate to larger televisions with higher resolution video streams. Customers today prefer the larger
format due to more realistic feel and clarity, but this of
course requires more throughput and will drive demand
for better broadband speeds.
Unified Communication
Unified Communication (UC) is the integration of different streams of communication into a single user interface.
This includes telephony, instant messaging, voice mail, email, web conferencing and videoconferencing all integrated with presence features accessible from a variety of
devices.
As communication infrastructure moves from TDM networks to IP networks, UC will move from network to business applications, inducing more informed and intelligent
communication. With deployment of mobile broadband,
business users will shift from PC-based access to browserbased mobile handsets. However, the application’s success
will be highly dependent on reliable high speed wireless
data connectivity for effective use on the move.
Unified communications will drive the next major
advancement in individual, team and organizational productivity in today’s 24x7, always-connected and increasingly mobile work environment. While still in its initial
stage of adoption in India, some of the verticals that have
already adopted UC in India are healthcare, financial services, BPOs, and PSUs.
TABLE 7.4 Key Enterprise Applications that will Move Towards Mobile Environment
7.4 Connectivity an Enabler for
Social Improvement
7.4.1 E-Governance
Governments across the globe have realized the benefits of
computerization and high speed connectivity in helping
scale various e-governance initiatives. By leveraging connectivity the Government can process Government to
Citizen (G2C) transactions such as the filing of tax returns,
death and birth registration, land records, etc.
FIGURE 7.16 Changing Devices, Capabilities and Requirements Drive
Advancement in Applications and Services While Mobile
Recent years have seen various e-governance initiatives
being run as pilots in India with the aim of empowering
the urban / rural community with access to various
Government services. In the Indian case, one can showcase
a few pioneering initiatives which reflect the use of connectivity and technology to enhance transparency and
accountability in matters of governance. Akshaya, eSeva,
Gyandoot and Bhoomi are some of the successful implementations, however most of the other e-governance projects have not scaled primarily due to lack of sustainable
model, connectivity or technology barriers as well as
inability to drive user adoption.
E-governance projects, by their very nature are meant for
the masses, so the technology challenges to implement
them require serious attention. Interconnection and integration of backend IT infrastructure remains a bottleneck
in effective delivery of services.
Most pilot projects were unable to meet desired objectives
because they were designed and confined to serve a few
pockets only, without the possibility of future expansion if
successful. Mostly supported by subsidy, financial objec-
tives have also been off target. Hence, there is a need to
evaluate models, which can create new venues for income
generation of the rural masses.
The possibility of connecting all villages in the country by
broadband capable wireline networks will be a daunting
task, therefore AWS would promote faster rollout of e-gov-
KEY TAKEAWAYS
Government can be the most influential
enabler of broadband adoption in the
country by integrating back-end IT infrastructure of various departments and
by delivering effective and economical
e-governance services directly to citizens. Mandating online use of
Government services for passports,
taxes, etc., will compel citizens to try
these services, and thus provide the
very first exposure of using connectivity
and online platforms.
Social services that suffer from lack of
sufficient access to resources like
health and education can also reap
substantial benefits from both fixed
and mobile broadband.
With the majority of the losses in agriculture due to weather vagaries, information connectivity would provide
great benefits to farmers. Connectivity
would also enable supply chain optimization with buyers of product to
enhance farmers’ earning abilities.
Rural Shoring will help build a sustainable business model by creating new
income opportunities in rural areas
other than agriculture.
ernance applications into remote areas. Content for grievance redressal should have priority over others services so
that citizens will have less physical interactions with
Government offices, thus reducing cost of service delivery.
Localization in respect of vernacular language for content
meant for e-governance should be encouraged, especially
for citizens in rural areas.
The Governments of Singapore, Canada and Switzerland
have already implemented e-governance initiatives
through G2C portals to serve their citizens. Even though
the demographics and geography are very different,
Singapore’s experience can help India draw some impor-
tant learning on how to overcome some of the challenges
in making e-governance a success.
7.4.2 E-Health
E-Health is a relatively new field in the health care practice
area supported by connectivity and technology to provide
medical informatics, public health and business health
services through the internet. In countries with robust
broadband infrastructure, e-health can provide the platform to allow the mass market to avail the benefits of
advances in medical technology conveniently and at
affordable costs. In the Indian context, it is important to
analyze how e-health will help introduce basic public
health services to rural India and how high-speed data
connectivity will help achieve this.
The urban out of pocket expenses in India are twice that of
public healthcare spending, while rural spending is ten
times (Table 7.5). Considering levels of rural affordability,
the need for leveraging technology to address these
inequalities is apparent. Scarce resources, which in this
case are doctors at hospitals, can be leveraged effectively,
for example, one physician and nurse can support more
than 100 patients through remote consultations.
In India, most state Governments are planning various ehealth measures. Asia Heart Foundation’s tele-medicine
initiative installed in 2002 has completed over 2,000 telecardiology consultations through an enterprise based network. The Online Telemedicine Research Institute in
Ahmedabad, Sanjay Gandhi Post Graduate Institute of
Medical Sciences and Apollo Hospital’s Telemedicine initiative are some other examples. While tele-mentoring
with exchange of good audio and video signals using a 512
kbps connection through satellite links works today, pilots
reveal that more bandwidth is needed for relaying high resolution medical images, and lower cost connectivity will be
required to achieve scale.
Though these initiatives have met with enthusiasm, user
acceptance, and financial viability still remains uncertain,
along with quality of e-health, privacy,confidentiality, and
security.
case study
EBAY97
Founded in September 1995, eBay is a global online marketplace where practically anyone can trade anything. Its Indian
subsidiary, eBay India (formerly Baazee.com), was launched in India in 2000 and has become one of India’s leading
online shopping platforms.
eBay India has a community of over 2 million registered users over 670 towns in India as of March 2007. Approximately
12,800 sellers use eBay India as a primary or secondary source of income.98 Although eBay is a global company, eBay.in
offers a trading platform tailored to launching users in India on their platform, including payment in Indian currency and
extensive training to ensure better usability of the site. On an average day, more than 2,500 categories of products are
traded daily.
In addition to providing its sellers with an opportunity to start a business with zero investment, eBay India also offers
sellers the convenience of managing one’s business from their home, small office or even a cyber cafe.
One of the major drivers for trading on eBay India is that no matter where the seller is located, he has immediate global reach. eBay India thus provides an opportunity for sellers of localized and unique products to reach out to buyers
across the world, who also benefit from access to authentic products directly from places of their origin.
To help drive adoption, eBay created a sophisticated training and business management platform for trading. This training is also supported with sophisticated information software once traders move from being casual users to operating
much higher volume businesses online. These packages allow sellers and traders to track a complete set of business
information as would be available to a large company with an ERP deployment, like historical sales volumes, payments,
marketplace trends, etc. This information is being used by the seller to improve productivity and make informed business decisions.
Transactions are facilitated by eBay India’s payment gateway, allowing local currency payments. The gateway, called
PaisaPay, supports credit card payments and online bank transfers. With PaisaPay, buyers can make instant payment
for their online purchases, and sellers can accept online payments from anyone with a credit card or an online bank
account. The platform then manages the conversion of currency and system of payments so that the whole process is
transparent to the end users, making it convenient and feasible to really leverage the global reach of the platform.
eBay is a prime example of how a managed services platform for SME / SOHOs, and even individuals, can leverage reliable broadband connectivity combined with relevant applications and training to create better businesses opportunities.
Delivering e-health applications successfully would
demand removing technological barriers involved with
facilitating health care services such as tele-consultations
and tele-medicine, which require high quality live audiovideo transmission.
Wireless technologies have already proven their usefulness
in this regard internationally. The Cell-Life project uses
mobile phone software for collection of data necessary for
ensuring effective adherence to anti-retroviral treatment
among South African HIV-AIDS patients. Therapeutic
counselors carefully record the health status of patients,
including their adherence to medication schedules. During
the visit, cell phones, which have a wireless internet gateway (WIG) application, are used to report a patient’s status. The information is sent via SMS to a central database,
which can be accessed by the patient’s doctor or nurse, and
in an emergency the doctor is contacted via SMS and beeper.
7.4.3 E-Learning & M-Learning
Problems with the Conventional Education System
With a population of roughly 350 million101 in the learning age group, the country’s educational infrastructure like
schools, colleges and even roads leading to schools have
been fairly inadequate. The quality of education in India is
a concern due to an acute shortage of competent teachers
combined with high levels of teacher absenteeism (Table
7.6), irregular classes and overcrowded classrooms.
Additionally, in urban centers, vocational training, test
preparation and tuition are very popular, but again, quality can vary greatly from one institute to another.
E-learning in India is still in a nascent stage, however with
high speed data connectivity, education can be made more
accessible by delivering interactive, high quality distance
education at a low cost for social and commercial purposes.
A consumer survey among 1,221 Indian parents from a
randomly selected sample of 188 villages in Bihar, Madhya
Pradesh, Uttar Pradesh and Rajasthan conducted by the
Delhi School of Economics and the Indian Social Institute
revealed that 80.2% of parents felt primary education
should be made compulsory for all children.102 The strong
commitment from parents to ensure their kids receive the
best education and the willingness to pay indicates a strong
potential for e-learning in India.
TABLE 7.6 Teacher Attendance Across Schools Visited in 28 states and UT’s
Internationally, various Governments have adopted a
strategy to start by connecting schools with broadband
connections, and then move into homes by having provided students their first exposure to the benefits of connectivity. In India, schools and libraries in rural or remote
areas could use high speed data connectivity for conducting classes / sessions / interactions between rural students
and school teachers who can be shared across many classrooms simultaneously. The large geographical spread and
high cost of connectivity would be deterrents for e-learning over fixed internet networks, whereas the rise of AWS
technologies has made this task seem more possible. A successful example is the wireless education initiative in
Indonesia.
Source: 2005 Annual Status of Education Report, Pratham
Future of Education: M-learning
To further push e-learning to the masses, mobile phones
could be used as the access device to provide education
content in the form of short test capsules, games and ebooks. E-learning has limited the learning experience to
within the confines of the institution, though m-learning
would enable schools to bring teachers and students
TABLE 7.5 Access to Health Services: Rural Versus Urban Disparity in India
Source: CAHTI, 2003100
case study
SINGAPORE - E-G
GOVERNMENT EXPERIENCE THROUGH E-C
CITIZEN PORTAL99
What is the E-C
Citizen portal?
The E-Citizen portal was started in 1999 by the Singapore Ministry of Finance. It is a one-stop online resource providing
close to 1,600 e-services, and the ability to search Government agencies for different services.
The e-Citizen service integrates 15 multi-agency e-services, reducing customer interactions with Government by at least
50%. For example, Online Business Licensing Service (OBLS), which allows businesses to apply, update, renew or terminate business licenses, has had more than more than 55,000 transactions since its launch in 2004 through to 2006.
The portal also provides a unique service vital to the residents of Singapore through a personalized portal called
My.eCitizen. By using My.eCitizen, the public can subscribe to personalized alerts from different Government agencies,
such as timely reminders to renew road tax, passports, season parking or to even return library books. The service had
2,200 subscribers in June 2003, which increased to 57,000 by July 2006. The service also believed in empowering citizens to voice their opinions, so citizens were consulted on policies through “Online Consultation Portal". During 2003 2006 the Government received greater than 100,000 feedback submissions in response to consultations exercises,
50% of which were received online.
Success Strategy and Accomplishments
The E-Citizen portal is a long term vision from the Government to mandate use of various e-governance applications.
The strategic planning and execution of the portal was driven by a dedicated organization (NCB/IDA) along with public and private sector and citizen partnerships.
To boost acceptance of its services the Government started the “CitizenConnect” program in 2005 to assist those
with no internet access to transact electronically with the Government. 95% of participants expressed satisfaction
with the facilities provided and 92% mentioned that they would use the internet to transact with the Government in
future.
The portal implementation has achieved significant enhancements in efficiency and reduction in costs for the
Government with 90% of those transacting with the Government in 2005 doing so via internet, kiosk, IVRS or SMS.
97% of public services that were thought to be feasible online have now been enabled by the Government compared
to 500 services available in 2001.
88% of citizens transacting with the Government are now leveraging online services. Of the users who have accessed
the service online, 85% of the users were satisfied with the overall quality.
Challenges
The online service faced some initial challenges during its operations. It had to overcome initial skepticism about e-governance along with language issues and improving internet access, especially among the poor and elderly population.
Also, by bundling several Government agencies and services into a one-stop online portal, the Government had to make
sure that Government data available on the internet maintained information and security norms.
Future Path
iGov2010 (Integrated Government) is the next step in e-government for Singapore. The five-year plan launched in May
2006 would dynamically engage citizens in policy-making process and thus strengthen the mutual relations. Services
such as information on Government websites would be more interesting, vibrant and easier to understand with new features introduced such as a single SMS number for all Government services.
Singapore’s online Government presence is a benchmark in terms of the large number of transactions that residents
can carry out electronically. The portal has transformed the way in which the public interacts with Government agencies
by mandating the use of interactions related to online services for passports, taxes, etc. This provides citizens the very
first exposure to using online platforms. Once they realize its true benefits in terms of productivity enhancement, cost
savings and convenience, they get into the habit of using the same services again.
together from geographically dispersed locations over high
speed networks.
M-learning offers a powerful and practical solution to
many learning and training challenges in collaborative
projects and fieldwork. It can also be a classroom alternative to books or computers where learners are widely dispersed, and for “just-in-time” employee training.
One such area is for test preparation in India, which is a
market worth USD 3.7 billion in 2006 with the engineering entrance test preparation market alone worth USD 1.3
billion (Figure 7.17).103
Students preparing for various entrance examinations
such as IIT-JEE, GRE and Medical Examinations could be
an addressable market for m-learning solutions wherein
course capsules or test series could be downloaded over the
mobile phones using high speed connectivity (Figure
7.18).
The concept of m-learning, though very new, has already
caught the attention of some Indian companies such as
Valued Epistemics Pvt Ltd., a Chennai based company
which has introduced “WIZDOM.in” a product that contains interactive GRE training material in the form of sessions that can be accessed on mobile phones with GPRS
connectivity. However the data speed of current GPRS networks could act as a bottleneck.
7.4.4 E-Agriculture
Agriculture is the source of livelihood for over 73 % of
India’s population across 600,000 villages and shares 23%
of the GDP employing over 66% of the total workforce.104
The “Green Revolution” was responsible for India’s move
from a struggling agriculture economy to net exporter,
although the primary producers, the farmers, still largely
belong to weaker economic segments. The urban versus
rural disparity continues to increase largely due to rural
India’s high dependence on agriculture, which has seen a
low level of growth of 2.5% during 1997-2007.105
To change this situation, connectivity is needed to facilitate
delivery of information on farming practices, market
FIGURE 7.17 Test Preparation Market Opportunity
Source: BDA Analysis, 2006
FIGURE 7.18 IIT JEE Test Takers
Source: BDA Analysis, 2006
information (commodity prices), and weather, to not only
prevent losses but also enhance earnings. By paying a nominal fee, farmers would have access to such information
either through community based centers or personalized
access mediums such as a mobile phone. Quite a few successful innovative practices showcase the ICT benefits for
the agricultural sector.
VERCON,
(Virtual
Extension
and
Research
Communication Network) in Egypt is one such project
where Government researchers and extension workers in
institutes and rural villages use a web-based portal to
exchange critical information with district offices and
ministries in Cairo. Researchers and extension workers
access information resources such as extension brochures,
statistical databases, decision support systems, and participate in special interest forums, online discussions, news
and events. An online query system called “Farmer’s
Problems” answers technical questions raised by farmers in
remote villages.
In India, the stunning success of ITC e-Choupal also
demonstrates the strength of this model. With over 6,500
“e-Choupal” in villages so far, ITC has driven agricultural
procurement and support to farmers with impressive
results.106 While farmers have been able to bypass middlemen and get better prices, ITC has been able to procure
cash crops at lower costs and better quality.
TABLE 7.19 Target Workforce for Rural BPO
ITC faced a number of challenges while rolling out the eChoupals, primarily due to lack of infrastructure. Lack of
power supply, transportation, and telecom connectivity,
along with the basic challenge of educating first-time
internet users in remote and inaccessible parts of rural
India, all had to be overcome. Convincing farmers of the
benefit and aligning middlemen was also a difficult task.
The 31,000 villages currently covered account for 5% of
India’s total villages, and to reach each of them, infrastructural issues need to be addressed. Although a majority of
the villages are now connected by concrete roads, electricity and broadband are still uncommon. ITC thus had to
adopt a satellite-based connectivity with throughput rate
of up to 256 Kbps., which has substantial cost, costing
Rs.120,000 (USD 2,650) per installation. With this, each eChoupal site costs between USD 3,000 - 6,000 on average
to install. For models such as e-Choupal to succeed, AWS
networks would reduce startup and operational costs by
drastically reducing the largest cost element.
While connectivity will enhance farmers’ capabilities and
resources, the deployment of content and applications as
well as educating farmers on the benefits of using information systems will be the key to substantial improvements.
7.4.5 Rural Shoring
Rural BPO’s are a new phenomenon in India, but have
already made an impact in early trials. They create new
income opportunities for the rural population that is educated yet unemployed and with a basic understanding of
English, written language skills or some technical background (Figure 7.19). These centers, which are owned
managed and led by the community, serve as the back
office for processes from businesses, Government, and
other institutions. BPO companies such as DesiCrew and
GramIT have already established rural BPO operations in
smaller towns and villages. The low cost of operations and
the lower employee attrition levels are the key benefits that
these companies derive from their rural operations. The
benefits yield 20-30% cost savings when compared to their
urban counterparts.107
Source: n-Logue - Microsoft Research Data from over 150 villages in
Tamil Nadu, 2006
Challenges for Rural Shoring
The main challenges Rural BPOs face are under-developed
infrastructure facilities, in particular, lack of power and
data connectivity, which has limited the scale to just a few
seats in these village centers. In addition, transportation,
education, and other support facilities also present hurdles. Upgrading the skills of rural BPO staff is also a critical factor for improving service quality levels.
Currently, rural BPOs are managing with 72 Kbps backhaul throughput to enable them to download tasks online
and assign them to staff. However many projects still are
delivered by CD because the size of the information does
not allow relying on the data connectivity. Rural BPO
companies feel that their productivity and turn around
time could substantially improve if they have access to
high speed data connectivity in the range of 2 Mbps. One
of the Desicrew locations where a 256 kbps connection was
available saw productivity 4-5 times higher than other
locations while working on an online data entry application.109
Just as urban India has over time become a hub of efficient
business process outsourcing for the world; an opportunity exists for rural India to become the hub for business
process outsourcing for urban India. It is important for the
case study
WIRELESS TECHNOLOGIES EMPOWERING RURAL INDONESIA THROUGH CONNECTIVITY AND EDUCATION
In 2005, Qualcomm launched the Wireless Reach initiative to empower underserved communities across the world
through the use of 3G wireless technologies to strengthen economic and social development.
Overview
Indonesia has a population of over 230 million dispersed across 13,000 islands. The Way Kanan regency in Lampung
province has minimal telecom infrastructure and a population of 396,160 with an area of 3,922 square kilometers.
Project Description and Objectives
Basic telephony: Implemented a CDMA450 EV-DO “cellular kiosk” in each of the 59 villages within 5 townships to
give villagers access to basic connectivity.
Broadband Access: Established computer labs with internet access via CDMA450 in each of the 5 provincial high
schools. Similarly, a Community Access Point (CAP) consisting of a computer laboratory equipped with an EV-DO
modem to provide high-speed internet for local townspeople was established in Pacitan, East Java.
E-E
Education: The computer labs and broadband wireless access are used to broaden IT skills and enhance educational opportunities (e-learning) for the youth.
IT Training: An integral part of this project is to ensure these computer labs are useful to both teachers and students, and Qualcomm partnered with ICT Lampung, the Ministry of Education and Microsoft to implement a “train
the trainer” program, ensuring adequate knowledge levels with the faculty.
Partners
The Ministry of Information and Communications Technology The State Ministry for the Accelerated Development of
Disadvantaged Regions Sampoerna Telekom (STI) IndoNet Axesstel Inc.
Technology Used
Technology used for this project is based on 3G CDMA2000 EV-DO architecture. 2 BTSs equipped with EV-DO cards were
located in the Way Kanan region with all the network elements operated by STI, the CDMA450 operator. For EV-DO, STI
has one dedicated RF carrier offering average data rate of 500 kbps.
Challenges
The five district schools had minimal telecom facilities with two of the schools operating even without electricity. Some
of the teachers had never used computers, so Qualcomm together with its partners provided training on basic computer, software and LAN operation. The schools were required to provide local security to protect the computer lab. The
roads leading to the schools were also in poor condition and during monsoon season some of them were impassable,
making the project even more difficult in the initial phases.
Success of the Initiative
Twenty teachers from the five high schools who had no access to computers earlier were provided with a week of training that covered basic computer operations and computer based curriculum with follow-up training to reinforce these
skills.
The key needs of people in these areas were affordable access to voice and data services, which were met successfully. The project also accelerated tele-density and internet penetration.
Women were given preference to education and received the same technical skills as the men in their communities,
and could use these tools to engage in entrepreneurial activities.
Remote communities, specifically the youth, now have the opportunity to receive a higher level of education as well as
the ICT skills.
future of the country to enable income opportunities in
rural areas other than agriculture and create an area of
innovative business practice with tremendous potential.
Endnotes
7.5 Conclusion
Inducing trial, exposure and experience through attractive and affordable pricing of content and applications
will help drive broadband adoption. Deployment of
mobile high speed data connectivity would help in driving adoption of emerging consumer applications in the
categories of Gaming, Entertainment and Social
Networking.
Making sure that content becomes the central agenda of
all ICT initiatives is essential. Development of innovative
content and applications, which are simple and user
friendly, can trigger first trial, and drive further adoption.
Businesses will continue to lead the way in adopting and
using data connectivity. Many challenges still remain in
addressing the needs of SME / SOHOs, though innovative platforms which can leverage managed services and
provide complete solutions which will enhance utility
are likely to be successful.
The Government needs to take the lead in creating applications working closely with private players in areas of egovernance, e-learning or tele-medicine similar to the
IRCTC initiative since these services have an important
role to play in context to rural India.
61
Korea Game Development & Promotion Institute and BCG Report, 2002
62
Online Gaming India Baseline Report, IAMAI, 2007
63
Rise of Korean Games, KGDPI, 2005
64
I-Cube 2006, Syndicated Research of e-Technology Group, IMRB
65
Online Gaming in India Baseline Report, IAMAI, 2007
66
PC gaming can include games which are termed as single user, LAN-based,
online casual, and Massive Multi-player Online Role-Playing
67
BDA Interviews
68
Qualcomm Brew Market Research, 2006
69
ET and Zapak, 2007
70
NASSCOM, 2006
71
IIM Ahmedabad, Report: Java Economy in India, 2005
72
Outsource2India.com
73
Nielsen SoundScan,
74, 75, 76, 89
A Singapore-based digital music service provider
78
KDDI Company Reports, 2006
79
Japanese Society for Rights of Authors, Composers and Publishers, 2007
80
CDG 2006
81
GFK Asia Report, 2006
82
ABI Research
83, 84, 85
86
87, 88
89
Consultative Group To Assist the Poor Survey, 2006
The Impact of the Costs of Banking on Access, Finmark Trust, 2005
Internet & Online Association of India (IOAI), 2005
IAMAI Report 2006
90
BDA Interviews, IRCTC, Press Releases, Industry Publications
91
An i-ticket is the traditional form, which is delivered to the customers though it
is purchased online.
92, 93
94
Voice & Data Gold Book 2006
Cellapps.com Dec2005
95, 96
Voice & Data Gold Book 2006 & June 2006
97
eBay.in
98
AC Nielsen International Research, June 2006
99
Infocomm Development Authority of Singapore Publications, 2006
100
Centre for Enquiry into Health and Allied Themes, 2003
101
Gurukul Online, 2005
102
Delhi School of Economics and the Indian Social Institute, 1999
103
BDA Analysis, 2006
104
ITU India Case Study, 2004
105
The Economic Times, Press Releases, 2007
106
ITC portal, 2007
107, 108, 109
IAMAI Reports, 2005 & 2006
77
BDA Interviews, Desicrew company information
case study
DESICREW - RURAL BPO INITIATIVE108
Desicrew Solutions is a unique BPO initiative building a new outsourcing model to provide employment in rural India by
using existing rural infrastructure to generate new income opportunities for the rural workforce. Desicrew trains candidates to acquire specific skills for BPO tasks. The central team based in Chennai manages the training, distribution and
monitoring of work, quality control and client interaction. Presently the firm operates BPOs out of 11 village centers
where its partner N-Logue has established rural kiosks centers with PCs and connectivity.
Groups Behind the venture
TeNet Group: is engaged in teaching and training, product development, incubation of technology companies by IITMadras alumni, telecom and IT policy studies, and front-line research.
IIT-Madras: a foremost institute of national importance in higher technological education, basic and applied research.
N-Logue Communications: a firm incubated by the TeNet group, which establishes rural kiosks in partnership with local
entrepreneurs and offers ICT enabled services.
Services Offered
Since inception in August 2005, Desicrew centers have completed more than 20 projects. The service areas offered are:
Administrative Services: Digitization and data entry, data collection from secondary sources, data validation.
Engineering Services: 2D drafting in AutoCAD and 2D to 3D modeling in SolidWorks for the manufacturing industry.
Content Localization Services: Translation of text and voice from English to regional languages (e.g. Tamil) and integration with Web and Multimedia mediums.
Technical services areas like 2D drafting and 3D modeling require at least a diploma in mechanical engineering.
Candidates are inducted through an entrance test for specific skills and are then trained by the company. Each centre
employs 3 to 15 people, headed by a business associate or a team leader. At the moment, Desicrew has employed 60
people across 11 village centers. All the work is conducted online connected to a specially designed virtual office network hosted in Chennai.
The age group of the employees is typically 18-25, except for the translation division which also has retired school teachers. A village centre can earn around INR 8,000 (USD 176.6) to INR 12,000 (USD 264.9.) per month with the workforce
paid as per their productivity.
Business Model
City Level: Manage training of rural workforce, distribution and monitoring of work, quality control and client interaction.
District Level: 25-seat training center with batches running for 3 months with 50 people per batch.
Village Level: 3-10-seat delivery centers with 20 people per center.
Impact and Future Plans
Currently opportunities available in rural areas are predominately agricultural, whereas Desicrew introduced the rural
workforce to acquiring new set of skills. This has increased the income earning capacity of rural internet kiosks as well
as generated new income opportunities for people who otherwise were educated, but dependent solely on agriculture.
Educated young girls and housewives who can not commute can now be included in the workforce, enhancing existing
household income levels and reducing gender divide.
Desicrew plans are to build a capacity of 200 well-trained associates by the end of financial year 2007-08. The company as of now is working on three live projects.
8
REGULATORY ISSUES
AND IMPLICATIONS
FOR ADVANCED
WIRELESS SERVICES
Chapter 2 predicts significant benefits for the Indian economy from
the introduction of advanced communication services, specifically
from advanced wireless services offering mobile broadband.
However, broadband and mobile-based value added services have
not yet grabbed the attention of the Indian market, and the country
is thus lagging behind the rest of the world in broadband adoption.
Just as the introduction of 2G wireless networks have helped accelerate the diffusion of telephony, the introduction of advanced wireless networks is expected to drive penetration of mobile-based
applications and broadband. Thus, a great amount of interest is
focused on the possibility of wireless broadband and mobile based
value added services.
In making this connection, it is valuable to recognize that the success of 2G voice telephony, especially in urban areas, is a manifestation of the supportive and enlightened regulatory environment
available to the industry. As evident from Figure 8.2, major benefits
in terms of lower tariffs and higher subscriber numbers have resulted following significant regulatory initiatives. Thus it is clear that a
strategic long-term vision in policy and regulation can play a major
catalyzing role in the diffusion of AWS across India.
KEY TAKEAWAYS
We expect that wireless technologies will drive broadband growth,
just as they have ushered in the
voice telephony boom.
Without doubt, ensuring that sufficient spectrum is available in a
predictable and transparent manner is the key to continued growth
in the Indian telecom sector.
Technology neutral spectrum allocation and pricing is necessary to
avoid market distortions, enable
competition, and improve spectrum use efficiency.
Universal service fund support
should be extended to subsidizing
low cost multimedia terminals to
drive demand for advanced converged communication services.
This section elaborates on the regulatory issues facing the sector and
then discusses regulatory proposals and initiatives currently under
consideration to deal with these specific challenges. We end with
specific recommendations on the policy and regulatory measures
for consideration by the Government and its allied agencies.
8.1 Current Relevant
Regulatory Issues and Their
Status
The wireless industry currently faces a significant number
of regulatory issues. Several of these are under active con-
sideration by the regulator and the Government. The discussions and decisions around these issues will affect the
success of AWS platforms in India to enable growth of
high-speed communications.
At a generic level, issues around wireless telecommunications technologies, whether basic voice or advanced services are centered around:
The availability of spectrum to meet the needs of
current and future wireless players
Ensuring universal access at affordable prices, especially in rural areas
FIGURE 8.1 Broadband Adoption in OECD Countries versus India as % of Population, December 2006
Source: OECD, TRAI
Several new initiatives have been taken in India in recent
months in order to deal with the above issues in the context of AWS.
8.2 Spectrum Needs of Current
and Future Players
Spectrum is the essential requirement for wireless communications. Given its importance, the need to manage interference, and its resulting scarcity, the proactive involvement of Government agencies is critical to ensure its optimal use.
The total quantum of available spectrum for 2G cellular
services is already restricted. By TRAI’s own analysis, the
amount of spectrum allocated to existing licensees is much
less than the international average. As TRAI itself noted in
its 2006 recommendations:
The organizational frameworks and methods of spec-
trum management are still primarily tied to a legacy
where only a few government departments and agencies
were spectrum users. Considering the growth and development of wireless technologies and services, a longterm view on overall spectrum management policy
including the organizational structure for spectrum
management is necessary. A liberal and transparent
approach is necessary so that it matches with the overall
policy approach.
One of the main outcomes of this ‘legacy’ is the resulting
scarcity of spectrum - since even today, much of the spectrum is allocated to defense and non-commercial government undertakings or agencies. While these uses are essential, it is still important to consider the relative importance
of the growing ICT economy, and the potential social and
economic value of spectrum put to use in commercial
service. Hence, a balance between the public and private
sector uses of spectrum is the key to any future spectrum
policy.
In 2006, TRAI made specific recommendations on spectrum allocation and pricing for 3G and BWA services,
what we collectively refer to as AWS. DOT is expected to
announce its spectrum policy by the middle of 2007.
TRAI’s recommendations for AWS, linking spectrum
FIGURE 8.2 Impact of Various Regulatory Initiatives on Mobile Subscriber Growth
Source: TRAI, BDA Analysis
bands with services as well as pricing approach, are summarized in the Table 8.1.
Unfortunately, despite the recommendations of TRAI, the
trend of spectrum shortage visible in 2G space might continue into 3G and BWA as well. Several non-commercial
spectrum users have already communicated to the
Government that they are unable to vacate spectrum
bands likely to be used for 3G and BWA services. Some
portion of the 2.1 GHz band is being used by Defense
agencies. The 700 MHz band has similar usage and is currently being claimed by WiMAX and mobile TV broadcasting technologies. In the 2.5 GHz band, the Department
of Space uses a large part of the spectrum available, while
in the 1800 MHz band, Defense usage remains, along with
the possibility of hosting both in-band 3G and currently
deployed 2G services.
In addition, of the two bands identified in a number of
countries for CDMA services, i.e., 450 MHz and PCS1900,
only the 450 MHz band is referenced in NFAP-2002 for
wireless services. The PCS1900 band, on the other hand, is
used by Defense services in some parts of the country, and
some portions are also reserved for microcellular TDD
systems and thus used by CorDECT networks, mainly in
South India and in some rural areas.
TRAI has recommended that the government should look
into the feasibility of considering licensing AWS in both
the PCS1900 and the UMTS 2.1 GHz bands. If these trials
are successful, it is advisable to use the quantifiable and
empirical data to determine policy and allow mixed-band
allocations for 3G services as well.
Table 8.2 provides a snapshot of the current status of the
AWS bands in India with respect to their availability for
commercial use.
8.2.1 Band Allocations for AWS
Currently, BWA systems are allocated the 3.3 GHz band,
sections of the 2.5 GHz band, and Wi-Fi can operate on an
unlicensed basis in the 2.4 GHz and 5 GHz bands. A number of other bands are available for point-to-point
microwave links, but these are not feasible for end-users.
In its 2006 recommendations, TRAI identified the 3.3 GHz
and 3.4 GHz bands for allocation to BWA services, indicating technology-neutrality by not specifying which technologies might be used in this band. Other possible bands
e.g. 700 MHz band, 2.3 GHz band, and 2.5 GHz band
might be unavailable until existing captive networks,
defense services users, Doordarshan, and ISRO are in a
position to vacate them.
Based on current information, we expect that the 2.1 GHz
and 3.4 GHz bands will be available by the end of 2007.
The 2.5 GHz band might take longer to be made available
for either BWA or cellular networks.
A primary concern is that there is little clarity about the
availability of sufficient spectrum going forward. In spite
of TRAI’s recommendations, without a clear and decisive
spectrum policy backed by political will, there will be little
headway in the vacation / re-farming process. A roadmap
for spectrum availability, similar to those being followed
by FCC and Ofcom, will allow licensees to plan their network deployments and investments in advance - this will
reduce the friction between players in their drive to secure
spectrum, and will also ensure that investments can be
made more efficiently, with the long-term in mind.
8.2.2 Current Spectrum Rules and
Takeaways
India’s spectrum management regime has evolved over
time to meet needs and challenges as they appeared before
it. Since wireless usage until a decade ago was, and even
today is, largely confined to state enterprises and agencies
like defense applications, space and the public broadcasting agencies, the allocation pricing and other processes
have rarely been required to meet the challenges posed by
today’s commercially-driven wireless industry. With the
increasing role of the private sector and of competing
technologies, the current processes will need rationalization to leverage the huge potential of wireless technologies
and deliver these services to the population at large.
A slew of international best practices have evolved to
address the challenges of competitive wireless markets.
Broadly, most regulators prioritize the:
Efficient use of scarce spectrum resources
Access to spectrum through transparent allocation
processes and fair pricing mechanisms
Fair competition between players competing for
spectrum
Technology neutrality in spectrum use
Delivering the benefits of wireless technologies to
users
Separating spectrum licensing or authorization
from service provision to ensure optimal use of
spectrum
TABLE 8.1 TRAI Recommendation for AWS Spectrum Usage and Price
TABLE 8.2 Status of Various Spectrum Bands for Use by AWS Platforms
International regulators believe that the measures listed
above promote fair competition in the market and are key
to maximizing the benefits of wireless technology - they
lower prices, allow provisions of more services, and
improve quality to subscribers.
An analysis of current spectrum practices in India, on the
lines of the above regulatory goals, provides insights into
challenges being faced by the India’s wireless market.
Spectrum Allocation Criteria & Pricing
We see that the process for allocation and pricing of spectrum in India is largely unrelated to demand and supply.
Thus, it is difficult to justify a spectrum price that reflects
the inherent scarcity and demand for spectrum. Current
2G spectrum pricing is based on coarse subscriber numbers - rather than commercial principles, and has encouraged operators to invest where the subscriber base can be
easily developed, i.e. urban areas, as opposed to developing
widespread networks that use spectrum efficiently everywhere.
Further, the current ad-hoc incremental allocation process
increases costs for the operators because they cannot plan
their networks at one time. With each additional set of carriers, it is necessary to order new equipment, redesign the
RF plan, and incur expensive re-programming of the RAN.
A significant and relevant development is TRAI’s recommendation for 3G and BWA services. The recommendations envisage a one-time allocation of 2 x 5 MHz per
licensee in the case of 3G and a 15 MHz allocation in the
case of BWA. The sequencing of the allocations will
depend on the outcome of an auction - the licensee with
the highest bid will get the first chance to choose their preferred spectrum block, while those who bid the lowest will
havmto wait for future spectrum releases. This recommendation takes into account a market-oriented approach to
ensuring that allocated spectrum is used and not hoarded
(one of the other objectives of the current criteria).
Further, and more importantly, the licensee who pays for
spectrum will want to use it quickly so that the investment
is recovered. Thus, the proposed 3G and BWA spectrum
allocation process encourages quick rollout and efficient
use of spectrum.
However, one of the key issues in the recommendations is
that the reserve prices for 3G and for BWA services differ
by an order of 8 - for the service area of Mumbai, the 3G
reserve price in the 2.1 GHz band is INR 80 crores (USD
17.7 million), while for BWA it is INR 10 crores (USD 2.2
million). Even though the possible uses and characteristics
of the bands are different, we believe that setting the
reserve price the same for both - or indeed all bands - is
the fair route. Ultimately, the market will decide a higher
price for a more valuable band, but having different
reserve prices sends signals about which band should be
more valuable, as opposed to letting the market decide on
its own.
A relevant point on the pricing issue relates to the separation of the service and spectrum license. Currently, mobile
licensees in India do not implicitly guarantee spectrum
allocation. DOT approves spectrum allocation on a caseby-case basis111 depending on availability and operator performance. DOT’s rules effectively price spectrum currently allocated for 2G services at zero, and levies an annual
spectrum charge based on operator revenues. The 3G and
BWA recommendations also signal a welcome break on
this anomalous approach and will spur more prudent use
of spectrum resources.
Technology Neutrality
The spectrum allocation criteria for 2G in India is different for CDMA and GSM networks, with the subscriber
base requirements for CDMA networks roughly double
that of GSM for the same quantum of spectrum. Full technology neutrality is therefore currently not in place in
India’s spectrum regime.
This poses two other problems: there is an assumption
that GSM or CDMA technology will be the only 2G technologies used, and second, theoretical technical characteristics are used to make a regulatory decision. The first
problem will complicate matters in the future, when different technologies might be used in the 800, 900, or 1800
MHz bands - for example, for in-band 3G. With higher
spectrum efficiencies, the criteria will have to be changed.
Second, continuous evolution of these technologies will
result in an unsustainable set of unique rules for each technology based on assumptions that are bound to become
increasingly controversial.
TRAI’s September 2006 recommendations on spectrum
for 3G and BWA services are therefore a significant step
towards creating a technology-neutral regime in India
since both quantum and allocation criteria of 3G spectrum for GSM and CDMA operators are treated at par.112
The specific lesson from this discussion is that the spectrum allocation criteria have to move away from being
technology-specific and based on subscriber figures. In
this light, TRAI’s proposal for a one-time allocation of
spectrum based on market methods like auctions, as recommended by TRAI for 3G and BWA spectrum will help
remove crippling anomalies in wireless regulation.
Rural Wireless Networks
Current allocation criteria unintentionally supports the
growth of urban networks over rural networks. BTSs in
more mature urban areas can support more subscribers at
a lower cost than in a rural area. This will be an incentive
for operators to focus on urban areas and ignore the rural
markets only in order to capture and hold more spectrum.
TRAI’s 2006 recommendations, on the other hand, have
in-built incentives, especially to prevent hoarding, and to
ensure that spectrum is used most efficiently and as soon
as possible. This mix of one-time market-based allocations, with rollout obligations and penalties makes for a
good system to ensure that both operators’ business plans
are supported while keeping a check on the satisfaction of
universal service goals.
8.3 Expanding Access to AWS
Currently, every telecom licensee pays 5% of its AGR
towards the Universal Service Obligation Fund (USOF),
which has reached a size of INR 9,194.12 crore (USD 2.0
billion) as of March 2007.
Following the amendment of the Indian Telegraph Act in
2006, USOF support, which until recently was available
only for fixed communications services, has now been
extended to cellular mobile and broadband services.
Following this policy change, the USOF administrator has
initiated a number of schemes to assist in the rollout of
wireless services in rural areas. Most notable is the recent
successful auction of subsidies to operators to set up
shared towers in rural areas.
Results of the subsidy auctions indicated that mobile operators are actually willing to pay up to INR 21,000 (USD
464) per tower annually to the government for the right to
use towers subsidized by the USOF. This strongly indicates that operators perceive deploying mobile services
in rural areas to be commercially viable. With the subsidy
for setting up and managing of infrastructure, operators
OPEX will be limited to the maintenance of their own
active components.
Currently, the USOF administrator is setting the following
targets based on their supported projects:
Rural area coverage on the order of 85% with
mobile signals
About 8,000 towers to be installed by December,
2007
Capacity creation of approximately 24 million lines
Infrastructure to also be utilized for providing
broadband connectivity to villages
The USOF Administrator also believes that USOF support
should continue as long as there is a digital divide in the
country. The focus of the fund, however, can continue to
shift (e.g. broadband, disability assistance, etc.). Since
2006, a scheme to extend support for providing broadband
connectivity in rural areas has been under preparation.
April 2007 has seen meetings by DOT to work out the
specifics for this scheme. At this time, the USOF administrator takes the view that this project will:
Use existing infrastructure on a technology-neutral
basis
Offer a minimum of 512 kbps connectivity
Follow a bidding process for the award of funds
This approach is prudent, transparent, and neutral, and
will go a long way towards creation of a versatile cost effective wireless broadband infrastructure in rural India.
The 2G experience shows that user adoption of a service is
determined by the running cost of the service as well as the
cost of entry into the service. Therefore the policy initiatives have to be focused towards promotion of low cost
integrated voice, data and multimedia terminals. USOF
support for broadband value added service on mobile and
fixed platforms could be invaluable in delivering broadband based infrastructure to rural communities at affordable rates.
Unlike voice-based mobile services, where the service and
the advantages associated with it are familiar, broadband
mobile services and its advantages are not common
knowledge. Thus, expressed demand is not as wide spread.
Therefore, an important element of the policy framework
would be dissemination of information about the potential of broadband.
There is therefore an urgent need for the government to
update its Broadband Policy of 2004 to outline the initiatives its various departments will take in the use of e-platforms for their day-to-day interaction with citizens. The
initiative to deploy Community Information and
Communication Centres will go some way towards stimulating demand by showcasing applications and services of
demonstrable value to citizens.
8.4 Competition
reduce the number of players but also make it more difficult for entrepreneurs or smaller operators to offer internet services. This can potentially hurt AWS since operators
could have benefited through optimal use of network
capacity by aggregating subscriber resulting out of new ISP
operators.
It should be noted that the Indian market has always benefited when the number of service providers has
increased and competition has become stronger. The
best example is how the increasing number of cellular
operators and the increased competition between access
networks had spurred not only subscriber base growth, but
also had made tariffs drop (Figure 8.2).
As per international practice, anti-competitive measures
should be taken if there are scarce resources in use. For
example, if spectrum is to be allocated, then a marketbased mechanism could be used and it is fair to expect
some restrictions on the number of spectrum users, especially in interference protected bands. However, when no
scarce resources are in use for a service, then the government and regulator should step back and let market forces
play out, for example, in fixed line telephony or wireline
ISPs, or if there is minimal burden on scarce resources like
in the use of unlicensed spectrum based devices.
The Indian cellular market is relatively competitive, with
HHI calculations showing that different service areas have
about 0.2 on the scale.113 The number of operators is often
6-7 per circle. This level of competition is rare and is primarily responsible for the unusually low price of mobile
services in India.
India also needs a strong and transparent competition
policy that makes the conditions and expectations for
market behavior clear to participants: both on the consumer and producer sides. If indeed there need to be
checks on any specific market behavior, the trigger points
for any intervention should be clearly specified.
However, more can be done. TRAI’s recommendations on
mobile number portability, since rejected by the DOT,
would have helped the service providers to improve QoS
and encourage competition between operators across
technologies, which is currently limited only to market
share and tariffs.
Entry of New Operators in 3G Provision
Based on press reports, it is possible that new and/or foreign players might be allowed to participate in the 3G
spectrum auctions. While competition is rarely harmful to
consumers, the current proposal raises a number of interesting possibilities.
Further, TRAI’s recent recommendations on ISP licensing
will reduce competition in the hitherto more liberalized
internet market in India. The cap on the number of ISPs,
discontinuing of local ISP licenses, and purging of “nonoperating” ISPs ostensibly targeted to reduce “grey-market” ISPs, are a blow to competition since they effectively
For a start, TRAI had recommended that only existing
operators be allowed to bid and the final decision to allow
new operators rests with the government. It is possible that
some of the larger international operators or investors
could pump in significant amounts of capital to enter the
Indian market through the 3G route and thus upset the
plans of current operators. It is also possible that some of
the larger Indian operators might find merger or acquisition deals coming their way as a mode of entry into both
the 2G and 3G markets. Indeed, we believe that this might
have been a driving factor behind the Vodafone acquisition
of Hutch.
Given the state of the Indian market, with a large unsubscribed population in less-dense, poorer regions, and the
difficulty of providing national coverage, equivalent to
that of existing players, on day one combined with the lack
of 2G network coverage to fall back on, it is unlikely that
an independent 3G network will be seen as a viable business proposition. Hence, any entry of an entirely new player in the Indian market through the 3G route, even if possible, might not be viable.
However, the value of a 3G network does increase significantly, if it is used as a 2G overlay. Given the shortage of 2G
spectrum, it is possible for an existing 2G operator to use
3G to support high MOU users and use 2G only for
voice-centric and lower MOU customers. In this case, 3G
will act as a way to reduce the load on 2G spectrum. Thus,
we must also consider how current 2G operators will seek
3G spectrum to ensure their future growth, especially since
2G spectrum is in short supply, and since 3G technologies
have greater capacities. Hence, there is a link between
future 2G growth and the availability of 3G spectrum.
In considering whether new operators should be allowed
into the Indian 3G market, the Government should consider the effect on existing 2G providers. On one hand, the
market can gain from the entry of an experienced international operator, and from the increased competition,
which might lead to higher QoS and new technologies
entering the market. On the flip side, the market is already
facing a severe spectrum crunch, and it might not be prudent to allow a new operator given that existing operators
might use 3G to reduce the pressure on their 2G spectrum.
In the end, however, even if the market is thrown open to
new entrants, we strongly believe that a 3G-only service
provider would not be very successful in the Indian context.
Quality of Service
In order to ensure AWS platforms grow and are successful,
it important to ensure a reasonable QoS to the end cus-
tomers. Today one of the most severe problems facing telecoms service provision is the poor QoS among cellular
operators. The The large unsubscribed market (even in
some major cities and towns), cost savings from less dense
network deployment, the large pent-up demand for
telephony service, and a severe shortage of spectrum in
some areas makes for a high growth market that has little
control over QoS due to incomplete competition.
In late 2006, TRAI contracted a survey to check both technical and customer satisfaction parameters to verify the
fulfillment of the July 2005 QoS regulation. The results are,
simply put, significantly below par. There is also a significant gap between technical parameters being met and the
customer satisfaction for cellular services. For example,
while 96% of operators meet the required call set up success rate of 95%, and 99.21% of operators reach the
required call drop rate of <3%, only 11% of operators
meet the required benchmark of >95% in customer survey
responses for network performance. Further, only one of
128 cellular operators meets the overall customer satisfaction benchmark of 95%. Poor performance ranges
amongst all the operators in a circle is noticed in
Karnataka (68-71%), Tamil Nadu (69-74%), Kerala (6871%), Rajasthan (69-79%), West Bengal (59-76%), Bihar
(68-75%) and Orissa (70-73%). This result is worse than
the previous survey ending June 2006, where six operators
(5%) met the overall satisfaction benchmark.
Poor QoS in network provision is problematic because it
frustrates customers, but also because it makes network
performance unpredictable. In a scenario where broadband services have to be provisioned over these networks,
having variable or low-quality network performance
makes service value uncertain and complicates the models
for how to attract and retain subscribers for high-end services such as internet or multimedia content.
It is important that incentives be created to provide higher QoS. These incentives can be competitive or regulatory.
It is clear from recent statements that legal enforcement
might not be possible beyond fines and reprimands.
However, competitive arrangements like number portability can ensure increased competition improves QoS.
Further, the allocation of spectrum should be such that
operators can design networks in a manner to support
high QoS levels - without adequate spectrum, it is unlike-
ly that any QoS standards can be met. Thus, a combination
of spectrum availability and competitive moves can help
improve the levels of QoS in the Indian market.
Defining Benchmarks
Regulatory principles and best practices teach us that
direct intervention should be limited to times of market
failure. This is especially true in mobile telephony. While
most regulators find it hard to justify leaving allocation of
scarce spectrum resources entirely to market forces, their
intervention in other areas is rarely necessary. For instance,
few regulators have needed to set benchmarks for technology performance, quality of service or its scope.
Competition in most markets has ensured that if operators
fail to provide value, e.g., adequate bandwidth, fair price,
or acceptable quality to consumers, they risk losing market
share rapidly. Even in India, the vast improvements in
service offerings and the virtual crash of call charges has
happened without any direct regulatory action. The temptation to set tough benchmarks should be avoided not only
because compliance is difficult to guarantee or enforce but
also because they become redundant.
8.5 Recommendations
It is most important to ensure that sufficient spectrum is
available for the fast growing mobile market. A spectrum
crunch will lead to a slow down in investments and a
reduction in service quality to levels even worse than they
currently are. A clear roadmap will aid service providers,
and the Government and regulator should work to release
more spectrum for commercial use. Incentives should be
made to relocate government users in the prime bands
marked for commercial usage.
It is important that a clear spectrum plan should be developed to ensure that operators, no matter what technology
they use, know what their future spectrum supply might
be. In the long-term, however, it is essential that spectrum
allocations be made technology-neutral and transparent,
which ultimately needs the introduction of market-based
allocations. It might also be prudent to look into global
technology harmonization trends in the next few years to
determine what the bands of choice might be for different
technologies to prevent continuing conflicts.
The USOF initiatives have to be focused towards promotion of low cost integrated voice, data and multimedia terminals. USOF support for broadband value added service
on mobile and fixed platforms could be invaluable in
delivering broadband based infrastructure to rural communities at affordable rates.
It is important to prevent biases in technology choices by
operators by setting significantly different base prices for
bands that can used to offer comparative services, as the
market will ultimately decide a higher price for a more
valuable band. In this regard, as a regulatory principle
technology neutrality should also apply to spectrum allocation criteria and pricing.
Endnotes
110
Economic Times, Jan 18, 2007
111
“Based on usage, justification and availability, spectrum may be considered for
assignment, on case by case basis." DOT unified access service license agreement, clause 23.5
112
TRAI’s decision of having a different allocation criteria for 450 MHz band may
have been motivated by the lack of available WCDMA and HSPA equipment in
this band, its inability to immediately make available the 1900 MHz PCS spectrum for the CDMA2000 operators and/or its intention to push the operators to
use this band due to its favorable coverage advantages. It is worth mentioning
that the 450 MHz band is referenced in NFAP-2002 for possible use of wireless
telephony.
113
HHI is the Herfindahl-Hirschman Index which is a commonly accepted measure of market concentration. It is calculated by squaring the market share of
each firm competing in a market, and then summing the resulting numbers. The
HHI number can range from close to zero to 10,000, where the closer the value
is to 0, the more competitive the market.
9
PROJECTIONS &
WAY FORWARD
The Indian telecommunications industry has seen an unprecedented growth over the last few years. At the end of April 2007, there
were 171.20 million wireless subscribers and 40.82 wireline subscribers, taking the teledensity to 18.74% from a low 8.62% in
December 2004.114
FIGURE 9.1 Quarterly Growth for Circle Categories
The growth over the last few quarters is shown in Figure 9.1. There
was a net addition of almost 20 million subscribers in the quarter
ending December 2006, however, the net additions were slightly
lower at 14.7 million in the quarter ending March 2007 since, following Government directions, operators suspended many accounts
of subscribers whose addresses could not be verified.
India’s current teledensity of 18.74% comes from a rather disparate
penetration of 49.53% in the urban areas and 1.84 % in rural
areas.115
Source: TRAI
Though urban teledensity seems high compared to rural, it is still
well below developed countries like Hong Kong, Italy, the UK and
Singapore where teledensities are beyond 100% at 123.47%,
124.28%, 112%, and 100.76%, respectively.116
FIGURE 9.2 Urban and Rural Teledensity
Indications and BDA’s analysis demonstrate that there is still latent
demand in both the urban and rural areas. Operators are independently extending coverage beyond cities and towns. In the recent
Universal Service Obligation Fund (USOF) tender, several operators
submitted “negative bids", in effect offering money to the
Government to be allowed to use towers funded by the USOF to
provide mobile services in unconnected villages. Operators clearly
see a business case for rural telephony.
As discussed earlier, services in category B and C Circles are experiencing the highest growth percentages as operators expand aggressively and have moved from covering 30% of India’s population two
years ago to 60% today. This continued expansion is going to be one
of the major growth factors going forward, as well, as operators target to grow from covering 50 - 55% of India’s population today, in
the beginning of 2007, to 90% - 95% by the end of 2010.117
Based on BDA analysis, 2G, 3G and fixed wireline broadband subscribers combined can reach beyond 475 million by the end of 2010.
Source: TRAI
9.1
Affordability
Rapid fall in price of handsets and services has fuelled a
proliferation of wireless services in the country. Ultra low
cost handsets (<USD 50) constituted approximately 50%
of total new shipments in 2006.118 CDMA 2000 handsets
are now available for as low as INR 777 (USD 17).119
As of December 2006, blended ARPU has reached levels as
low as INR 281 (USD 6.19), with CDMA ARPU being even
lower at INR 196 (USD 4.32). In rural areas usage and consequently average revenues would be even lower. There
would also be more incoming minutes than outgoing. We
estimate that rural ARPU would conservatively be 50% of
the blended national average, if not at the 50% level of
CDMA ARPU.
Benchmarks of communications spending indicate that
households can spend up to 6.9% of their income on communications services.120 With this benchmark and today’s
very low total cost per year of USD 58 (including a handset) for being connected, 95% of Indian households can
afford more than 1.5 phones. Higher income level households could afford 2 or more mobile phones, even when
factoring in their desire for higher cost devices. Based on
the distribution of income and affordability levels, 430
million is easily achievable as a subscriber base for mobile
phones when coverage is extended to almost all of India’s
population.
Our analysis is conservative for a few reasons. We assumes
no household growth has occurred since the 2001 Census
and income per household has been constant since then.
Furthermore, competition will force costs of both handsets
and call tariffs to decline further in the coming years.
Therefore more low-end households will be able to afford
connectivity and will also be able to add more connections
per household, resulting in the potential for more than 430
million subscribers.
Our analysis is focused specifically on 2G, 3G and fixed
wireline broadband platforms as other mobile and fixed
wireless solutions are yet to mature or acquire significant
usage to enable meaningful forecasts.
9.2 Subscriber Growth
growth has begun to flatten. Going forward, therefore,
metro circles will not be the main sources of high growth,
though additions will continue at a steady pace. Growth in
the cities in Circles A and B will follow the same steady
pace as in the metros. However, the majority of subscribers
will come from the semi urban and rural areas in Circles A,
B and C. The mobile teledensity in category C Circles is
only 7.4% and the growth rate there will be the highest as
operators have only recently started rolling out services
outside cities and major towns in these areas.
Based on household affordability, mobile teledensity
should reach 38% by 2010. BDA’s growth estimates, based
on new network rollout and coverage extending to 95% of
India’s population, are shown in Figure 9.3 along with the
distribution of subscribers among the different Circles. As
can be seen, 35% and 40% of the subscribers will be from
category A and B Circles, respectively. The percent of total
subscribers from metros will fall drastically due to limited
growth potential from the high level of penetration already
achieved.
Growth in rural areas will be fuelled by support from
USOF, which has recently auctioned subsidies for cellular
telephony. Category B Circles will receive the highest benefit in terms of population and number of villages covered
(Table 9.2). Category C Circles will also be benefited,
though we believe that growth would not accelerate greatly until mid 2008 and 2009 since USO rollout in these villages is likely to be in the second half of the USO rollout
timeline, and subscriber adoption in those more difficult
areas will therefore be somewhat delayed.121 Circle C will
have the lowest mobile teledensity due to its lower income
levels, although it will see voice subscribers continue to
grow at higher rates than other areas, even past 2010.
9.2.1 Base Case Scenario
The Ministry of Communications and IT has projected
500 million telephone subscribers by 2010, with approximately 440 million mobile and 60 million fixed. BDA
believes that the target can be met if spectrum constraints
are lifted and if the various other regulatory and systematic hurdles, which have been discussed in Chapter 8, are
handled appropriately.
Mobile teledensity in metro circles is already 58% and
9.2.2 Delay in Regulatory Decisions
One of the major challenges Indian GSM operators are
facing is that the spectrum allocated to them is already
exhausted well beyond the benchmark levels set by the
Government for allocation of further resources (Figure
9.4). If regulatory decisions regarding releasing spectrum
are not made quickly, growth will suffer and teledensity
targets will not be met.
TABLE 9.1 Affordability of Phone Lines
Source: Enabling India’s Broadband Economy: The 3G Way, CII, April 2006
Census of India 2001, BDA Analysis
FIGURE 9.3 Projected User Growth and Subscriber Distribution
The direct consequence of high spectrum packing density
is deteriorating quality of service (QoS) resulting in
dropped calls. The only way to address the QoS issue without additional spectrum is to increase the network capacity by investing additional capital in further cell splitting.
Since operators have already been undertaking such initiatives, and further redesign of the network would be even
more expensive, continuing reductions in tariffs would be
out of question and might have a negative impact on
growth.
With more dropped and unclear calls forcing consumers
to spend more time trying to either get connected to the
person they are calling or continually repeating themselves
in order to be understood, the cost of usage will increase,
thereby reducing subscriptions from the cost conscious
low-end segment. While general wisdom may assume that
low end subscribers are not quality conscious, when lower
quality actually increases the cost of ownership, they will
find it difficult to justify the lower value for the money
they invest. Growth in metros will nearly stall since future
growth in these areas would have come from low-end subscribers. The cities in category A and B Circles will face the
same problems as the metros since the spectrum packing
density there, too, has overtaken the DOT benchmark by a
substantial margin. On the other hand, growth from semiurban and rural areas will continue and peak in 2008.
Circle C will also experience minimal impact and growth
will continue as most of the Circle C areas are rural and
extensive network deployment has just begun.
In the absence of quick regulatory action on spectrum, a
mobile teledensity of only 32% with 364 million subscribers at the end of 2010 can be achieved, less than our
base case scenario by 73 million subscribers, and much
lower than the Government’s targets of 440 million wireless subscribers (Figure 9.5).
Without spectrum, broadband growth, will also be limited
to primarily fixed DSL from MTNL/BSNL and limited
rollout of other kinds of fixed networks from private operators.
9.2.3 3G Rollout
The rollout of 3G is the solution to the lack of 2G network
capacity and slow growth of broadband. If spectrum is
TABLE 9.2 Towers and Coverage of the USOF Rural Project
Source: DOT
FIGURE 9.4 Spectrum Packing Density for GSM Operators
FIGURE 9.5 Subscriber Growth with Delay in Regulatory Decisions
released by mid 2007, 3G can be launched commercially by
early 2008. High-end 2G subscribers will either migrate to
3G by themselves, or their operators will migrate them in
order to free 2G capacity to accommodate low MOU voice
users. In addition, 3G networks can provide broadband
coverage to provide an alternative to fixed broadband
infrastructure.
We expect 3G network roll out to be in multiple phases,
starting with the top ten cities, including Metros and parts
of Circle A, in early 2008. In the second phase, coverage
will be extended to the top 40 cities, including those in
Circles B and C. Finally, in the third phase, which would be
in 2010, all cities will have 3G services.
Today, even without 3G coverage, there are approximately
1 million subscribers with 3G handsets, constituting a
ready “installed base". Technically, these users can be shifted to 3G networks immediately when the network is
launched, even without them knowing they have been
transitioned, since they will still be able to roam onto the
2G networks when they are out of 3G coverage. In addition, many subscribers will themselves opt for 3G to access
better services - better voice quality, higher data rates and
rich multimedia applications. 3G adoption will not be limited to only high-end users as the more sophisticated midlevel users will also want to migrate.
Operators may offer handset subsidies to catalyze early
adoption of 3G. The average replacement cycle of handsets
in the high and mid-level segments is approximately 18
months. We believe that all subscribers upgrading, especially after 2 years of 3G network launches, will automatically choose devices with 3G support. Therefore, in 2010
when coverage is extended to all cities, 3G adoption rates
will grow more quickly due to pent up demand and a
wider installed base of 3G handsets. According to our estimates, if operators subsidize handsets, there will be 30 million 3G subscribers by 2010 (Figure 9.6).
Without handset subsidies, migration of high and especially mid-level users would take more time, and therefore
would accelerate more in the second year, in line with the
replacement cycle of handsets in this user group.
Our analysis, based on insights from operators and vendors, indicates that high end subscribers have 3.5 times
higher MOU than the remaining subscriber base. As these
FIGURE 9.6 3G Subscriber Growth Projections
Source: BDA Analysis, Note: Migrating subscribers remain in the 2G base until shifting to 3G.
high end users migrate to 3G, vacated 2G capacity can be
used to accommodate at least 3.5 times as many low end
users. This newly vacated “free capacity” on 2G networks
will allow operators to drive tariffs even lower because the
fixed network costs would have already been previously
amortized, allowing operators to think of recovery of only
the variable or marginal cost. This will further allow penetration to expand towards the bottom of pyramid subscribers. This would result in India surpassing our base
case estimate for 2010 by 30 million subscribers to reach a
total of 467 million subscribers (Figure 9.7).
9.2.4 Broadband Subscribers Growth
Penetration and the growth of fixed wireline broadband
connections has been slow so far (Table 9.3). The current
fixed line infrastructure cannot support more than 9 million residential and small business broadband connections. These connections will be concentrated in urban
areas and the number that can be supported will depend
on the capacity of broadband ports deployed in the local
exchange. Wireless broadband, on the other hand, will be a
more convenient alternative. A data card or USB modem,
which could be purchased independent of the operator,
like a handset is today, is all that would be required. There
would be no need for a potential subscriber to wait for the
operator to first test line quality, then assess local exchange
capacity, and finally execute a hard wire installation.
After 3G rollout, a dedicated broadband connection would
not be required since all 3G subscribers would automatically have broadband connectivity. The internet could be
accessed using the handset itself, using the handset as a
modem for another IAD, or using a data card/ USB
modem with a laptop or desktop computer.
In addition to those using their primary 3G connection for
personal data connectivity, there will be a class of households and home offices that would get dedicated fixed or
nomadic broadband connection for their homes, to be
shared by the family, or for use specifically with an internet
access device like their laptops. There would also be broadband subscribers from SMEs and SOHOs, as well, where
the broadband connection would be shared.
The affordability of a dedicated broadband connection in
addition to a personal 3G connection will be limited to
approximately 9.2 million households with income higher
than USD 11,000 per annum, based on inputs on device
cost and current tariff levels for broadband, as shown in
Table 9.4. The analysis is based on the 2001 Census and is
again a more conservative estimate than one would expect
in reality. It should be noted that all 3G connections would
themselves already be broadband enabled.
We estimate that all of the 9.2 million households that can
afford an additional broadband connection will acquire
one within the three years that 3G is rolled out to all cities
(Figure 9.8). Of the dedicated broadband connections, we
expect that the majority of new subscribers from the
launch of 3G will select wireless over wired, but our
growth estimates account for both platforms. Therefore,
FIGURE 9.7 Subscriber Growth Projections with Freed 2G Capacity Effect
Source: BDA Analysis, Note: Assumes 3G sccenaro with handset subsidy.
TABLE 9.3 Broadband Subscriptions (September 2006-April 2007)
Source: TRAI
TABLE 9.4 Affordability of an Additional Broadband Connection
Source: Census of India 2001, CII, NACER, nationmaster.com, BDA Analysis
overall broadband growth will accelerate in 2008 since
consumers will have the option of getting 3G wireless
broadband as and when required without the hassle and
wait of an extended installation process.
Not included in this projection is growth from rural areas,
where 3G could be adopted for broadband connectivity to
be used in community service centers, kiosks, small cyber
cafes and other multi-user settings. But this number is
expected to be relatively small compared to the overall
broadband subscriber growth, though, as discussed, it
could have a substantial impact on rural development.
Additionally, though advocated in Chapter 5 in the discussion on the economics of rollout in rural areas, these projections do not include a scenario where operators decide
to deploy a unified 3G platform as part of their voice and
broadband rollout initiatives for covering those areas. We
believe that operators will start considering this in the near
future since it is only recently that network and handset
costs have started approaching levels where such deployment may be feasible. Such decisions would propel both
broadband and 3G subscriber figures.
Based on the above scenarios, we expect more than 35 mil-
lion 3G and fixed wireline broadband subscribers by 2010,
including those on 3G networks who would be using both
voice and data, and those with dedicated connections
using broadband data only. With this, India will surpass
the DOT target of 20 million broadband subscribers by
2010.
9.3 Conclusion
It is evident that advanced wireless systems (AWS), particularly 3G, will play a key role in the future growth of India.
Those technologies, which have achieved growth and
maturity elsewhere, will also be leveraged by India to
achieve the next wave of growth in the telecom industry.
Initially, the primary role of AWS platforms will be to alleviate the major problems currently faced in the metros and
the top cities due to the lack of spectrum by migrating high
end users. Then, especially as more content and services
become available and even cheaper handsets integrate
FIGURE 9.8 Broadband Subscribers Forecast
AWS connectivity like 3G, these platforms will attract not
only the high end, but mid-level users as well. Operators
will be able to accelerate this adoption through handset
subsidies for their more valuable users. The capacity
released from the migration of these users will enable further growth in 2G networks as new low-end subscribers
can be added to the network at a marginal cost, and allow
operators to reach closer to the bottom of the pyramid of
users.
Finally, AWS will also enable overall broadband growth in
the
country.
Each
subscriber
to
3G platforms will automatically be a broadband enabled
subscriber as well, and these platforms will also allow dedicated broadband connectivity, greatly enhancing the reach
and convenience of today’s fixed wireline broadband networks. Growth in the broadband segment will be enabled
by the added convenience of wireless, and India will surpass the DOT’s goal of 20 million broadband subscribers
by the end of 2010.
For the above scenario to be achieved, the industry
requires a supportive regulatory environment. It is important that the Government consider how AWS platforms
can seed rapid growth of the telecom sector and the economy at large, as well as help achieve socio-economic and
developmental goals. We strongly believe that the outcome
will be both positive and substantial, and is enough justification for immediate action to be taken.
Endnotes
114
TRAI
115
TRAI
116
ITU ICT Indicators, 2005
117
Cellular Operators Association of India (COAI), 2007
118
BDA Analysis
119
My Mobile, May 15-Jun 14, 2007
120
Enabling India’s Broadband Economy: The 3G Way, CII, April 2006
121
USO requires that 50% of the passive infrastructure allocated in a winning
bid be completed in the first 8 months and the remaining in the next
4 months. Cellular service must start within 6 months of passive infrastructure
completion.
PROJECT TEAM
Vikram Tiwathia
Sachin Khanna
Chief Information Officer
Confederation of Indian Industry
Executive Officer
Duncan Clark
Kunal Bajaj
Ted Dean
Chairman
BDA Connect
Director - India
BDA Connect
Managing Director
BDA Connect
Jasmeet Sethi
Girish Trivedi
Deepshikha Garg
Rahul Gupta
Pranav Kapoor
BDA Connect
BDA Connect
BDA Connect
BDA Connect
BDA Connect
The Confederation of Indian Industry (CII) works to create
and sustain an environment conducive to the growth of
industry in India, partnering industry and government
alike through advisory and consultative processes.
CII is a non-government, not-for-profit, industry led and
industry managed organisation, playing a proactive role in
India’s development process. Founded over 111 years ago, it
is India’s premier business association, with a direct membership of over 6300 organisations from the private as well
as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 companies from around
336 national and regional sectoral associations.
A facilitator, CII catalyses change by working closely with
government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialised services and global linkages. It also provides a platform for sectoral consensus
building and networking. Major emphasis is laid on projecting a positive image of business, assisting industry to
identify and execute corporate citizenship programmes.
CII’s theme of “Competitiveness for Sustainable and
Inclusive Growth” reflects the Confederation’s commitment to balanced development that encompasses all sectors
of the economy and all sections of society, at all levels Global, National, Regional, State and Zonal. Partnerships
with over 120 NGOs across the country carry forward our
initiatives in integrated development which include health,
education, livelihood, diversity management, skill development and water, to name a few.
With 57 offices in India, 8 overseas in Australia, Austria,
China, France, Japan, Singapore, UK, USA and institutional
partnerships with 240 counterpart organisations in 101
countries, CII serves as a reference point for Indian industry and the international business community.
Reach us via our unique Membership Helpline: 00-91-11435 46244 / 00-91-99104 46244
BDA (www.bdaconnect.com) advises leading global corporations and financial institutions seeking to participate or
invest in Asia’s most dynamic markets.
Founded in Beijing in 1994 by Duncan Clark, a former
Morgan Stanley investment banker, BDA built its reputation as the leading advisory firm to both global and local
companies on the telecommunications, media and technology (TMT) sector in China.
BDA has been in India since 2004 when we were brought in
to advise the Telecoms Regulator y Authority of India
(TRAI) on a World Bank funded project to assess the implications of the rapid development of China’s telecommunications sector for India. India’s telecommunications sector
is now experiencing explosive growth rates, with the number of new mobile subscribers per month overtaking China.
BDA is embracing the opportunities arising from this
growth, and in 2006 opened an office in New Delhi where
we are rapidly growing a team of experienced professionals
assembled by Mr. Kunal Bajaj, formerly a McKinsey consultant and consultant to TRAI.
Building on a successful formula of experienced advisors
backed by the best research in the industry, today BDA is a
team of professionals in China and India advising corporations and financial institutions on investments in the TMT
sector as well as selected other high-growth segments.
BDA Connect Pvt. Ltd.
Tel: 91.11.47003100
Tel: 91.124.4014060-67
Fax: 91.11.47003102
Fax: 91.124.4014080
www.bdaconnect.com
www.ciionline.org

case study - Analysys Mason

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