Keeping 3G profitable in India and China

Ilan Seidner, RAD Data Communications
03 Sep 2009

As many mature mobile markets start to discuss LTE deployments, the two largest mobile markets in the world - China and India - are just launching their first 3G networks. The size of the markets and the fact that neither has extensive fixed services means we could be about to witness explosive growth of broadband services.

The current numbers pay testament to this - last year alone India added 100 million new 2G mobile subscribers. By making high-speed communications widely available for the first time across both countries, these 3G deployments are likely to be a driving force behind their economies for the next decade.

Yet the picture for the operators' bottom line might not be so rosy. Both countries will need to quickly heed the lessons learnt from more mature Asian and Western markets where rapid uptake of 3G services has certainly not equated to rapidly growing profits.

In fact two separate research firms, Omnitele and Strand Consult, recently arrived at the same conclusion: the flat rate mobile data tariffs that have driven the boom in 3G uptake are unsustainable. The reality is that rocketing data usage is causing costs from capacity upgrades to ramp up disproportionately to the growing revenues from mobile broadband services. Chinese and Indian operators will need to carefully manage the economics of their networks if they too are to avoid a similar fate.

While operators could easily cope with capacity costs in 2G networks, the evolution to 3G is significant. A single GSM connection requires 13 kbps, and a GPRS connection uses around 60-80 kbps, but 3G leaps up to 348 kbps. 3G upgrades such as HSDPA, where a single connection can offer 14.4 Mbps per user, is an exponential leap. One user can use the same capacity as 1,000 GSM subscribers.

Beyond this, Indian and Chinese operators have a number of other challenges that further complicate the economic challenge. Whereas 3G has in most markets been focused on delivering services to phone handsets and laptop dongles, in India and China - where fixed-line penetration is low - there will be a real market for desktop PCs too. To aggravate the issue, desktop users are a great deal more bandwidth-hungry than their mobile handset counterparts, thereby putting a greater load on the network and in turn ramping up costs.

Additionally, as both countries also have enormous sparsely populated regions with virtually no fixed line resources, operators have a real teledensity challenge in terms of balancing the cost of providing services in certain regions against potential revenues.
So how can Chinese and Indian operators overcome this challenge?  The reality is that although they both have very similar challenges, their solutions will be very different. Operators in both countries will both be deploying the latest 3G base stations alongside different telecoms infrastructures. The result will be very different mobile broadband services on the ground.

Where China's infrastructure is well prepared for this shift, in India an all-IP network is currently not an option. The country's operators must utilize the existing transmission infrastructure, all of which is legacy based. Therefore the 3G networks must be designed to maximize existing resources.


Follow Telecom Asia Sport!
No Comments Yet! Be the first to share what you think!
This website uses cookies
This provides customers with a personalized experience and increases the efficiency of visiting the site, allowing us to provide the most efficient service. By using the website and accepting the terms of the policy, you consent to the use of cookies in accordance with the terms of this policy.