To 3G or not to be

Both noble causes have elevated the dreary spectrum squabble to a war: Who gets to the airwaves first and introduces 3G will have the advantage in this high-revenue, but low-subscription, segment.

Trouble began with a report on spectrum by Trai. This report recommended allocation of the IMT-2000 band for 3G services of GSM and CDMA players. Though the cellular operators welcomed the decision, CDMA operators went up in arms, saying they do not have equipment ready to rollout 3G in this band. With Trai’s role at the centre of the debate, the ball is now in the court of the government’s frequency planners.

GSM has 1.4 billion worldwide users, while CDMA has about 340 million. 3G has, going by different accounts, 30 to 40 million users, deployed by roughly the same number of operators.

In India, 3G is expected to be a rough split-down-the-middle between CDMA and GSM customers. But to complicate matters for 3G, the common man has ‘basic needs’ from a phone: It should carry voice and it should be affordable — none of which are the USP of any 3G phone.

‘‘Would you buy a colour screen, music-playing, gaming, movie-on-demand, data-processing handphone today if it came at $100 apiece?’’ asks Dr Pittampalli, CTO, Lucent Technologies. For most Indians, the answer is, maybe not today. But in two or three years, when these handsets reach economies of scale, many could want their data processors, internet consoles and TVs to travel with them in their pockets.

At present, a mobile handset costs $25-27, still far higher than the sub-$10 phone that the government wants the chip-manufacturing industry (GSM or CDMA) to come up with. But in a few years, a 3G phone could ship for $50. ‘‘But enterprise customers are ready for 3G services today. The government obviously wants to cut the time lag between introduction of a technology abroad and in India,’’ says a DoT official.

Another noble goal, but obviously, the 3G takeoff is not going to be in the rural hinterland, the region that Trai says immediate teledensity will come from.

On their part, enterprise and high-end users will drive 3G usage, and boost revenues of mobile operators. Today 20 per cent of a mobile firm’s customers push up the average revenue per user, not the millions who simply want phones to make calls.

By such accounts, 3G will remain a plaything of the well-heeled for at least two years. For teledensity, operators must look at rural areas — that will need yet more spectrum and fresh doses of metal towers.