Three top mobile operators soon joining BSNL in 3G space

Published - June 13, 2010 11:08 pm IST - CHENNAI:

The rollout of 3G mobile telephony in the months ahead is likely to feature an intense battle in Tamil Nadu where the top three operators by revenue market shares are pitted against one another.

Having coughed up Rs. 1,464 crore each to win the bids for spectrum for Tamil Nadu service area, Bharti Airtel, Aircel and Vodafone Essar will soon be joining incumbent BSNL in the 3G space.

At the recently concluded spectrum auctions, Tamil Nadu had emerged the fourth costliest circle after Delhi, Mumbai and Karnataka.

Even as mobile operators are in the process of finalising the 3G rollout, industry experts predict a mixed model of competition and collaboration in 3G mobile telephony, where operators explore options of selectively sharing infrastructure with rivals on a bigger scale.

For instance, if the southern States were to be taken as one bloc featuring frequent cross-migration of users or heavy call traffic, an operator like Airtel with a 3G licence for Karnataka could enter into an infrastructure sharing formula with Idea Cellular, and in return, utilise the partner's network in Kerala.

Vodafone, which secured nine circles for a total price of Rs. 11,617 crore to have a 3G footprint covering 66 per cent of its current revenue base in India, is also likely to enter into similar tradeoffs with operators in circles where it does not have a direct presence.

Aircel is the only operator to have a presence in Tamil Nadu, Karnataka, Andhra Pradesh and Kerala.

According to Ashok JhunJhunwala, IIT-Madras professor and member of the Telecom and Networks (TeNet) Group at IIT, 3G operators were likely to put in place sharing agreements well before the rollout of 3G services. He pointed out that pricing of 3G services was likely to be a major challenge as a 3G experience that was exorbitant could be a damper for prospective clientele.

However, industry experts say that there could other determinants other than low costs that will drive 3G connections. For instance, though BSNL Chennai Telephones brings to the table the early mover advantage having launched commercial 3G services in February 2009, the 3G offtake has been below expectations in spite of pegging tariffs lower than 2G call rates. BSNL has so far issued only about 40,000 3G connections in Chennai in addition to about 60,000 in other parts of the State.

At the same time, BSNL stands to gain in striking revenue sharing agreements with operators who use its network in the southern States, either for 3G subscribers on roaming or possibly even intra-State.

“As far as 3G is concerned, the game-changing experience has to come from value added services,” an industry spokesman said. With its capability of high-speed transfer of voice, video and data, 3G telephony could transform lifestyles, he said.

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