Sunday, 19 June 2011

Much hyped 3G services a big failure

Telecom companies bet very big on 3G services in India and competed heavily with each other to get licenses. The bid amount was so high that not a single operator managed to get pan India license. The excitement shown in obtaining the licenses is not equally present when it came to rolling out the services. Market leader Airtel spent millions of Rupees promoting 3G but failed drastically in cashing on 3G reason - there is not enough market for 3G services at the moment.

India is not yet ready to use 3G. Unlike developed countries, people in India are not still addicted to 3G the way they are addicted to mobile phones. Today a person in India can live without data connectivity on his/her phone but will be handicapped without a mobile phone. Though urban India is catching up staying connected through internet its not the case with tier 2 cities and rural India.

The reason for the failure in utilizing the 3G services by Indian telecom subscribers is because of the huge input costs for gadgets supporting 3G services. Iphone costs Rs 40000 in India which is not even an years salary for more than 50% of the country's population. People in India still feel Kindle as a luxury. Unlike the rest of the world, print media is growing in India. I am not trying to confuse by bringing in print media into the topic of 3G. 3G services are meant for data connectivity and when it comes to data connectivity, it is the information flow be it accessing web sites or news and events. More than 99% in India still rely on desktop internet or television or print media for getting the information they need.

For 3G services to catch up, the internet should be within the reach of all the people in all the regions be it rural India or the urban India. Once people are addicted to internet, they will look at portable means of accessing the data. i.e through the latest generation phones like Iphone. Not even 50% of the people who use Iphone use data services in India. People who use Blackberry phones are mostly confined to the email services and hardly use the data services. With such minimal use of data services on gadgets or high end phones, it would be meaningless for the telecom operators to expect big revenues or users for its 3G services at the moment.

Though 3G could take up some day, only some miracle should happen to bring big boost to the 3G users in India. The entry of Relience Industries through Infotel could drastically add data users to Indian market and might also bring in users for its 3G services. As of now, the telecom companies which minted money through  voice services will find it tough to break even on 3G services.

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