Indian Mobile Operators are going to spend over $20B for 3G Licenses – What can they do to recover these license fees?

Last week I went to India and the big news was India’s budget deficit is going to be reduced thanks to 3G auctions fetching in excess of Rs 670B with total likely to exceed Rs 1,000B (~ $20B) after WiMax auctions. In a country with an approximate ARPU (average revenue per user) of $4/month and 420M subscribers, how are operators going to pay for it.

Some Misconceptions on 3G

In reading various articles in Indian magazines, I was surprised at the misunderstanding amongst local pundits and the solutions proposed. The proposed solutions varied from offering 3G video conferencing, TV services (none of the video services make sense unless LTE type bandwidths are available and even then there is no proof of video conferencing making money for service providers anywhere in the world), location services (one doesn’t need 3G to have location services) and for operators to find a killer service. (operators are not known to find killer services)

Obvious Path though not Right

The obvious temptation for mobile operators will be to offer new data services and like the current VAS (value added services), keep a very large percentage of service revenue for themselves. I am afraid this will not work. Look at the examples of US and other western countries where data services  took off only after Apple made it easy for software developers to come up with new applications and keep 70% of the revenue generated.

Some Ideas

This is what I think Indian Operators should do to recover their investments and increase profitability. What do you think?

• Don’t deploy yesterday’s technology and instead take a leap to LTE technologies so that it can actually become a contender to replace DSL for broadband
• Become the best pipe and open the platform for hardware and software developers to innovate on
• Imagine new low cost smart phones, Netbooks, iPads, eReaders, laptops and other new devices all with built-in 3G technologies requiring monthly services
• Imagine new applications customized for Indian markets all requiring data connections where a developer has an incentive to innovate – a large market, good % revenue share with operators
• Imagine every student (India has lots of them and spends a lot on education) carrying a 3G enabled device all the time consuming data services everywhere

Conclusion

Just as mobile phone brought the first phone into majority of Indian homes, 3G has the potential to bring mobile broadband and hence Internet into every home provided mobile operators are not short sighted and provide the best data pipe and leave others to innovate to increase value of their data pipes and hence revenue and profitability.

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In this decade, what changed us the most? Terrorism, Social Networking or Mobile?

When I reflect upon this decade which started with a dotcom bust followed by a terrorist attack  that changed all of our lives, I wonder what is one thing that changed us the most this decade. So, I came up with this list of 5 candidates and my conclusion. I invite you to come up with your list and reasoning.

No. 5 – Rise of China and India – China with its low cost manufacturing impacted the whole world in various ways and changed not just the face of China but many other countries. Y2K started India on a path to providing software outsourcing and made India a force to reckon with in software business.

No. 4 – Ecommerce – With well publicized failures like webvan and pets.com, Ecommerce finally became mainstream with Amazon leading the pack and brick and mortar merchants like Walmart fighting that battle.

No. 3 – Social Networking – Friendster may have been an early leader of the social networking phenomena but Facebook now is the new king of this hill and that changed all of our lives in many ways. Twitter, Linkedin, Myspace remain distant challengers.

No. 2 – Terrorism – The decade started  and ended with terrorist attacks in the US and terrorism continued its attack on other countries including UK and India.

No. 1 – Mobile Computing/Phone – If there is one thing that impacted us all worldwide the most and changed our lives this decade, mobile phone will take that honor this decade.

What do you think and Why? Share your opinions here.

R. Paul Singh

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