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.
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
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.