“It will revolutionize wireless communication. It will be a source of steady and growing profit for operators. It will be a boon for the average subscriber“.
This was what was being predicted in the months before the Auction for 3G Spectrum. After a lot of delays, the auction finally took place. Operators paid astronomical figures to gain 3G licenses from the Government. They shattered all the predictions set by industry analysts on how much they would pay for the spectrum. Thousands of Crores were paid for licenses, in anticipation that this money would easily be recovered over the next 5 years or so. However, as we are seeing, things haven’t turned out exactly as planned.
When operators launched their 3G services, they gave a month or so of free trails to their subscribers in the circle. While a lot of people tried it out, figures have shown that very few have actually continued using it at full price. While Airtel claims to have 7 million 3G subscribers, just 30% of them regularly pay and use 3G. Idea Cellular claims that 1/4th of their 3G subscribers are inactive.
What is the cause of this law rate of 3G Adoption?
According to Kumar Ranganathan, CMO of Vodafone India, it is lack of compatibility. “The growth of 3G is a little slower than what we expected. There is low adoption, as there is a fundamental problem with lack of devices, as we are unable to tell a customer about the experience without the device.”
However we find this highly highly improbable. 3G devices have been around since 2004. All Android devices are 3G compatible. A lot of feature phones too have 3G. Yet most of them prefer to stick to 2G (EDGE Services). This is due to the following reasons.
1) Cost: In a price conscious country like India, almost no one is willing to pay 10 times the amount they currently pay for 2G, just for faster internet speed. With the average 2G pack being Rs. 98 a month for 3GB data, the average 3G pack for 3GB data would cost a subscriber Rs. 850. Unless the user needs it for business or is an avid enthusiast, it is unlikely he will pay the premium.
2)Lack of Value Added Services Using 3G: Aside from offering limited Mobile TV, operators have failed to give customers enough reason to consider switching. Mobile Remote Computing, Mobile Learning and other applications of 3G should be made available to consumers.
3) Lack of Proper Connectivity: While operators claim to have covered entire cities, there remain a shocking number of dead spots where one just does not get 3G connectivity. On the other hand, 2G networks get connectivity almost everywhere and are a lot more reliable. Since 3G network is bad, it also adversely affects the mobile phone’s battery life and becomes a power drain.
4) No Single Operator with Pan India Connectivity: With the whole 3G Sharing Fiasco currently under way, it is likely that no single operator will be able to offer their consumers pan India 3G Connectivity. This is a major disadvantage for both consumers and operators.
Hence, 3G becomes more affordable, gets better reliability, gets an Eco-system of services around it and gets Pan India connectivity, we don’t see 3G taking off in a huge way.
What do you think? Will 3G boom in 2012? Do let us know in the comments below.