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High price of India's 3G spectrum to inflate costs for consumers

11 июня 2010

The amount of money raised by India's 3G spectrum auction may have come as a welcome boost to the government's coffers, but is likely to result in more expensive 3G services that could prove costly for consumers, according to Wireless Intelligence.

"The large investments behind spectrum allocation and network deployment are likely to inflate the cost of high-speed services for consumers," said Joss Gillet, senior analyst at Wireless Intelligence, in a statement on Thursday.Indeed, India's Department of Telecommunications (DoT) raised a grand total of $14.6 billion from its 3G auction – which ended last month – more than double the $7.6 billion the government initially projected.Despite the high price and aggressive bidding, none of the participating operators managed to secure a nationwide licence, an outcome that telco consultancy Coleago blamed on the format of the auction."A number of factors will influence the rate of [3G] adoption, but pricing is the most important," said Gillet.Wireless Intelligence noted that state-run telcos BSNL and MTNL have both launched 3G services – having both been allocated spectrum ahead of the auction – but have only accumulated 1.5 million connections between them due to the hefty price barrier."The cost of ownership of a 3G device and data plan is a barrier to fast adoption in such a price sensitive market, and this will remain a challenge for the country's new 3G operators," said the analyst firm."75% of the Indian population lives on less than $2 per day with around 200 million inhabitants living below the poverty line," commented Gillet.Nevertheless, he said mobile operators expect monthly ARPU from 3G services to reach $11, compared to $5 for current 2G voice services.Gillet's comments were made as Wireless Intelligence predicted Indian 3G connections will reach 150 million by the end of 2014.The analyst firm said it expects total 3G connections to surpass 10 million during the first half of 2011, topping 100 million during the first quarter of 2014, and hitting 150 million by the end of that year.Wireless Intelligence said it expects BSNL and MTNL to have the largest number of 3G connections by the end of 2010, with market shares of 67% and 10% respectively (see table below). However, it predicts rival operators will quickly catch up, leaving BSNL with 22% of the market, and MTNL with just 2%, by 2014.The company said its forecasts are based on the prediction that mobile operators that have acquired 3G licences aim to commercially launch services by year-end, and will take six to eight months to roll out their networks."Outside of Delhi and Mumbai, the most competitive 3G service areas are expected to be Maharashtra, Tamil Nadu, Haryana, West Bengal, Assam and North East India," said Wireless Intelligence. 
  No. of 3G circle licences % of current connections covered by 3G licences 3G market share 2010 (%) 3G market share 2014 (%)
Aircel 13 90 3 10
Bharti Airtel 13 65 6 20
BSNL 16 100 67 22
Idea Cellular 11 77 3 11
MTNL 2 100 10 2
Reliance Communications 13 49 2 9
S Tel 3 100 0.2 1
Tata Teleservices 9 48 3 11
Vodafone Essar 9 60 4 14
Source: Wireless Intelligence, TRAI, company data

Источник: Total Telecom

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