<b>Surajeet Das Gupta</b>: Why the 3G revolution didn't happen

There are three important reasons why 3G has failed and they are related to decisions that operators have taken

With about 20 million 3G customers - constituting for only over 2 per cent of the mobile subscriber base - it is no rocket science to understand that 3G has not taken off. Operators, of course, say that they are constrained by the limited amount of spectrum of only 5 MHz which they have to offer the services, which is one fourth of what is given in Europe or the US.

That might be true. But there are three other more important reasons why 3G has failed and they are related to decisions that operators have taken.

Let us consider the first reason. It is true that just a few months ago all operators slashed their 3G tariffs by over 80 per cent to make it more affordable. But despite that move, 3G data tariffs are very expensive. While tariffs vary according to subscribers a reasonable user of 3G would be forking out Rs 1,000 to Rs 1500 for 10GB of data usage.

And that is a lot of money. It simply means that you would be forking out Rs 400 to Rs 600 for downloading a movie of HD quality (it requires 4GB) and as much as Rs 100 to Rs 150 to download it in a normal format (1GB). In a country where you can watch a movie in a hall for Rs 200 and in smaller towns at as low as Rs 100 or get a pirated DVD for Rs 50, it is surely not an attractive proposition.

At another plane in case you want to watch news or YouTube for just half an hour to one hour every day, you would have forked out as much as Rs 1,000 to Rs 1,500 a month (you need 10 GB). With the same amount, you can get cable or a DTH connection at half the cost offering you hundreds of channels.

But it’s not the high tariffs which have kept subscribers away. It is also the poor and limited coverage even in the bigger cities leave along smaller towns. So if you are not in the central business districts or key commercial centres what you get is only EDGE services with lower speeds. According to tower operators, the country has over 375,000 towers out of which only 16 per cent or 60,000 towers are 3G enabled. In simple term it means that only one out of every six towers is enabled for 3G services. 

To make the numbers more realistic, many would argue that 3G services are only relevant to urban markets and amongst the top 100 cities. If we take that into consideration what tower operators say then there are over 150,000 towers in urban India. That simply means that average coverage in most cities in India of 3G is less than half with only 60,000 3G enabled towers. Or as a senior executive of a tower company says that in most cities one out of three towers is 3G enabled, or the coverage of the promised speed is available only in one-third of the city.
The third challenge has been inconsistency in speed as well as quality of the service. That is because it is not just enough to enable towers for 3G. It is also equally important that operators invest in a robust fibre optic backbone linking the towers within the city to support high bandwidth and therefore high speed broadband.

The reality is, however, very different. Most of the towers in the country do not have a fibre optic backbone. Instead they are supported by microwave links to connect each other. According to tower companies about 30,000 to 35,000 towers would have a fibre optic backbone, which means one out of ten towers has a fibre optic backbone.

A CEO of a large tower company in India admits that only a fibre optic backbone can support high bandwidth required to ensure that you can see movies and videos play live games without interruption. That is why 4G operators like Reliance Infotel are investing heavily on building their own fibre optic backbone not only between cities but within cities. It is of course a difficult process as it means digging the city to put in the fibre ducts and most states have imposed tough rules to get right of way to do so. Technology providers say that one alternative which is being tried by other 4G operators is to install high powered microwave links which could provide more bandwidth in the backbone.