3G may be a while in coming

High-speed Internet access on mobile phones, expected to be available by mid-2008, is unlikely to set Indian telephony on fire.

Value-added telecom services like data bring in 12 per cent of an Indian operator's revenue, having grown from 6 per cent in 2002. But revenue from Web browsing on the current slower mobile networks is less than 1 per cent of the total.

The bulk of what is loosely termed data revenue comes from text messaging (60 per cent) and caller identification, and the dominance of messaging, experts reckon, will continue for the next three years.

There are over 112 high-speed telecom networks in 49 countries but just two operators, NTT DoCoMo and Hutch 3G, cater to more than 65 per cent of third-generation telecom service subscribers. The other 25 million are spread over 100 networks.

More importantly, there is no successful model of a telecom utility offering both expressway and country-lane networks. Hutchison does not have a second-generation network in Europe and NTT DoCoMo is aggressively shifting its subscribers to its souped-up grid.

Also, at an average $220, most mobile telephony operators are subsidising nearly 90 per cent of the price of handsets.

And only markets with high mobile telephony reach have found such networks viable: Japan with a reach of 69 per cent, South Korea with 78 per cent and Thailand with 45 per cent have launched this service to expand the market; China, with a reach of 31 per cent, is still debating the economics.

In contrast, only 8.2 per cent of Indians have mobile phones. Even the urban use does not cross 10 per cent.

In most cases, radio frequencies for upgraded networks will be used in dense urban markets to run present networks that are ravenous for bandwidth.

This will not be cheap, considering that unlike for the existing ones, high-speed networks will have to pay for additional radio frequency if the telecom regulator's recommendation for auction is accepted by the government.

The Cellular Operators' Association of India is re-examining its projections, which said about 10 per cent of subscribers would shift to high-speed networks in the first year of service. Now it says this will be half if radio frequency has to be bought.