India’s government is reportedly working overtime to get much-needed spectrum into the hands of GSM-based operators by the end of the year so they can deploy third-generation services. But until it does, it’s not allowing CDMA operators to launch 3G networks either.
According to reports in India, the Department of Telecommunications ordered Tata Teleservices Ltd. to put off its CDMA EV-DO launch, telling the carrier that the country’s 800 MHz frequency band is second-generation radio frequency, and that the carrier will have to wait until 3G spectrum is released.
Ramifications for equipment vendors are hard to figure, since the timing of almost any county’s 3G spectrum allocation is not an exact science. At best, vendors and analysts offer forecasts based on educated guesses as to when governments will dole out spectrum for 3G.
However, Taha Rangwala, senior analyst at Pyramid Research, said that in terms of India, vendors are not thinking about quarter-to-quarter results.
“Ericsson and Nokia are looking for long-term profit,” explained Rangwala. “But profit margins aren’t that large in India-it’s going to be a volume game, they’ll get a small margin on every unit the sell. The bottom line is that nobody is making any money in India right now, and that means that they have a very long-term view. 3G will probably have better profit margins because of volume.”
To understand the vendor spread in India, consider that 79 percent of the country’s 100 million subscribers use GSM-based services, leaving 21 percent to the CDMA carriers. But guess who has spectrum to spare? Clue: it’s not GSM-based carriers.
CDMA carriers likely would increase their market share by launching 3G services before GSM-based carriers, and analysts think large portions of India’s more than 1 billion citizens are ready for 3G technology. Yet, analysts also noted that to do business in India, vendors have to be creative-they must find ways to meet the unique needs of both the carriers and the population.
For instance, Rangwala said in some cases vendors will even deploy networks at their own cost, and as cash-strapped Indian carriers sign people up, they will pay a per-subscriber fee to the vendor for network infrastructure and management.
He also commented: “Although India is primarily a voice market and illiteracy rates are quite high, there’s a minority of subscribers who consume data. Operators offer voice portals that allow users to `voice browse’ so that not being able to read doesn’t get in the way of using services.”
Datacomm Research President Ira Brodsky added, “India’s subscriber base grows by about 4.5 million every month, and out of the country’s 140 million telephones, 100 million are wireless. 3G shouldn’t be thought of as a luxury just because India’s population is considered to be somewhat poor and much of the country is rural. For Indian subscribers, getting a phone is a major purchase, and they want to have additional capabilities.”
But, said the analysts, vendors know that it’s all about getting a foot in the door.
“The early entrants into the market will probably dominate the market, becoming a preferred vendor,” said Brodsky.
And so it is, waiting for India’s DOT to sort out its 3G spectrum probably will not dull a single vendor’s enthusiasm as they focus on the big picture. Siemens, a huge player in India’s wireless infrastructure, said this: “We are in the starting blocks to deliver 3G infrastructure to India as soon as the market is ready for the new networks.”
Current Analysis’ Peter Jarich added that “timing issues are always fuzzy. That said, you can bet it’s an important concern for every major GSM and CDMA2000 vendor since most have a piece of the action in India … and the others want a piece.”
