3G in Developed Markets and the SAARC Region

Responses to 3G technology across the world have varied enormously. While 3G providers in the US responded by pumping in millions for technology development, countries like Japan and Korea welcomed 3G with open arms. At the same time, the introduction of 3G to SAARC countries is another ballgame altogether.

The advantages of 3G and other wireless technologies are widespread. Facilities like wide-area wireless voice telephony, video calls, broadband wireless data and better network capacity reach your mobile handsets via this very technology. Wimax, for instance, can improve broadband penetration and therefore, connectivity. Then why is 3G still a partly successful, shabbily understood technology in most parts of the world? While 3G has already been experimented with in developed regions, countries in the SAARC region are soon to deploy the technology.

Mediocre Response in Developed Countries

Going by the inputs of 3G providers and users in developed countries, there are numerous aspects to wireless technologies. The most important and most expensive is the input fee for 3G service licenses. The bids that providers have to make for spectrum availability are enormous. Added to that, big investments are required by telecom companies to build necessary technical infrastructure.

Users, on the other hand, have to separately buy 3G compatible phones. They also have to pay a premium for 3G mobile services (including Internet access). This makes the package very expensive for the end user.

Operators in the US were trying to promote the benefits of 3G services to their current subscribers and potential new customers. But the results were not dramatic. Technical problems, poor network coverage and unattractive handsets curtailed the projected acceptance of 3G.

In Europe, high cost of spectrum led to high rates, which meant 3G had few takers in the continent. In Germany and UK in particular, high spectrum prices meant little money was spared to build infrastructure for these services.

On a more positive note, governments in Japan and South Korea were committed to deploying technological infrastructure and curbing spectrum licensing fees. Hence, they witnessed a wider acceptance of the technology. These countries are already in the process of deploying 4G.

Acceptance in SAARC?

Many countries in the SAARC region are in the process of deploying 3G technology. What does it mean to the countries and to mobile technology providers?

If 3G auctions result in astronomical bids in the SAARC region, then one can expect similar results to get repeated here. Prices have to be kept under control if one expects to capture the wide but price-sensitive market in a country like India. This could be difficult considering the existing low 2G bandwidth and the high costs of implementing 3G. Economical handsets also need to be available if the burgeoning rural market needs to be addressed.

Wireless technologies can aid initiatives like e-governance, education, and m-commerce. This is expected to bring substantial economic and social benefits to SAARC. Since there is little copper and coaxial cable network, the only way to increase the broadband penetration in South Asian countries appears to be through wireless technologies.

Even if you do implement 3G in all parts of a country like India, for something like video telephony, both sides of the interaction have to be 3G enabled. This will take some time to happen. So one has yet to see the approval 3G will receive in price-sensitive countries.

SAARC Wireless Initiatives

So far, the SAARC region, including governments, providers and users, are positive about accepting 3G in their region. Countries like Bangladesh, Sri Lanka, Maldives, Pakistan and India are at the forefront of the revolution. This year expects to see bidding of licenses for 3G spectrums in all these countries.

Where availability of 2G spectrum is low, 3G should be able to bring in better connectivity, particularly in voice telephony. Of these countries, Maldives has high tele-density, India has the highest number of telephone subscribers and Pakistan is rapidly changing its regulatory policies. In countries where subscriber base is low and spectrum is scarce, companies need to evolve just the right business model to make 3G a success.

While developed countries are working on 2 ½G to fill the gap in moving from 2G to 3G, this seems largely unaffordable in India. It’s interesting to notice that some countries are already working on the 3 ¼G.

Going Forward

Because 3G technology has failed in countries except Korea and Japan, the SAARC region needs to deploy the technology sensitively. While price remains a primary concern in these countries, the technologies being developed also need to be suitable to its largely rural, untrained population. Technologies will need to be priced reasonably and applications will have to be easy to understand. Especially so because rural markets are where the future really lies for the telecom industry.

The ‘general’ choicest application of 3G is video telephony . But this is unlikely to reach a wide subscriber base because of unavailability of bandwidth. So providers will need to develop greater applications that are attractive yet cost effective. Although high end applications might strike some chord with the elite urban populace, the technology per se needs to be accepted by the rural population. If it fails to tap into the rural market, the chances of failure are imminent.

The Challenges

Stakeholders and the licensor need to do a lot more homework before deploying 3G and WiMAX services in the SAARC region. Companies need to plan their business model in a way that their rates are within the means of the large rural population. This will mean a large subscriber base to cover costs, without which success of 3G in SAARC countries will be close to impossible.

As far as the licensor is concerned, the spectrum charges need to be kept to a minimum if this new technology needs to be successfully implemented. There should also be a mandatory provision to use it in rural areas for growth in the SAARC region to happen squarely.

Content is another concern if 3G has to become a flourishing reality. Video and voice facilities, access to mCommerce and entertainment on mobiles should be suitably adaptable to the region. They also need to be commercially viable and in tune with the needs of subscribers.

The there is the lack of infrastructure for developing countries of the SAARC region. This obstacle can be met if operators cooperate and ensure that users get the maximum benefits out of the technologies available. Handsets, for instance, will also have to be made available for an average buyer. Else, an expensive technology like 3G is unlikely to have a successful runway in the SAARC telecom market. While hopes exist for the cost of these smartphones to go below $100, it is a little in the future to portend that.