India’s much-awaited tryst with 3G (third generation mobile networks) has come and gone without much to show for it. Perhaps the debt on their books, largely taken on to pay for 3G spectrum – the government made a total of Rs. 67,718 crore from the 2010 auction – dissuaded telcos from investing in creating the ecosystem 3G needs to thrive. At least some analysts believe this is proof that India will leap from 2G or 2.5G to 4G (fourth generation), bypassing 3G in its entirety.
This isn’t as easy as it sounds.
For one, India’s regulatory regime views 2.5G and 3G as mobile telephony technologies, while it views 4G as a mobile Internet technology.
Two, the Indian telecommunication market is divided between those who use the phone largely for voice (the majority) and those who use a single device for voice and data (a significant minority). The latter typically use a smart-phone over which they access the Internet. Still, the leap looks plausible.
India’s in-the-works new telecom policy will allow companies that have permission and spectrum to offer 4G services to offer Internet-based telephony services too (it is currently allowed but with enough conditions to make it uninteresting to most companies).
And phablets, phone-and-tablet combinations, such as Samsung’s Galaxy Note are becoming popular. A 28 May article in Information Week cites data from Millennial Media and ABI Research that shows that 208 million phablets will ship in 2015.
Given these developments, the most interesting emerging corporate battle (the MCX-NSE-BSE one is slowly tapering off) is the one between Bharti Airtel Ltd and Reliance Industries Ltd in the still-emergent 4G (fourth generation) space.
Every time Bharti has squared off against a Reliance company -- Reliance Infocomm, then part of the undivided Reliance Industries and run by Mukesh Ambani in 2002 and its later avatar, Reliance Communication, part of Anil Ambani’s Reliance Group, in 2007 – it has lost on the policy front and won in the marketplace.
Mukesh Ambani’s Reliance Infotel appeared to have a monopoly of sorts in 4G – it is the only one with a pan-India presence – but Bharti’s effective acquisition of Qualcomm’s 4G business gives it not just a presence in four more areas (it already has permission to offer wireless broadband services in four) including the important markets of Mumbai and Delhi, but also a first-mover advantage – Bharti has launched services, albeit minus a device and only through a so-called dongle, in Bangalore and Kolkata; Reliance is yet to. There are rumours that Reliance is in the process of entering into a partnership with a tablet or phablet maker, and it is entirely possible that the company enters the business, like it did the mobile telephony business in 2002, with a bundled offer that includes a handset. The company itself hasn’t gone public with its plans although analysts expect its strategy to be built around a device, content, and commerce.
The strategies of the two companies appear reasonably different, but these are still early days in India’s 4G journey. It will be interesting to see how it evolves.