Ronnie05's Blog

Indian Telecom Story (Part XXVI): 4G on the horizon?

Posted in Industry updates by Manas Ganguly on February 24, 2010

Of 4G deliberations and its implications on the current 3G spectrum auction

The much awaited 3G spectrum auction which has been delayed atleast 6-7 times in the past has found a new date: 9th April 2010 is when the government intends to carry out the 3G spectrum.

Even with the mess that 3G is, Telecom Regulatory Authority of India (TRAI) issued a pre-consultation paper to deliberate on 4G early this month. TRAI’s move to leapfrog to 4G or LTE technology comes in the wake of the government dithering over 3G policy, that has been delayed by more than three years. While accepting the “Bad” delay in 3G auctions, TRAI has branded this move as timely and preemptive to deal with issues, discussions and policies that would ensure a uniform and timely roll out of 4G.4G is a serious advantage to the bandwidth starved users of the country, as it provides 10 times faster internet speed than 3G and has support for live Hi-Def TV content.

This declaration undermines the feasibility of 3G and investments planned there-of. 3G viability now depends upon what time frame is TRAI working upon. 3G already is delayed by 3 years after the initial auction date and 10 years in terms of technology. Even if 4G moves on fast track, it would take anywhere near 2.5/3 years for it to see the light of the day. With 4400 crores/per vendor at stake on 3G, it is difficult to fathom why would any Telecom Operator waste money and time on implementing the 10 year old 3G technology and rather not jump into the 4G bandwagon. That would seriously impede the 3G deployments in the country.

The best case solution is 3G being implemented as a mass vehicle to enable broadband to the nation and 4G is used as the premium data service. The financial ROI of 4G would then be a derivative of the licensing costs. It is also possible that to have inclusive participation from all vendors, if the government offers subsidy over 4G spectrum to players who have bought into the 3G spectrum. That would then enable smooth transitions into both these technologies and co-existence.

The monies from the 3G spectrum and the 4G spectrum is seen as a big contributor to the government for closing the fiscal deficit. Last year, the base price of the 3G spectrum was increased two fold from Rs.2200 crore to Rs.4400 crore. The implementation of 4G will depend on timing it versus the 3G and the cost of licenses. If 3G and 4G implementations are not spaced amply, 3G may not provide suitable returns on Investments and TRAI may have to make subsidies to involve 3G players in the 4G space. A sufficiently long gap may hamper the case of growth powered by broadband reach through the country.

Earlier related posts: A 60,000 crore lost opportunity, Round of the decade 2000-09, January Round Up

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