Business Today

Namaste, 4G

Kushan Mitra | Print Edition: May 13, 2012

India was always behind the curve on telecom. When the telecom revolution began around 2001/02, spurred in large part by Reliance's entry into the market with its amazingly low tariffs, the country was still in the second-generation (2G) phase. By then telecom companies in Europe were already bidding for third-generation (3G) networks . India took almost a decade to catch up, when it auctioned spectrum for 3G networks in 2010. But fourth-generation (4G) mobile networks are a different matter.

Kushan Mitra
Kushan Mitra
Not only did India auction spectrum for 4G networks along with 3G, but also, with Airtel launching 4G services in Kolkata recently, it is now one of just a handful of countries to have started such services. It has been a year since 3G services began. So far, consumer interest has been lukewarm. The incredibly high prices paid by the telecom companies for 3G spectrum also means that users of 3G data services are paying steep prices for them. 'Fast' is also costly. 3G compatible devices are just as expensive.

There are a few cheap 3G devices available, such as the ones sold by Idea and Vodafone for around Rs 4,000. But the difference, between using a cheap 3G device and a highend one is vast. Also developed telecom markets have shown that consumers like expensive 3G devices (read the Apple iPhone).

I have used 3G services provided by two operators - Airtel and Vodafone - on multiple devices for over a year. The speed is commendable and YouTube videos do load fast. But then, I have a compulsive need to stay connected for most of the time, and to stare at a screen. Not everybody feels the same way. A few friends or colleagues, all of whom belong to the top user bracket of mobile subscribers, have taken 3G services but never use them except with an iPad. Thus, barring a small number of subscribers, no one really needs high speed data.

What does the tepid response to 3G mean for 4G? Let us look at the prices Airtel will charge for its 4G service - Rs 999 for six gigabytes (GB) and Rs 1,999 for 18 GB of data (excluding taxes). The user will also have to buy an access device - a dongle or a WiFi converter - for an additional Rs 7,000. Considering that Airtel charges Rs 1,599 for 75 GB of data if you use its Direct Subscriber Line (DSL) wired Internet service, why would you want to use the 4G facility at all? Another problem with this pricing plan is that given the speeds that Long Term Evolution (LTE) - the underlying technology behind 4G - can achieve, the data cap can be exhausted in a few minutes. According to a telecommunications vendor, speeds of over 100 MB per second had been achieved in pilot trials.

At such speeds, 6 GB of data can potentially be downloaded in eight minutes. Of course, prices may fall as rival operators (Reliance Infotel, in particular) enter the fray. In that case, a data revolution may be in the offing.

But it is worth noting that, given the prices all players have paid for 3G spectrum, 3G access prices have not been impacted by competition. More entrants in 4G driving prices down may be great in theory, but will it actually happen? Even if access devices get cheaper, it is still years before 4G becomes viable.

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