Recent reports in the Indian press have looked at 3G's success - or otherwise - in India. BSNL and MTNL have yet to see more than a few sales of 3G services. Is there something flawed with the companies' approach to 3G? Michael Schwartz analyses.
Two state-run companies, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), were said to have been given an unfair advantage by the Indian authorities when they were allowed ter the 3G arena before other such enterprises. This may seem out of keeping with the deregulated Indian market of recent years; what can not be denied is the lack of subscribers that either company has attracted for 3G.
Since launching in February, BSNL, for all the attractions promoted by 3G's supporters, can only boast 9,000 3G customers. It may be that BSNL, which is still owned by the Indian Government, imagines that it does not have to live in a competitive telecoms market and that government finances will always be there to bail it out. One would have expected more success from BSNL, considering that it was allocated 70 circles (licensed areas).
As for the other entrant, MTNL, it attracted 400 customers in its first month of 3G. MTNL is not spread as widely as BSNL, but operating in both Mumbai and New Delhi should in theory have proved very lucrative. Analysts of this type of operation would describe MTNL as creaming off the richest markets but it has not happened so far.
Both companies will have the rivalry of Bharti Airtel, ATT and Vodafone Essar to contend with very shortly as 3G licences will be up for sale in the next few months. The two with the head-start have almost nothing to show for their advantage; it is accurate to say they have wasted their opportunity.
One is tempted to ask whether the newer players will be more successful. Indian 3G phone prices have been discussed on blogs like the Indian Broadband Forum. Participants here have called up information via the companies' websites. In the case of MTNL, there is a fixed charge of nearly US$12.50 per month, considered high by commentators. Then there are the inconsistencies. Use an MTNL 3G phone to contact the USA, UK or Hong Kong and you will pay US$0.13 per minute. Cross a few miles from the UK into France and Germany - or from Hong Kong into China or Japan - and it will set you back US$0.19 per minute. There are real inconsistencies.
And the BSNL handset, before you even attempt to gain access to content, will cost you US$62.38. Early 3G is not good value in India.
All too clearly, something is going wrong. The early days of 3G in Europe saw some success. Apart from a question of affluence (can ordinary subscribers in India afford the handset and then the content?) it may well be that the content offered to Indian subscribers is simply irrelevant. This is referred to in marketing circles as brand equity.
Indeed, one telecom consultancy, BDA Connect, has been looking at the tradtional target markets for 3G: "business customers, heavy data users, and the youth." While one would challenge the idea that 3G users are predominantly young (do not share-holders of all ages check their portfolios and do not punters follow the progress of their bets?) the singling out of heavy data users is valid.
Must any such data be downloaded exclusively via a 3G phone? Surely, the answer must be no. Ordinary computers do exist; they can have broadband speeds installed, bypassing 3G phones.
In fact, an Indian family which has just invested in an ordinary household personal computer may well feel there is no need for a 3G phone - and may not be able to afford one anyway.
For the sake of shareholders and employees in the new 3G entrants mentioned above, one hopes that the latter's approach will be more focused and ultimately more successful.
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