India South Asia Com Witness Rural penetration 3G Issues

The India & South Asia Com congress closed today in Mumbai, after two days of discussions and experience-sharing on the strategies to grow the region’s telecommunications market.

The event gathered representatives of leading operators, service providers, regulators, analysts and vendors, who attended keynote sessions and specialist streams covering all the major issues in the market. The overall feeling from the speakers was that the potential for growth is great in the region, provided the stakeholders can take advantage of the opportunities offered by rural telecommunications, 3G networks and value added services.

The subject of rural telecommunications and how to bridge the rural-urban divide was addressed in the opening keynote session by Shri Nripendra Misra, Chairman of the Telecommunications Regulatory Authority of India (TRAI), who commended initiatives from industry associations on this subject (as well as calling for greater regional cooperation in developing telecommunications, and announcing recommendations and consultations on 3G, spectrum, MVNOs and number portability). In an overview of India’s mobile market, TV Ramachandran, Director General of the Cellular Operator Association of India (COAI), highlighted rural penetration as one of the main growth opportunities in the region. Addressing a key aspect of rural growth, Anil Tandan, CTO of Idea Cellular, described the strategies for optimising CapEx and OpEx, and touched on the issue of infrastructure sharing. This was one of the key topics in the session and was further discussed by Umang Das, Managing Director of Spice Communications.

The opportunities created by 3G were of particularly great interest to the participants, as 3G licences are expected to be awarded in India in the coming year. Most speakers however were keen to point out that 3G would not be an instant success. Without denying the benefits of rolling out 3G networks, Rajat Mukarji, Chief Corporate Affairs Officer at Idea Cellular said “today I doubt that there is an application in 3G that we wouldn’t have brought out in the 2.5G environment”. Irfan Wahab Khan, Executive Vice President of Telenor Pakistan, pointed out that one of the benefits of 3G will be to help offload some of the capacity constraints on existing networks. The business case for 3G in the region will depend greatly on the licensing process (TRAI’s Misra said recommendations would be published this week), and on the costs involved in fees and network rollout.

With or without 3G, some value added services are proving very successful on existing networks, and content was hailed as a key service to increase revenues. Mobile music in particular is one of the highly successful services in the region, with caller ringtones an example of a success story. However, partnerships between operators and content owners to make their music catalogue available and to promote it on the mobile channel seem difficult. Rajat Kakar, Managing Director or Universal Music India, mentioned that revenue share between operators and content owners in India’s mobile music market is the least advantageous for the content owners compared to other markets.

The conference also saw two of the market’s hottest topics addressed in the streams: WiMAX and mobile advertising. Both seemingly offer great opportunities for operators to deliver enhanced services or target new market segments, but on the other hand, their business models are not proven enough yet.

India & South Asia Com will take place again in Mumbai next year, with the support of COAI and a drive to include more of the region’s alternative service providers, in addition to its larger operator groups from India and neighbouring countries Bangladesh, Pakistan and Sri Lanka.

Cellular sub scri ptions in South Asia (Bangladesh, Bhutan, India, Nepal, Pakistan, Sri Lanka) exceeded 320 million in December 2007, according to Informa Telecoms & Media’s World Information Service (WCIS). This represented 24% of Asia Pacific’s total cellular sub scri ptions; a figure that is forecast to increase by 36% to 775 million by the end of 2012.

Key to the growth in the South Asian region is India whose 230 million cellular mobile subscribers as of end December 2007 represented 71% of South Asia’s sub scri ptions. At the end of 2012 India is forecast to have 740 million cellular sub scri ptions. With India’s cellular penetration at 19.5% (and South Asia’s at 24%) at the end of December 2007 there is still a great potential for growth.

GSM is by far the most dominant technology in South Asia making up 86% of overall cellular sub scri ptions at the end of September 2007 compared to CDMA with 14%. WCDMA at the end of September 2007 was only available in Nepal and Sri Lanka with a combined overall total of 14,000. At the end of 2012 GSM will still remain dominant with a forecast 74% market share but CDMA’s market share is forecast to fall to 10% and WCDMA is forecast to increase to 14%.

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