Stakeholders of the telecom industry discuss issues relating to policy, global success stories, India strategy, and content at the fourth CEO Conclave 2005

The unprecedented boom in telecom services in past couple of years can be attributed to the tremendous growth in mobile services. As the market matures, telecom operators face new challenges, as sustaining current high level of growth may not always be easy. On the other hand, customer expectations and demand for services including data services and other bandwidth hungry applications such as video clip, mobile TV etc are increasing. There is an immediate need of ensuring the availability of additional spectrum for the growth of mobile services. Thus it is time that the Indian telecom players start considering 3G as a potential technology for future telecommunication. VOICE&DATA took up this issue in its fourth CEO Conclave, which was held in New Delhi on December 1, 2005.

Representatives from various segments of the industry came together to discuss major regulatory and commercial issues related to 3G technology.

Dr DPS Seth, member (Technology and Services), TRAI

The conclave began with a keynote address by Dr DPS Seth, member (Technology and Services), TRAI. He raised important issues related to the impediments in the process of introducing 3G in India and cause of its success internationally. Shedding light on the Indian mobile market, he said, “In India just over 30% of the population is exposed to cellular mobile signal, so first priority will be to cover the remaining 70% with cellular services, then look for 3G market there.”

He compared the demand of data centric services in rural and urban India and reiterated that rural areas were a potential market for data services provided they are offered at reasonable prices.

Defining the role of the government and regulator, he stated that in India presence of a number of parallel or competitive technologies has led to lot of uncertainty in choice of technology for applications. “The role of the government or the regulator is to ensure that regulatory and licensing policies should be technology independent and leave the choice of the technology to the entrepreneur”, he said.

Availability of sufficient spectrum is the major issue for 3G technology to grow. The regulatory policy, pricing policy all depend on the availability of spectrum. He said, “Availability of spectrum is important as the policies that we adopt will depend on it, if we have plenty of spectrum, the policies can be very liberal and in opposite case the choice of service provider and pricing will have to be decided carefully.”

He emphasized on the importance of the next few years for the entrepreneurs and the government, with respect to 3G technology. “The next few years are important for the entrepreneurs because they will have to take decision on a variety of choices of technology in lieu of the nature of evolving demand in India, possibility of rural coverage, still maturing technology in 3G area, the cost of available handsets. Interconnection and regulatory issues etc. They are important for government because wrong policy decisions can lead to not adequate pickup on 3G technologies,” he said

Session I: Regulatory Impediments
In the first session, the panel discussed issues such as regulatory direction related to 3G, allocations of 3G spectrum, availability of spectrum for operators, spectrum allocation versus revenue share, market creation for new technologies, issues pending with regulators, and global regulation.  RN Agarwal member, Radio Regulations Board, ITU gave a historical background on 3G technologies and the bands identified in the radio regulations. He said, “A single frequency band which could be globally harmonized could not be identified in WPC 2000 thus a solution of three frequency bands with the flexibility of usage to administrations was devised.”

TV Ramachandran, director general, COAI stated that in seeking regulatory directions we should learn what went wrong in other countries. The learning for India will come from 2G policies, which needs to be replicated. New players should not be allowed without catering to the needs of existing players. The existing players should be given free entry, which will lead to growth in the market and decrease in tariffs as in 2G. He said, “Giving license to existing players will lead to seamless transition from 2G to 3G services.” The requirement of globally harmonized bands, which will increase the bargaining power of vendors for equipment, was emphasized. The rural areas bandwidth should be utilized as data services and demand is high there and BPO companies also hold a potential for 3G technology. He said, “3G is relevant to India now and it's a chance for us to beat China.”

 JP Garg, principal advisor, Telecom Nokia India, discussed the drivers and enablers, which are changing the communication scenario such as growing customer expectations, convergence of networks and services, and growth of rural economy. He said, “Interconnectivity and interoperability are the issues that have taken up our time in 2G and 2.5G and they are expected to pose much serious problems in 3G.” The importance of IPR, security, privacy, and legal aspects were discussed.

Success Stories: 3G has made a comeback despite being written off (L to R) Delphine Reffet, business program manager, SGBU, HP; Sanjay Singh, VP engineering & GM, Dilithium Networks; Prof V Sridhar, dean research and consulting and professor, Information Management, MDI; Swami Krishnan, chief marketing officer, Sasken Communication Technologies; Deepak Maheshwari, secretary, ISPAI

Parag Kar, director (Government Affairs), Qualcomm, defined 3G and elaborated the mindsets of the international bodies with respect to this issue. 3G is a business enabling technology and the regulator should allow 3G to help businesses get rid of constraints impeding business growths. He said, “We have spectrum constraints, constraints of teledensity and providing business services.” For consumers to get benefits of the technology, level-playing conditions should be ensured to create a competitive environment in the market place. The regulators should not to take fragmented approach for framing policies.

Rakesh Mehrotra, chief officer, Corporate Regulatory Affairs, Tata Teleservices, indicated the advent of convergence and questioned the logic of issuing new licenses when existing licenses allow voice and data. Distinction can be drawn between in band and out-band services, which require different allocation of spectrum. He said, “Frequency allocation should be done in a band where equipment and handsets are easily available.” He expressed the view that vacation of spectrum is important but not at the cost of national security. Content availability was a major issue and numbering and portability also will come and play around.

Biswapati Choudhary, director, WMO, Government of India and chairman, ITU- Working Party on spectrum Management Methodologies, raised the question, “How we look forward?” He said, “Harmonization is not being done today. A spectrum manager must look to accommodate all the technology and service. Management positions should also be changed according to availability of spectrum. Problem areas should be identified and classified and rules should be framed accordingly.”

Rajat Mukarjee, vice president Corporate Affairs, Idea Cellular, said it was a long way to reach the objective of government to achieve 250 mn subscribers wireline and wireless by 2007. He said, “Whatever policy changes need to be made should ensure addition of subscribers on a month-on-month basis. The present users have to be asked to vacate the spectrum and it has to be made available for the areas where it is required.” The cost structure around the industry, which make-up a heavy cost base-needs review. Interconnection points have to be developed in a faster way. He said, “All players must be treated equally. We are still at the mercy of the incumbent for virtually everything.”

Session II: Global Success Stories
The panel dwelled upon the issues such as learning from global regulations, opportunities in voice and data, various business models, market creation for new technologies and successful case stories.

On the issue whether 3G would flourish in India as it did abroad, Sanjay Singh, VP engineering and GM, Dilithium Software Technologies India, stated that 3G had made a comeback last year, after people had already given up on it.

Strategies: Availability of spectrum is important for 3G (L to R) Rajiv Gupta, CEO, Oxigen; BM Khanna, ex-CMD, MTNL; SD Saxena, director (Finance), BSNL; CS Rao, CEO, Lucent Technologies; Don Price, CTO and director, Bharti Cellular

He said, “The main drivers for 3G technology are converged devices such as camera phones, fixed broadband prevalence, need for anywhere anytime content, adoption by youth, and availability of enabling technology.”

Swami Krishnan, CMO, Sasken Communication Technologies, talked about the pricing of the 3G services. He stated, “DoCoMo gets around $1000 over three years. This is the base required for good coverage, good ecosystem, handling pre-specification fragmentation and content delivery.” Thus in India, the mix of both flat rates and premium for VAS is required.

Deepak Maheshwari, secretary of ISP Association of India, reiterated the need of getting more spectrum allocated by vacating the existing users. He said, “Worldwide the 3G experience is very basic, as the operator wants high ramp up and the customer expectations are very high as they pay higher prices for the services.”

Delphine Reffet, business program manager, SGBU, HP, emphasized the need of creating an ecosystem. She said, “Nobody is sure which service would be successful thus they need to be designed as per the market. Branding too is interesting; as the consumer has to be educated first for the technology and then brands play will come in.” She also emphasized that cost is an important factor.

Session III: 3G Strategies for Indian Service Providers
The third session deliberated on aspects such as business models and successful strategies, technology roadmap and road blocks, integration and interoperability issues, the convergence game plans, growth strategies, reinventing capex cost structure, roll out and cost factor for services and handsets.

BM  Khanna, ex- CMD, MTNL, said 3G is here to stay. CDMA 2000 and GSM-based 3G services will grow in India. He raised the issue of constraint of bandwidth and how to manage it. He said, “The CDMA 2000 based 3G services as per IMT report had 150 mn subscribers mostly in US, Japan and Korea and GSM based service has only 90 mn”

In the rural scenario, 3G will cater to e-agriculture, e-governance, e-health and e-education so these services can be included in the plans while formulating the policies. The need to have a time bound plan for vacation of spectrum by defense for 3G to be introduced in India was also emphasized.

Don Price, CTO and director, Bharti Cellular, said that the need was to stay in globally harmonized IMT 2000 band. Service providers are comfortable in today's regulatory environment, as it appears to be a level playing field. He said, “We have surpassed the benchmark for extra spectrum and at some point the quality of service may suffer. Customers are demanding higher data services and we remain very bullish on 3G.” Introduction of 3G networks by March 2007 should be realistic, he stated.

CS Rao, CEO Lucent Technologies mentioned that to exploit the technology capability of 3G with the highest spectrum efficiency, we need to achieve the higher teledensity in the metro areas and concurrently achieve the growth from the tertiary areas of the country. “Additional application to be delivered at affordable prices is another model operator need to be addressed,” he said.

He also raised certain important points such as, affordability of 3G handsets. Concurrent growth of cheap voice, evolution of a common IP core is important for adoption for 3G services. Affordability of technology is important in capex sensitive country like India.

Rajiv Gupta, CEO, Oxigen Infovision, highlighted the consumer standpoint on 3G. The 3G devices are going to be high end. Thus the target consumers need to be chosen carefully. He said “The whole idea of 3G is great, because the capability of the service is going to be data one has to think with a data and not voice mindset.”

SD Saxena, director (Finance), BSNL, talked about the challenges faced by BSNL in expansion of GSM including 3G.

He said, “We'll use spectrum freely as we are not charging from customers, the tariffs are touching rock bottom in India and the 3G networks should not be auctioned.”

Session IV: Content-Enablers and Opportunities
The fourth panel discussed issues related to content enablers and opportunities.

Putting forth the content developers' view, Sukanta Dey, director (Telecom), Times Internet said, “With the mobile screen, we could move anywhere and get voice, data and entertainment anytime. He explained the relevance of 3G or 4G technologies, as they will bring to life what we see on the mobile.” 

Content: Entertainment is the DNA of 3G (L to R) Sukanta Dey, director (Telecom), Times Internet; Vivek Kumar, Jt DDG, New Services, BSNL; Taron Mohan, CEO, Phoneytunes; Ibrahim Ahmad, Editor VOICE&DATA; Eric D Collins, VP Sales, Marketing, Business Development, AOL Mobile; Sanjay Goyal, CEO ACL Wireless

Voice portals have also become a big success. With 3G the rich voice delivery will be cheaper. According to him, “Games have high usage but low penetration, the killer application for 3G would be the two ends of the spectrum dominated by entertainment. Music will be the biggest driver at one end and enterprise solutions at other.”

He was of the view that consumers will buy branded products and the developer will have to build a B2C brand. Freshness of content has to be maintained and formats need to be developed. Moreover 3G will enable better products at relatively lower cost. According to him, “Voice is going to be almost free so bundling of voice with was will be done by the operators.”

Taron Mohan, CEO Phoneytunes.com believed that 3G would enable convergence of TV and handsets. He said, “Content for 3G has to be mobile specific and not a reproduction of TV.”

Eric Collins, executive VP Sales, Marketing, and Business Development, AOL Mobile, stated that developers are not keen on pushing content into the mobile space as the chunk of the revenue goes to mobile operator. He stated, “It's more favourable to work as an enabler of content and support the applications.” The challenge is also to create a profitable business model for content providers.

Sanjay Goyal, CEO, ACL Wireless stated that the most important thing is that 3G provides the right environment to deliver the kind of user experience the end user might like to see. He pointed out, “We are not sure that we will be able to extract more revenue from the end user more that we do now. New applications and content need to be developed for 3G.”

Vivek Kumar, Jt DDG, New Services, BSNL put forth the operators perspective that 3G will bring some challenges for operators and content developers. He said, “The challenge for the operators would be to make the service affordable and for content developers is to come up with applications which would address the needs of the subscribers.”

The panel was of the view that until a Business model for 3G content is developed, making money through content is difficult. “The telcos are marginalizing the developers, the lions share goes to the service provider, said Mohan. Dey reiterated that content developers are getting squeezed between operators and IPR.

Kumar on the other hand said, “The content remains crucial but the owners are loosing control over it. The content provide should come up with applications which are a natural progression to what are available in 2G or 2.5G.” He was of the view, “ The content developers should consider both the sides as even if that they get less revenue share they can thrive on volume.”

On the issue of killer applications, the panel was of the view that consumers were excited about chat and dating. According to Goyal, “We have learnt a couple of things from 2 G and 2.5 G that music works along with cricket, chat and dating. User generated content model is what can really bring tremendous volumes for the service provider and developer.” Video down loads, full track music downloads, sports and other highlights, news and tragedy, gaming will also gain popularity.

The CEO conclave was successful in bringing together all industry stakeholders and provided enough food for thought on 3G: the technology of the future.

Sonia Sharma
sonias@cybermedia.co.in