India’s long-awaited auction of 3G licenses – now scheduled to begin 14 January – will result in the launch of services by the country’s biggest operators in the fourth quarter of next year, according to a new Wireless Intelligence report. The study – ‘Indian 3G Market Assessment’ – predicts that leading Indian GSM operators such as Bharti Airtel, Vodafone Essar, Idea Cellular and Reliance Group will successfully acquire 2.1GHz spectrum in the auction and switch on 3G services by the end of 2010. The two state-owned operators BSNL and MTNL have already received spectrum ahead of the private auction and are currently rolling-out 3G services. By 2013, the report forecasts, India will have around 60 million 3G connections, equating to 7.5 percent of the country’s total mobile connections base.
Not that the path to profitability will be easy for operators. The Wireless Intelligence report claims that the high cost of acquiring the 3G spectrum in January’s auction (now with a reserve price of INR35 billion/US$750 million per license), combined with the high cost of building the networks, will mean that many mobile operators will not see a return on their investment for at least three years. As a result, the current trend of network sharing between ‘2G’ operators in the country is likely to continue into 3G deployment, the report adds. “We expect such initiatives to fuel the speed of adoption of 3G networks in rural areas and help operators to manage capital and operating expenditure,” said Joss Gillet (pictured), senior analyst at Wireless Intelligence. Of issue to operators will also be the fact that the report believes 3G data services will likely be a niche service in the short term, targeting specific market segments such as affluent consumers and business users in the large cities of Chennai, Delhi, Kolkata and Mumbai (the ‘Metros’).