If the operators are paying such a heavy price, they will obviously roll out first in the creamy layer of the country, which is the metros, said TV Ramachandran, director general, Cellular Operators Association of India.
Though most telecom companies refused to go on record on their rollout plans, nearly all national players said they will bid selectively for 3G licences. The services are initially expected to be restricted to major metros like Delhi, Mumbai, Chennai and Bangalore. Among the metros, New Delhi (including national capital region NCR) has the largest subscriber base of 10.3 million, followed by 9.1 million in Mumbai, another 4.7 in Kolkata and 3.7 in Chennai.
The biggest problem being the price-sensitivity of the Indian market which makes it a challenge for the telecom operators to get customers on to the 3G network. Besides, high upfront payment would also result in higher end user charges.
"I dont think any company will launch 3G on pan-India basis because the spectrum charges will be too high," says Alok Shende, director of technology practice at Frost & Sullivan.
An operator will have to invest nearly $125-$140 per subscriber purely on technology (excluding spectrum and licence chargest) which translates into around Rs 600 crore for a million subscribers.
Industry observers also say not only are 3G equipment expensive, even handsets are on the higher side. 3G handsets available in India cost above Rs 15,000, which restricts their affordability.
"It makes sense for the operators to roll out 3G services first in metros as 3G does not deliver data as per requirement," says Mallikarjun Rao, director wireless solution Nortell India. Data over 3G will be approximately 1.2-1.3 times more expensive than 2G, adds Rao.