The telecom market in India is the most competitive; it?s the second fastest growing sector in the world, adding 7 million customers every month. Globally, technology is fast advancing, the 2G story is becoming older and advanced countries begin to launch 4G services. But in India, the hot point is 3G allocation. Is it worth to get the spectrum at such a huge cost in an almost saturated market?
The average revenue per user (Arpu) indicates how much money the company makes from the user. In the UK, it?s $30 per month, but in India, is just $4 per month. The disparity ratio is 7.5 times in the UK?s favour. Still, the outcome of the 3G spectrum auction in the UK was disastrous. The 3G network did not diffuse because firms broke. They had no money left to invest in infrastructure after paying for the spectrum licence. But in India, 3G will be cheaper as competition in market will increase, leading to lower cost and increased customer base.
The launching 3Gs will lead to better learning, growth and education, taking the country beyond just talking and messaging. The stake of the telecom sector in India is very high. Directly or indirectly, it creates employment. And from a market prospective, it creates opportunity for new companies to enter. India needs a revolution in the telecom sector as it is far behind other developing countries. If it lags behind, India would lose the competitive advantage in trade and commerce in the world. So, the country needs to capitalise on the oncoming 3G revolution. In long run, 3G services have got the potential to tap the vast rural market, helping India to realise its true potential.
All said, the 3G auction was a fair deal to India?s telecom companies. On the one hand, they can offer better services to the increasingly discerning customers. On the other, it will also lead to the consolidation in the telecom sector.
The writer is MBA (batch of 2009-11) student of IBS, Bangalore. Email: salritolia@gmail.com