Nov 12, 2010
Post the 3G auctions, operators will now have to work out strategies to recover back the dear price of 3G
India is now poised for the next technological leap with the planned rollout of 3G services by early next year. The auction of the 3G spectrum by the government recently concluded in May, 2010 after 34 days and 183 rounds of intense bidding by nine private operators for 22 circles. The auctions ended after hectic bidding wars with no single operator winning the high-speed 3G spectrum in all 22 circles. The three biggest carriers of India namely, Bharti Airtel, Reliance Communications, and Vodafone managed to bag 13 circles each.
While the 3G spectrum auction was a bonanza for the Indian Government which netted `66,000 crore, the Indian carriers had to pay a steep price for the 3G spectrum artificially inflated by the intense bidding over the 34 days this year. The question that will be foremost in the minds of all the Indian operators is how to recover the cost of the expensive 3G spectrum in the shortest possible time as they plan the rollout of the 3G services.
Navigating in the 3G Domain
This article looks at some techniques that can be adopted by the service providers to quickly recoup the 3G spectrum costs. The 3G rollout will involve network upgrades to access, core and backhaul networks in order to meet the demands of the newer 3G services. The distinguishing and alluring feature of 3G, governed by the IMT-2000, is the great increase in data speeds. 3G networks allow download speeds of 2 Mbps for a stationary user and up to 384 Kbps for a mobile user, enabling service providers to come up with a slew of exciting new services. Such high network speeds allow for innovative services panning voice, data, and video.
A look at some of the techniques that can be adopted by operators to generate a healthy revenue from 3G incentivizing for traffic growth:
• Smartphones: A recent report by Ericsson indicated that mobile data traffic globally grew 280% during each of the last two years with the forecast of doubling annually over the next five years. This explosion in mobile data traffic in countries like US, Europe, and Japan is largely due to the entry of smartphones like the IPhone, Nexus One or Droid with their numerous data hungry applications. A compelling strategy for the carriers is to have a voice and data plan in the network, for which a smartphone like the ones above, are provided at a throwaway price. This will be a major incentive for the subscribers to download high speed, data hungry applications. The operators should avoid the flat-rate pricing offered in some networks in the US and instead have price-tiered service based on usage.
• 3G Dongles: Another strategy on the same lines is to subsidize 3G dongles for enterprises. As before, the CSPs should concentrate on the revenue arising out of usage of the dongles as opposed to making any margins on the dongles themselves. Now, with the entry of the iPad and other competing tablet computers there is bound to be significant growth in data traffic.
• App Stores: What makes 3G service so attractive is the high speed coupled with the inherent mobility. The CSPs have to take advantage of this fact and provide compelling high data applications which subscribers can download and use through App Stores. The App Stores should include innovative applications spanning location based services, video download services and mobile commerce.
3G Network Design Considerations
• UMTS RF Design: The service providers will have to devise their RF design strategy based on whether the 3G deployment is greenfield or brownfield in which the 3G network will be co-located with existing 2G radio access systems. The UMTS RF design and planning should take into consideration the increased capacity requirements and traffic growth projections for the 3G network. The RF design considerations should be based on sound market research and its goals should be to maximize coverage, to provide sufficient capacity, optimized link budgets, acceptable QoS while minimizing opex and capex. The service providers will have to take appropriate steps if spectrum re-farming from 2G to 3G is considered. In this situation, the operator must ensure that the transition is transparent as possible.Also, the operators should introduce dual–mode handsets that will allow the subscribers to seamlessly switch between 2G and 3G networks and vice-versa where 3G services are co-located with legacy 2G networks.
• Core Network Design Considerations:In parallel with the design of the UMTS RF access, planning and design should also be taken for the Core network. The projected increase in subscribers on a monthly basis, the expected increase in voice traffic and the potentiality of explosive growth in data traffic should be given due consideration. All these factors should be taken into consideration while dimensioning the Core 3G network. The traffic handling capacities of network elements like the MSCs, HLRs, SCPs, SMSCs, SGSNs, and the transmission systems like High Speed Links (HSLs) / Low Speed Links (LSL) should be dimensioned based on voice and data traffic projections. Based on experience of existing 3G networks in the world it would make better sense to slightly over-dimension the network than to face potential outages because of shortage of network resources. The operators have to accurately anticipate traffic growth, increase reliability of the network, and plan for the eventual migration to an all-IP network.
• Mobile Data Offload: The tremendous growth of mobile data traffic in countries that have already deployed 3G like US, Japan resulted in carriers there having to offload some of the data traffic to Wi-Fi networks and femtocells in order to reduce the burden on the network. Indian service providers should plan their network with data offload as a possible eventuality.
Prudent Technology Choices
As the network providers plan the growth of their network to support 3G technology they should also look at some of newer technologies that can help in reduction of the service provider's capex and opex. Two technologies with great potential are cloud computing and analytics. By judiciously migrating some of their applications on a public cloud, carriers can reduce their capital expenditure.
Lastly, CSPs can look at how data mining and analytics of their existing software systems can be used for identifying areas which will improve customer retention and reduce customer churn. Analytics provide a wealth of information on customer behavior which can then be strategized to increase revenue.
These are truly exciting times for Indian telecom. Coupled with the promise of the advanced technologies like the 3G, are also associated challenges and opportunities that are unique to those technologies. CSPs that plan ahead and execute on their strategies are bound to emerge as true winners in the years to come.
-Tinniam V Ganesh
The author is senior architect, Infinite Computer Solutions