New Delhi: Ten months ago, state-run telcos Bharat Sanchar Nigam Ltd (BSNL), and Mahanagar Telephone Nigam Ltd (MTNL) were vested with what some in the business would call an unfair first-mover advantage in the lucrative third generation phone.
But, today, the duo has little to show by way of customer additions for 3G, as the service is popularly referred to in short. A 3G service supports faster data downloads allowing for speedier Internet access on mobile phones or video-calling, as also better voice quality.
BSNL has just 9,000 customers to its 3G service from 70 licensed areas or circles. The wholly owned government company, which runs fixed line, mobile phone and other telecom services nationwide, launched the service in February.
MTNL, that offers phone services in Mumbai and New Delhi, has 400 3G customers in its first month of launch of its Jadoo-branded service.
Few takers: A 3G service supports faster data downloads, allowing for speedier Internet access on mobile phones or video calling. Lluis Gene / AFP
India expects to sell licences for 3G services later this year in a delayed auction and has attracted interest from the likes of global giants such as AT&T Inc. as also local market leaders Bharti Airtel Ltd and Vodafone Essar Ltd who see the service as a means to boost revenues.
BSNL and MTNL have to match the highest bid made at the 3G auction.
To be sure, it is early days to label BSNL and MTNL’s entry into 3G service a damp squib but some experts view it as a squandered opportunity.
Kunal Bajaj, managing director for India operations of BDA Connect, a firm of telecom consultants, says the two operators do not have the brand equity in the main target markets for services such as 3G: business customers, heavy data users, and the youth.
“Despite the fact that their products are more cost effective than the private operators, they just are not able to get the numbers,” Bajaj says. “There is very little overlap between the products that they have on offer and the existing customer segments that they have on their network.” Bajaj says.
He cites the example of Hutchinson Whampoa’s 3-branded 3G service in Europe that ended with 340,000 customers in the first 10 months of launch in 2003, as an example of rapidly ramping up a user base. In the UK, 3G services, first introduced in March 2003, ended that year with some 210,000 subscribers.
BSNL and MTNL, in their defence, say they are still rolling out 3G networks and are not ratcheting up advertising and marketing yet. In a recent interview, BSNL’s chairman and managing director Kuldeep Goyal said he expects the service to gain momentum next quarter, adding network coverage in some 70 cities was only 50%.
“We expect that by end-July we should have 150 cities with complete coverage,” Goyal had said. “It is only then that we can really go on aggressive marketing.”
MTNL chairman and managing director R.S.P. Sinha too put the delays in launch of service and uptake to time overruns in rolling out networks.
The two state-run telcos have time on their side to win over high-paying customers, says an analyst. “Keeping in view the lead time of six-nine months for (nationwide) roll-outs, winning bidders are likely to launch 3G services in 2010-11,” Shobhit Khare, an analyst with Motilal Oswal Securities Financial Services Ltd wrote in a report last week.
Still, they have some way to go. BSNL has a target of 1.2 million 3G customers by March, while MTNL’s Sinha said his company was targeting up to 300,000 3G customers in the first year of operations. Mumbai and New Delhi had a total of nearly 43 million mobile phone customers end-May.