3G proposal fails to strike chord with foreign telecom companies

3G proposal fails to strike chord with foreign telecom companies
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First Published: Fri, May 18 2007. 12 11 AM IST
Updated: Fri, May 18 2007. 12 11 AM IST
New Delhi: Notwithstanding the heavy bidding war for control of Hutchison Essar Ltd and an invitation from the former communications minister, very few telecom majors have forged plans to enter the Indian phone-services market, the fastest growing in the world.
Dayanidhi Maran, who exited the information technology and communications ministry on Monday, had announced that the bidding for new licences for the so-called third generation or 3G services, a cellular phone service that supports faster transfer of data, would be open for both existing and new players.
Though government sources indicated interest from several companies such as Deutsche Telekom AG, Verizon Communications Inc. and Japan’s NTT DoCoMo, only the German company gave any indication that it is interested.
“We have announced in the past that we are looking for opportunities for expansion, and India is certainly one of them,” said Mark Nierwetberg, spokesman for Deutsche Telekom. But, he declined to speak about details until the plans are final.
The only other international operator that evinced an interest in the Indian wireless market was Sprint, a Virginia, US operator looking for a “non-equity” participation in the Indian market.
BT Group Plc. and AT&T Inc., the two overseas operators already in India and focused on services to corporate clients, said they did not see themselves entering either the consumer market or the wireless market in the near term. Both companies once had stakes in Indian telcos which they sold—BT in Bharti Airtel, and AT&T’s wireless arm, since sold out by the company to Cingular, in the company that is now Idea Cellular.
Sprint, which plans to cover at least 100 million people by the end of next year under its ongoing deployment of ‘WiMax’ wireless data networks in the US, said it is in talks with two Indian operators exploring the roll-out of a similar network in India.
“Currently, we are focused entirely on getting our US (Wimax) network off the ground, and not interested in doing an equity joint venture,” said Christopher Weasler, Sprint’s vice-president for global development.
“But in the interest of expanding the Wimax-ecosystem to as many countries as possible, we believe that a huge market like India will be crucial for the success of the technology,” Weasler, who recently visited India, said.
Several other companies such as Telefonica SA of Spain, Australia’s Telstra Ltd and France Telecom declined to comment or did not respond to queries.
India’s under-penetrated telecom market is the main attraction for companies that don’t have a presence here. “The biggest attraction of India are the hundreds of millions of subscribers who are likely to join the mobile world over the next three years,” said Romal Shetty, director of the telecom practice at consultant KPMG India.
With a mobile penetration rate of less than 15%, India is the world’s fastest-growing wireless market, with net monthly additions in the six-seven million subscriber range for the last eight months. The government had expected to lure cash-rich international operators, most of them struggling with 100%-plus penetration levels in their home markets, with the possibility of gaining a part of the expansive Indian mobile market.
“The numbers don’t add up straight when it comes to 3G, because most of these new subscribers are going to come from rural areas, which cannot be tapped efficiently because the the cost of the handset is two to three times that of the normal phones. And since the primary use of a phone in such areas is going to be for voice, the data-capability of 3G will not be of much use,” KPMG’s Shetty said.
Yet, a business case exists for a limited 3G roll-out in the metro, as 3G handsets automatically switch to or roam on current generation networks when 3G signals are not available. But under the current Indian law, cellular operators can refuse to let customers of 3G roam on their networks when they step outside of their home networks, Shetty added. Until the department of telecom clarifies this fine print, potential entrants will prefer to wait and watch, he said.
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First Published: Fri, May 18 2007. 12 11 AM IST
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