Third Generation

According to Physics: If you double the frequency of an electro magnetic signal, it will travel half the distance. This is basic law of physics but this law is going to burden balance sheet of Indian telecommunication companies. And some folks decided earlier that we should not use same equipment to roll-out 3G what we use for 2G.

Government provides 2G spectrum in 800-950 MHz and will provide 3G in 1800-2000 MHz. This will reduce the coverage area of the 3G towers and where a telecommunication used to put 1 tower, will have to put at least two towers to cover the same area. Also, the company needs to install totally different equipments to roll-out 3G.

back-of-the-envelope calculation suggests that telecoms companies will need same amount o roll-out 3G what took them to purchase 3G spectrum. The other factor is why I would like to go for 3G? Agreed that 20-25% subscribers in Delhi and Mumbai have 3G ready phones and they may be waiting for 3G. But it will be difficult to spread 3G like 2G services. Rest of the India will wait for 3G services prices to go down.

Also, if telecommunication companies decides to use 3G spectrum to fulfill 2G spectrum requirements, their return on investments will suffer heavily. Three things will happen in next 3-5 years:

1) consolidation in Indian Telecommunication Sector
2) If consolidation doesn't happen, same finance minister will be forced to provide tax relief to telecommunication companies because they will find hard to survive
3) Telecommunication companies will become customer centric rather than product centric. At present, telecommunication communications are working out cheapest rates and to stay ahead in beating the competitor. This 3G roll out will stop this trend and we will see companies paying attention to quality of services which has taken a back seat. At least one company will differentiate on quality of services (end-to-end) and force others to follow suits. The quality along with attention on customer preferences can push ARPU to 750+ levels monthly and bring back telecommunication sector back on track.


Indian customer is also getting smarter and now he will demand quality with cheapest rates...

One advice to finance minister: Keep at least 10,000 crores aside for telecommunication sector where government can work on scientific advances to make spectrum a reasonably priced commodity. Very high rates of infrastructure is never a good sign and ultimately government will suffer due to same.