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WiMAX, 3G and Number Portability to Drive Indian Wireless Market in 2009
Defying the global economic slowdown, IndiaÃ's mobile-phone demand is expected to continue to rise at an accelerated rate in 2009 due to the rollout of 3G and WiMAX networks and the implementation of Mobile Number Portability (MNP), according to iSuppli.
IndiaÃ's mobile-phone demand is expected to rise to 136 million units in 2009, up 23.9 percent from 110 million in 2008. This compares to 16.8 percent growth in 2008.
Cellular subscribers in the nation will grow to 319.9 million by the end of 2008, up 36.9 percent from 233.6 million at the conclusion of 2007.
iSuppli estimates IndiaÃ's total wireless subscriber base will grow at a Compound Annual Growth Rate (CAGR) of 25.1 percent for the period 2007 to 2012 to reach 715 million by the end of 2012.
"The continued expansion of IndiaÃ's mobile-handset market is partly due to the declining costs of calls, the availability of inexpensive handsets, increasing geographical coverage and operatorsÃ' rising portfolio of Value-Added Services (VAS)," said Abhimanyu Raina, associate analyst at iSuppli. "In 2009, the rollout of 3G and WiMAX networks and the implementation of MNP are expected to drive the growth of the wireless sector."
3G, WiMAX and MNP drive demand
Indian telecommunications operators presently are focusing on 2G CDMA and TDMA (GSM) technologies to deliver lower-cost mobile services. However, the process of cost reducing 2G-derived handsets seems to have reached its technical limits.
iSuppli forecasts 3G and WiMAX will garner subscriber bases of 250 million and 19 million respectively by 2012.
This growth can be attributed to spectrum availability, more affordable price points and support from the government. Initially, the market for these technologies is expected to be driven by corporate and enterprise users and by tech-savvy young people.
MNP will be implemented by the end of 2008 in four metropolitan areas: the National Capital Region, Mumbai, Chennai and Kolkata. These rollouts will be followed by a launch in other areas by April 2009. As shown in nations such as Australia, Japan and Hong Kong, the implementation of MNP increases the churn rate, leading to rising competitiveness in the market. iSuppli expects similar results in India.
India announces 3G and WiMAX policy
IndiaÃ's Ministry of Communication and Information Technology in August released its 3G and WiMAX policy, which covers both GSM and CDMA services. Key features of the policy include:
- Foreign companies will be allowed to bid for 3G and WiMAX licenses in India.
- Up to five licenses will be issued to operators over 60MHz of spectrum in each coverage area for telecom companies. Five additional operators may be added in the future.
- The 3G spectrum in the 2.1GHz band will be available for auction, with spectrum allotment for 20 years.
- WiMAX spectrum at the 2.3GHz and 2.5GHz bands will be available for auction, with spectrum allotment for 15 years.
- Spectrum is set to be auctioned in blocks of 2x5MHz at the 2.1GHz band and 20MHz at the 2.3GHZ and 2.5GHz bands.
- Operators are exempted from paying an annual fee during the first year of operation.
- Operators will pay an annual spectrum charge of 1 percent of adjusted gross revenue after one year.
- Companies holding a Universal Access Service License (UASL), and/or fulfilling the eligibility criteria of UASL and possessing previous experience of running 3G services can bid for spectrum.
- Rollout obligations include 90 percent of metros' areas within five years from the date of spectrum allocation.
As a result of the announcement of the above policy, the Indian telecom sector has seen a host of activities pertaining to 3G and WiMAX technologies. These include:
- State-owned telecom operators Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) each received single blocks in each 2.1GHz (3G) and 2.5GHz (WiMAX) spectrum. These firms are expected to roll out their 3G and WiMAX services by the end of 2008. This has given them a head start compared to other private telecom players.
- Apple in August launched its iPhone 3G in collaboration with Airtel and Vodafone.
- Tata Communications, previously named Videsh Sanchar Nigam Ltd. (VSNL), launched WiMAX in Bangalore. The company plans to invest $500 million to roll out the service in Chennai, Delhi and Hyderabad.
- Sloka Telecom, a global player in wireless broadband solutions, has initiated aggressive brand building activities in India. The company is in the advanced stage of sample product testing and negotiations with some telecom OEMs and service providers for offering WiMAX solutions.
Posted to the site on 17th November 2008