3G beats broadband in India

For a country which still defines broadband at 256kbps speed, having 12 million broadband users is a decent achievement. Ever since broadband was introduced in 2003, nothing much else has happened. The service gathered 12 million subscribers since its launch. A feat which was achieved in 26 months by the fledgling 3G service. Now 3G subscribers have crossed India’s broadband subscribers and 3G as a service is on the verge of becoming the next big thing.

3G spectrum was initially released to state-owned telcos BSNL and MTNL, which have struggled to gain customers. As per Telegeography, 3G services have grown by 400% from March 2010 to March 2011. A growth which we never saw in Broadband connections. What is impressive about the growth of 3G is the rate at which it is growing in the past 6 months after it was rolled out to private telcos. 3G subscribers went from 7 million to 12.2 million in just 3 months.

The spurt of 3G subscribers can be attributed to the arrival of new operators, increased competition, the availability of cheap 3G handsets and the rise of Google’s Android operating system. Few other factors are also evolving contributing to 3G’s success in India.

Telcos have recently agreed to co-brand their 3G service which should see another spurt of growth. Not all operators have 3G spectrum allocated in all the circles. This means IDEA which can’t sell its 3G services in Karnataka, have to tie up with  either Airtel, Aircel or Tata to sell 3G services to its 2G customers in Karnataka. Similarly Bharti Airtel would tie up with IDEA to provide 3G services to its customers in Maharastra and Gujarat.

Dual SIM phenomenon which brought companies like Micromax and Spice to limelight is also spilling into the 3G arena. People who do not want to sacrifice their voice plans for new 3G data plans are increasingly looking for 3G dual SIM mobile phones. A phone which can take a 3G SIM and 2G SIM and thus allow the customer to access the best of both worlds.

Despite 3G’s initial success, it is not without its problems and it definitely is not an elixir. 3G speeds are often erratic. The speeds range from 10kbps to 4Mbps which makes it an unreliable connection. In addition, 3G services use a lot of battery and are expensive. Lack of hyper competition means, the rates would remain the same until 4G comes along.

3G services should transform from being erratic, expensive and unreliable to a stable, cheap and trustworthy service for greater adoption.

Is this initial success an indication of things to come? Can 3G solve India’s connectivity challenges?

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