COMPARATIVE ANALYSIS BETWEEN THREE

TELECOM SERVICE PROVIDERS (AIRTEL) ,

(RELIANCE COMMUNICATONS) AND (BSNL)
REGARDING 3G SERVICES AND FUTURE
PROSPECTIVE OF 3G SERVICES IN INDIA
 A
PROJECT REPORT
ON

COMPARATIVE ANALYSIS BETWEEN

THREE TELECOM SERVICE PROVIDERS
(AIRTEL) , (RELIANCE COMMUNICATONS)
AND (BSNL) REGARDING 3G SERVICES
AND FUTURE PROSPECTIVE OF 3G
SERVICES IN INDIA.

Submitted by:
Harsh Vardhan Kaushik

(09BS0000850)

Submitted to:
Prof. Vinay Aggarwal

ICFAI Business School

Chandigarh

2
 Acknowledgement

Before I proceed further I wish to spend some time in expressing my gratitude to all those who
have been involved in guiding and helping me out during my entire research project.

I am grateful to IBS Chandigarh for giving me the opportunity to undergo this

research project. My project has been enriching and value adding experience. I
would like to equivocally thank the Dean, Prof. Bhagat Ram, who gave me this
opportunity to work under this project.

I would take this opportunity to express my sincere accolade to my faculty guide,

Prof. Viney Aggrawal for facilitating me at various phases of the project. At the
very outset of this research report, I would like to acknowledge the contribution of
all those who have been instrumental in helping and guiding me in course of this
effort.

Above all, I am grateful to all the respondents who took out time and helped to
make this project a reality.

Harsh Vardhan Kaushik

3
 Abstract

India is the fourth largest telecom market in Asia after China, Japan and South Korea. The

Indian telecom network is the eighth largest in the world and the second largest among

emerging economies. At current levels, telecom intensiveness of Indian economy measured

as the ratio of telecom revenues to GDP is 2.1 percent as compared with over 2.8 percent in

developed economies.

Communication sector or mobile telephony is the most active and attractive sector of last

decade. While the telecom industry itself has been present since ages in our country, it is

only the recent past it has witnessed so much dynamism. The emergence of Telecom sector

in India has more to do with the increased number of service providers, especially post-

liberalization, increase in product variety, and increase in economies of scale, with the aid

of modern supply and distribution solutions.

Indian Telecom industry is going through a transition phase with the introduction of the third

genration network or we can say 3G.

This report will cover the study of future prospects of 3G services in India. It will cover
the changes occurred and future changes in the sector, challenges, opportunities,
contribution in employment and the economy of country.

4
CONTENTS

Telecom Industry........................................................................................................7

Major Players.............................................................................................................. 9

What is 3G? ............................................................................................................. 10

Evolution from 2G to 3G........................................................................................11

GSM evolution to 3G.............................................................................................11

What will 3G mean to users?....................................................................................12

Features of various services.....................................................................................13

How is 3G different from 2G and 4G?.......................................................................14

Limitations of 2G...................................................................................................... 14

The Advantages of 3G Technology...........................................................................15

USER BENEFITS........................................................................................................ 17

OPERATOR BENEFITS AND MEDIA HOUSE BENEFITS................17

Issues of 3G ............................................................................................................. 18

Current status and Impact of 3G in India.................................................................21

Roll-out strategies.................................................................................................... 22

Market opportunity ..................................................................................................23

5
Getting subscribers on the 3G bandwagon..............................................................23

Future of 3G............................................................................................................. 24

Which companies have applied for 3G license?....................................................25

What is the pricing issue in India?.........................................................................25

What about the security in a 3G network?............................................................25

Where was 3G spectrum first introduced?............................................................25

CHALLENGES............................................................................................................ 26

Weakness in current telecom sector (the recent case of 2G scam).........................26

Limitations due to laws of TRAI...............................................................................26

Lack of basic and Secondary infrastructure.............................................................26

Poor distribution network.........................................................................................26

Economies of scale...................................................................................................26

Looking Ahead…...................................................................................................... 27

BSNL and MTNL are very differently placed in comparison to other private players. It
is not yet known when 3G auctions will happen and which companies will be in the
spectrum run. With a huge amount of investment only to acquire license, a lot of
other costs would be involved when it comes to network building and
implementation........................................................................................................ 27

6
Telecom Industry
Objective: Future of 3G Technology in Indian Telecom Sector.

The Indian telecommunications industry is one of the fastest growing in the world and India is
projected to become the second largest telecom market globally by 2010.India added 113.26
million new customers in 2008, the largest globally. In fact, in April 2008, India had already
overtaken the US as the second largest wireless market. To put this growth into perspective, the
country’s cellular base witnessed close to 50 per cent growth in 2008, with an average 9.5
million customers added every month.

According to the Telecom Regulatory Authority of India (TRAI), the total number of telephone
connections (mobile as well as fixed) had touched 385 million as of December 2008, taking the
telecom penetration to over 33 per cent. This means that one out of every three Indians has a
telephone connection, and telecom companies expect this pace of growth to continue in 2009 as
well.

7
The overall cellular services revenue in India is projected to grow at a CAGR of 18 per cent
from 2008-2012 to exceed US$ 37 billion. Cellular market penetration will rise to 60.7 per cent
from 19.8 per cent in 2007.

The Indian telecommunications industry is on a growth trajectory with the GSM operators
adding a record 9.3 million new subscribers in January 2009, taking the total user base to 267.5
million, according to the data released by COAI.

India is the fourth largest telecom market in Asia after China, Japan and South Korea. The
Indian telecom network is the eighth largest in the world and the second largest among emerging
economies. At current levels, telecom intensiveness of Indian economy measured as the ratio of
telecom revenues to GDP is 2.1 percent as compared with over 2.8 percent in developed
economies.

Indian telecom sector has undergone a major process of transformation through significant
policy reforms. The reforms began in 1980s with telecom equipment manufacturing being
opened for private sector and were later followed by National Telecom Policy (NTP) in
1994 and NTP'1999.

Policy reforms can be broadly classified in three distinct phases-

• "The Decade of 1980's saw private sector being allowed in telecommunications

equipment manufacturing. Mahanagar Telephone Nigam Limited (MTNL) and Videsh
Sanchar Nigam Limited (VSNL) were formed and a Telecom Commission was set up to
give focus to telecommunications policy formation.
• "In 1990s, telecommunications sector also benefited from the general opening up of the
economy. NTP 1994 was the first attempt to give a comprehensive roadmap for the
Indian telecommunications sector.

 Availability of telephones on demand (targeted by 1997)

 Universal service covering all villages and one PCO per 500 persons in urban
areas at the earliest (targeted to be achieved by 1997)
 Telecom services at affordable and reasonable prices
 World standard quality of services

8
 • "NTP 1999 brought in the third generations
of reforms in the Indian telecommunications
sector.
• India is one of the fastest growing telecom
markets in the world with an addition of
more than 6 million connections per month.
FDI inflow in Indian Telecom sector is the
highest among all sectors. It is emerging as
telecom manufacturing hub. Year 2007 was
declared as "Year of Broadband" in India.

It is projected that the industry will generate revenues worth US$ 43 billion in 2009-10.

Rural India had 76.65 million fixed and Wireless in Local Loop (WLL) connections and 551,064
Village Public Telephones (VPT) as on September 2008. Therefore, 92 per cent of the villages in
India have been covered by the VPTs. The target of 80 million rural connections by 2010 is
likely to be met during 2008 itself. Universal Service Obligation (USO) subsidy support scheme
is also being used for sharing wireless infrastructure in rural areas with around 18,000 towers by
2010.

The Indian rural market is going to be the next big thing for wireless telecom providers. With the
tele-density in rural areas being still about 10 per cent against the national average of about 21
per cent, there seems to be huge untapped potential for mobile phone penetration in rural India.
The government also plans an investment of US$ 2 billion, during 2008 to 2009, for the
development of around 100,000 community service centers in rural India to provide broadband
connectivity.

Additionally, by 2010, the government targets:

• 80 million rural connections

• Mobile coverage of 90 per cent geographical area
• Internet Protocol Television (IPTV) in 600 towns
• Quadrupling manufacture
• Two-fold increase in telecom equipment R&D from the current level of 15 per cent.

Major Players
There are three types of players in telecom services:
• -State owned companies (BSNL and MTNL)
• -Private Indian owned companies (Reliance Infocomm, Tata Teleservices,)
• -Foreign invested companies (Hutchison-Essar, Bharti Tele-Ventures,
Escotel, Idea Cellular, BPL Mobile, Spice Communications)
Market Shares of Key India
Mobile Operators, 2008

9
What is 3G?
3G (Third Generation) is the latest wireless technology. It is also known as UMTS (Universal
Mobile Telecommunications System), an improvement over 2G (Second Generation) providing
wireless access to the data and information to the users from anywhere and anytime. It is the
latest mobile technology and in fact it is described by Cellular (2004) as being a generic name
for the most of mobile technologies.
3G cellular phones were first launched in Japan in October 2001. This 3G phone was designed
so users would be able to surf the Internet, view pictures of the people they are talking to, watch
movies and listen to music on their handsets .

International Mobile Telecommunications-2000 (IMT-2000), better known as 3G or 3rd

Generation, is a family of standards for wireless communications defined by the International
Telecommunication Union, which includes GSM EDGE, UMTS, and CDMA2000 as well
as DECT and WiMAX. Services include wide-area wireless voice telephone, video calls, and
wireless data, all in a mobile environment. Compared to 2G and 2.5G services, 3G allows
simultaneous use of speech and data services and higher data rates (up to 14.4 Mbit/s on the
downlink and 5.8 Mbit/s on the uplink with HSPA+). Thus, 3G networks enable network
operators to offer users a wider range of more advanced services while achieving greater
network capacity through improved spectral efficiency.

10
Mobile telephony allowed us to talk on the move. The internet turned raw data into helpful
services that people found easy to use. Now, these two technologies are converging to create
third generation mobile services.

In simple terms, third generation (3G) services combine high speed mobile access with Internet
Protocol (IP)-based services. But this doesn’t just mean fast mobile connection to the world wide
web. Rather, whole new ways to communicate, access information, conduct business, learn and
be entertained - liberated from slow, cumbersome equipment and immovable points of access. It
will enhance and extend mobility in many areas of our lives.

Evolution from 2G to 3G

GSM evolution to 3G

11
What will 3G mean to users?
"Mobility" will be offered with many services that we currently regard as "fixed" – indeed,
Mobile operators believes that mobility will become the norm for many communication services.
We’ll be able to make video calls to the office and surf the internet, or play interactive games
with friends at home - wherever we may be. But 3G is not just about applications that require
high speed data rates. It’s about convenience and speed of access.

12
 There are various technology comes under various forms of services like under 1G its AMPS,
2G its CDMA, TDMA, GSM, PDC & 3G its W-CDMA, CDMA-2000,TD-SCDMA

TECHNOLOGY FEATURES

1G AMPS Advanced Mobile Phone Service -Analog voice service

- No data service
2G CDMA Code Division Multiple Access - Digital voice service
TDMA Time Division Multiple Access - 9.6K to 14.4K bit/sec.
GSM Global System for Mobile - CDMA, TDMA and PDC offer one-
Communications way data transmissions only
PDC Personal digital cellular - Enhanced calling features like caller
ID
- No always-on data connection
3G W-CDMA Wide-band Code Division Multiple - Superior voice quality
Access - Up to 2M bit/sec. always-on data
CDMA- Based on the Interim Standard-95 - Broadband data services like video
2000 CDMA standard and multimedia
TD- Time-division synchronous code- - Enhanced roaming
SCDMA division multiple-access

Features of various services

Services Features Speed Time to Download 3Min Mp3
song
2G Phone Calls, Voice
Mail, Receive Simple
Email Messages 10kb/sec 31- 41 Min

13
2.5G Phone calls/fax
- Voice mail
-Send/receive large
email messages
- Web browsings 64-144kb/sec 6-9min
Navigation/maps
- New updates

3G Phone calls/fax
- Global roaming
- Send/receive large
email messages
- High-speed Web
Navigation/maps
Videoconferencing 144kb/sec-2mb/sec 11sec-1.5min
- TV streaming
- Electronic agenda
meeting reminder.

How is 3G different from 2G and 4G?

While 2G stands for second-generation wireless telephone technology, 1G networks used are
analog, 2G networks are digital and 3G (third-generation) technology is used to enhance mobile
phone standards.

3G helps to simultaneously transfer both voice data (a telephone call) and non-voice data (such
as downloading information, exchanging e-mail, and instant messaging. The highlight of 3G is
video telephony. 4G technology stands to be the future standard of wireless devices.

Limitations of 2G
• Designed mainly for telephony application

• Circuit-switched

• High BER (Bit Error Rate)

• Low data bit rate (< 14.4kbps)

14
 • Too many standards globally

 GSM, CDMA, PDC, PHS etc.

The Advantages of 3G Technology

• Perform all those functions that they perform at present with their mobile devices but at
much higher speed than before.
• Provides them with faster connectivity, faster internet access, and music entertainment
with improved quality.

15
 • Can avail the benefits of video calling.
• Clarity is better and the facility can be enjoyed as long as both of are using the 3G
technology.
• Access any site on the Internet by using your phone as a modem for computer or laptop
and mail the important documents.
• Downloading games and songs is much faster with this technology
• Can be also used for favorite search engines to find information on news headlines, get
information about the evening weather.
• Provide with the data transmission speed of up to 2Mbps when the users are using the
phone on stationary mode.
• Provides significantly faster data transfer rates of connectivity and increased networking
and most importantly the resistance to noise.
• Increased the bit rate thus enabling the service providers to provide high speed internet
facilities, increased call volumes and host of the multimedia applications to their
customers.
• All these services can be provided to the customers on the basis of the amount of data
they transmit and not on the time for which they use the service thus making the services
cheaper.
• Beneficiary to the service providers as well as the intermediaries like the content
providers and the media houses who are looking for an additional platform market their
products. Basically it holds three way benefits to all the parties involved.
• Improved performance over 2G, including:

 Will ease spectrum constraints on the 2G networks and accommodate

subscriber growth
 Will improve data opportunities as spectrum constraints are a major barrier to
adoption and usage; Indian consumers already own c2m 3G devices
 3G spectrum will allow incumbents to differentiate services from new
entrants and regional players
 Improved capacity

 Improved coverage, enabling migration from a 2G deployment.

 A high degree of service flexibility, including:

 Support of a wide range of services with maximum bit rates above 2 Mbps
and the possibility for multiple parallel services on one connection;

 A fast and efficient packet-access scheme.

• A high degree of operator flexibility, including:

16
  Support of asynchronous inter-base-station operation;

 Efficient support of different deployment scenarios, including hierarchical cell

structure and hot-spot scenarios;

 Support of evolutionary technologies such as adaptive antenna arrays and

multi-user detection.

USER BENEFITS

OPERATOR BENEFITS AND

MEDIA HOUSE BENEFITS
17
Issues of 3G

Although 3G was successfully introduced to users across the world, some issues are debated by
3G providers and users:

• Expensive input fees for the 3G service licenses in some jurisdictions

• Differences in licensing terms between states

• Level of debt incurred by some telecommunication companies, which makes

investment in 3G difficult

• Lack of state support for financially troubled operators

• Cost of 3G phones

• Lack of coverage in some areas

• High prices for 3G in some countries

• Demand for high speed services in a hand-held device

• Battery life of 3G phones

18
COMPARATIVE ANALYSIS BETWEEN
RELIANCE COMMUNICATIONS , AIRTEL AND
BSNL REGARDING 3G SERVICES IN INDIA

The analysis is done upon some parameters like:-

1. Customer market share

2. Revenue market share

3. Product and services

Customer market share:-

1. Bharti Airtel :- 29%

2. Reliance Communications :- 17%

3. BSNL:- 16%

As we can say from the above data that Airtel is aving maximum customer market share or
we can say the largest customer base in number of people who are using Airtel after that in
second number there is Reliance communications and in third number government owned
BSNL

If 3G services are rolled out in India then we can say the competition between Airtel and
Reliance communication is more rather then comparing to BSNL

The investment done buy the private companies to get the 3G spectrum is the huge sum of
amount and they want to recover it from the customer it happens only when the
organization having the large customer base but in case of BSNL its a government owned
company its not provide services for the profits they want that the customer must use the
service which is provided buy the BSNL.

REVENUE MARKET SHARE

19
 1. Bharti Airtel:- 31.5%

2. BSNL:- 9.2%

3. Reliance Communications:-11.5%

PRODUCTS AND SERVICES

3G Services offered by BSNL

• 3G services customers would have three monthly subscription options of Rs 350, Rs

650 and Rs 1,350. Apart from this, customers would also get the 3G services through
a bundle offer

• The subscribers would be offered a plethora of services like live TV, high-speed
mobile broadband and movie download through 3G services.

• 20paisa per second call charge from the customer.

3G services offered by Airtel

• Mobile TV with 110 channels.

• Net connect with high speed.
• Video calling
• High speed data transfer
• Airtel 3g data cards
• Airtel 3g broadband services
• IPTV

3G Services offered by Relaince Communications

20
 • 3G ready GSM sim
• 3G broadband service through their latest Reliance NetConnect Broadband+
Evdo (3G).
• Video calling
• Mobile tv with 69 channels
• Offer services with other handsets providers.

Current status and Impact of 3G in India

The success of 3G is going to depend on demand for superior quality voice services and data
heavy, media rich content. The initial pricing has been on the higher side and it will have to drop
if mass adoption is to ensue.

Spectrum policy in India has been the victim of slow decision-making, which has left the
country lagging behind many others.

The delay in auction over three years has deprived Indian subscribers of the benefits of high-
speed mobile data services available to over 300 million subscribers residing in over 125
countries with significant concentration around the Americas, Europe, and South East Asian
countries.

This is also an opportunity for Indian software companies to join hands with service providers to
develop applications that will meet the needs of the Indian mobile user. At a later stage, these
could be rolled out into other emerging markets..

3G in India is initially expected to provide additional spectrum for voice services. This would
pave the way for data usage on mobile phones. This is vital as operators are focusing on
customer acquisition as well as ‘sticky offerings’ to prevent churn. 3G enables better VAS
services due to the higher levels of bandwidth that it can accommodate. The technology is
expected to drive data card adoption. Currently, Tata Indicom and Reliance are the only players
in the data card segment. With more players coming into the market, sales are expected to boom
with competitive prices and attractive schemes.

Poor broadband penetration, a large untapped rural market, and the challenge of providing high
bandwidth in rural areas using landlines are all factors favoring a 3G rollout. With 3G, network
operators can offer wireless broadband services. Moreover, many operators are starved of
spectrum and as 3G offers four to five times the voice capacity of 2G spectrum, it is a cost-
effective tool to deliver voice. Services beyond voice and text can be offered; 3G offers a
platform which can offer true multimedia services.

21
The technology will be critical for operators in enabling the differentiation of their service
portfolio, by providing a far richer service experience than is currently available—particularly in
the deployment of audio-visual services.

The fundamental driver for 3G in India is to serve the country’s demand for broadband services.
From a technological point of view, in areas where no fixed-line infrastructure exists, deploying
a mobile network is much cheaper and it can be rolled out a lot faster than wired infrastructure.

Revenue from Value added Services

12000 11096
10000
8000 7252
6000
5000
4000 2712 3708
2000 1752
0

2005 2006 2007 2008 2009 2010

Rs Cr

Roll-out strategies
Starting in February 2009, BSNL and MTNL—the state-run operators who were pre-awarded
3G licenses—have rolled out 3G services in 70 (BSNL) and two (MTNL) cities nationwide
respectively. The private telecom operators are in the process of planning their 3G network
infrastructure and awaiting final approval from the DOT auction to start rolling out their
networks; they are ready to go fully operational within six months of spectrum allocation.

Despite the hype around 3G, MTNL and BSNL have attracted a few thousand subscribers for
these services. Lack of attractive applications and content, the high monthly charges and the
anticipation of private players entering the 3G arena soon are the likely reasons for the low
uptake of 3G services. Meanwhile, Frost & Sullivan estimates that the number of 3G subscribers
will be around 7-8 million by the end of FY 2009-10.

In the first year of 3G operations, the operators are expecting 3G subscribers to pay about five
times the current 2/2.5G tariffs. 3G-enabled handsets and data modems for laptops are also likely
to be expensive. This is a steep increase and will target only niche demographics, but in the
coming three-four years the operators will see higher subscriber volumes and better operational
efficiencies and consequently the prices will drop to attract a wider audience. The challenge for
operators will be to offer wide coverage (including roaming), high quality service and attractive

22
content in the initial years to sustain high-paying subscribers long enough to reach the tipping
point of growth.

Market opportunity
According to the Federation of Indian Chambers of Commerce and Industry (FICCI), in India,
the 3G subscriber base is expected to hit 90 million by 2013, accounting for 12% of the overall
wireless user base. By 2013, 3G service revenues are expected to generate $15.8 billion,
accounting for a share of 46% in overall wireless service revenue. Due to the 52% contribution
made by the replacement market, annual sales of 3G devices are projected to reach 81.3 million
by 2013.

There will also be an increase in the share of non-voice services, including data card access, and
short messaging service. The Average Revenue Per User (ARPU) from these services will rise
from the present 9% to nearly 23%.

3G would be initially deployed as a voice technology. The ARPU is not expected to rise
significantly in the initial years. The overall impact on ARPU will be determined by
pricing/bundling strategies that operators adopt. In some markets, where 3G services have
already been provided, operators have adopted a penetration pricing strategy, aimed at building a
strong base of 3G users by pricing 3G services attractively.

Indian mobile operators already generate significant revenues from non-SMS data services and
3G will see new, exciting data services available to the Indian public. It’s worth noting that India
already has a dynamic mobile content industry.

However, some experts think that apart from data cards, there are no other killer applications in
mobile data services. In the enterprise, e-mail may be a major driver for this market. As far as
retail is concerned, video streaming could be a driver. This depends upon the pricing of video
clips and the download speeds that 3G can guarantee. 3G services are at a nascent phase with
only state owned companies offering 3G services in limited pockets—so real price cuts cannot
be seen

Getting subscribers on the 3G bandwagon

In urban regions, telecom carriers are facing declining service quality and decreasing margins
per minute. With 9% of the subscribers contributing 45% of carriers’ margins and 29% of
revenues, 3G will certainly enable the carriers to transfer high ARPU customers to the
congestion-free 3G network.

23
A combination of better services, innovative applications, and smart handset bundling coupled
with right pricing can attract a large base of users to 3G. Besides, many Indian customers already
have 3G-enabled devices. These people will be the first movers.

In order for the customers to know and get the feel of 3G, MTNL is initially offering a trial pack
for 15 days. The customer can get a first hand feel of exactly what 3G is all about. They can
experience the service, and MTNL is sure that after getting the feel of the same the customers
would not like to go back to 2/2.5G data services.

To improve overall service experience, operators will need to allocate spectrum for 3G to
provide improved voice services. However, this is unlikely to impact the ability to provide richer
VAS services. The eventual cost of deploying 3G networks may deter operators from rolling out
3G networks to the entire existing customer base, meaning that some segments will not have
immediate access to 3G. The cost of deploying the networks may impact the pricing strategies
for service packages offered to the market, with operators adopting different strategies to attract
new subscribers and cover their investment costs

Future of 3G
The good news for mobile users is that now 3G has been uploaded in all the latest handsets from
the leading manufacturers including Sony Ericsson, Samsung, LG, Nokia and Motorola. In
addition, a new technology called HSDPA has been upgraded with the 3G system which works
faster than 3G. The latest gadgets are well-equipped with power-packed features, enabling you to
communicate and enjoy loads of fun.

Today 2G is booming, one of the big reasons is the low-priced handsets. This, however, is not
the case with 3G. Opportunities are big, but we will have to make it happen.

The success of 3G will depend on innovative business models. The most certainly needed thing
is favorable regulations in terms of spectrum fees. It is creation and competition that are the two
mantras for the success of 3G in India. There is a need for creating an enthusiasm of technology
among the consumers, and 3G portals need not be the only goal of the operators.”

The big challenge set before us is the affordability of the 3G devices. Educating the customer on
3G is another challenge. 3G is most certainly going to be exciting, but also challenging. We need
the infrastructural support and the handset, too, would be at an affordable price. The stakeholders
should come together in order to see some good development. There is an opportunity to
transform the society, which is possible as long as all of us can work together.”

One of the advantages of 3G network is that it would give better voice clarity. It will shift the
Internet largely to the mobile space and we can ensure a 3G success

A matter of concern before us is the kind of bidding that would take place. It is equally
challenging to attract consumers to 3G. The reason why ARPUs are on the decline is because the

24
consumers are not able to see value for money. We need to concentrate more on customers. A
proper working strategy will lead to the success of 3G services.”

Which companies have applied for 3G license?

3G spectrums has been provided to GSM players like BSNL, MTNL, Bharti, and Vodafone and
some international companies have also shown interest to carry out an interface check on a non-
commercial basis ahead of the start of 3G mobile services.

Apart from PSU majors, spectrum for carrying out 3G trials has been given to all those who have
applied under the National Frequency Allocation Plan on the 2.1 GHz band. GSM players
operate on 900 MHz and 1,800 MHz, while CDMA players operate on 800 MHz.

What is the pricing issue in India?

While Tatas have welcomed Trai’s Rs 1,400-crore (Rs 14 billion) base price for a nationwide
rollout of 3G services, the rest of the players find the price too exorbitant.

Bharti-Airtel is disappointed with the pricing as they were expecting it to be Rs 300-400 crore
(Rs 3-4 billion). The reserve price is a disincentive for telecom companies in India. Bharti has
appealed to lower the prices especially for rural penetration.

What about the security in a 3G network?

3G networks offer a greater degree of security than 2G predecessors. By allowing the UE to

authenticate the network it is attaching to, the user can be sure the network is the intended one
and not an impersonator. 3G networks use the KASUMI block crypto instead of the older A5/1
stream cipher. However, a number of serious weaknesses in the KASUMI cipher have been
identified.

In addition to the 3G network infrastructure security, end to end security is offered when
application frameworks such as IMS are accessed, although this is not strictly a 3G property.

Where was 3G spectrum first introduced?

Japan was the first country to introduce 3G on a large commercial scale. In 2005, about 40 per
cent of subscribers used only 3G networks. It is expected that during 2006 the subscribers would
move from 2G to 3G and upgrade to the next 3.5 G level.

The success of 3G in Japan also shows that video telephony was the killer application for 3G
networks. Downloading music was the biggest draw in 3G services.

There are about 60 3G networks across 25 countries.

25
For infrastructure providers 3G will be a value-add during slowdown, as they would get to put in
a lot of new developments. Layout of next generation networks that are 3G compatible will help
in better manageability of services over the networks. Even service providers believe that 3G
would make the entire mobility space much more accessible. The broadband connection, as they
have not reached the set target, will also benefit with 3G coming to India.

3G will help service providers manage their existing infrastructure better and remain competitive
in a mobile number portability (MNP) regime. It will also generate a more addressable market to
the GSM service providers. They can go back to their existing customer base and provide them
with enhanced data services

3G will not only make its presence felt in cities and towns but also bring in better and faster
networks to rural India.

In the years to come 3G would make a lot of difference in making business models more
innovative. 3G and WiMax will help solve the problem of low broadband penetration in India to
a great extent. It is high time the government realizes the need and use of 3G. In a fast growing
economy these technologies have the power to change the development roadmap of the country.

CHALLENGES

Weakness in current telecom sector (the recent case of 2G scam)

Limitations due to laws of TRAI
Lack of basic and Secondary infrastructure
Poor distribution network
Economies of scale
1. Differentiation

2. Difference between urban and rural customer

Critical Success Factors

• Location
• Merchandise
• Knowledge and Information
• Customer Satisfaction
• Ability to Acquire the Right Products

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 • Product Presentation / Placement
• Traffic Building
• Layout

Looking Ahead…..
BSNL and MTNL are very differently placed in comparison to other private players. It is not
yet known when 3G auctions will happen and which companies will be in the spectrum run.
With a huge amount of investment only to acquire license, a lot of other costs would be
involved when it comes to network building and implementation.

But the high costs will lead to new services making its way into the market, especially the urban
areas. “Unlike 2G, in 3G one has to come up with very innovative applications and tariff plans.

The penetration level of 3G, however, is still uncertain. The new technology comes with costs
attached, and while the upper-middle class business professionals might be able to utilize these
services, a major part of our population is still far from the levels of affordability that these
services ask for.

With a per capita income (national average) of as low as $950 per annum (Rs 38,000
approximately), access to these technologies shall remain for the select few. Rs 8,000, the
minimum amount required for purchasing a 3G handset, is a luxury that most can't afford. Also,
other gadgets such as laptops, which can use 3G-run broadband access, are yet to make inroads
among the large population.

Even as most handset manufacturers see a tremendous growth opportunity in the realm of 3G-
enabled mobiles, it is certain that price will play a key role in deciding the fate of the new
technology. To tackle this concern, mobile phone manufacturers are making efforts to come up
with phones as cheap as Rs 3,500, against the currently available minimum price of over Rs
8,000. Mobile makers in India are also expecting prices to dip, and thus are contemplating
aggressive plans to come up with affordable handsets in this category.

Analysts say that 3G first needs to be popular with the middle class segment if it is to bring the
much talked about “broadband revolution”. For such kind of change to take place, the price of
the handset and the services will play a crucial role.

About 15-20% mobile phones in India are already 3G-enabled, but they have to be made
affordable. The availability of reasonably priced phones has already made many experts rework
their estimates of the size of the 3G market to grow from the present 40-70 mn to 100-150 mn by
2012.

3G is one of the most cost effective ways to deliver mobile broadband to the masses. Expectedly
3G can single-handedly achieve far more in terms of bridging the digital divide than any other

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way of mobile internet connection introduced by the government.

Because of its higher voice capacity, 3G could also facilitate the delivery of far more cost-
effective voice services. However, this will happen only if operators do not have to pay
exorbitant prices for 3G spectrum. An auction of 3G spectrum could lead to irresponsible
bidding resulting in high costs and tariffs, which would completely negate the tremendous
capacity advantage that 3G has to offer.

Auctions also have another downside - by their very nature, they entail a selection amongst
bidders, which would result in discrimination between existing cellular operators as it would
deny some operators their legitimate expectation of evolving to 3G. Also, it would not be in the
national interest if the 3G policy ended up being disruptive, creating uncertainties, leaving the
survivors with the winners' curse and others with the prospect of gradual collapse of businesses.

Therefore, the answer to the question raised is that, yes, 3G has a future in India and that it is
relevant and important, but the key to the success of 3G will lie in its price, that is, if it has to
become a mass service. 3G did not take off in the west because of the exorbitant prices attached
to its spectrum, which made the service unaffordable and restricted to a niche market.

The 3G service can also help to alleviate the severe spectrum crunch that is currently being
experienced by various operators, especially those in the big cities and metros. There simply is
not enough 2G spectrum that can fuel the aggressive growth in services.

Also the 3G spectrum has a voice capacity that is four-five times higher than the 2G spectrum.
This could actually play a crucial role in helping to overcome the limited availability of the 2G
spectrum. It may be helpful in achieving a national telecom target of 250 million by 2009 and
500 million by 2010.

3G networks enable network operators to offer users a wider range of more advanced services
while achieving greater network capacity through improved spectral efficiency.

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 Project Introduction

Indian Telecom industry is going through a transition phase. Most of the Service
provider in our country who earlier provided the 2G services now going to Provide
3G services.. Though Telecom sector in India is undergoing an exponential growth,
the road ahead is full of challenges.

India telecom industry is the largest industry in India, with an employment of

around 8% and contributing to over 10% of the country's GDP. Retail industry in
India is expected to rise 25% yearly being driven by the services which is going to
rolled out in upcoming months.

This project will evaluate the future prospects of 3G services in India. And
comparison us done between the three big telecom organization or we can say the
service providers (Airtel, Relaince and Bsnl) regarding the 3G services.

Objectives

• To study the future prospects of 3G services in India

• Challenges & opportunities

• Impact of big players on small players

• Impact of foreign players

• Role of Government

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Limitations of the study

• For collecting data commutation cost will be incurred

• Frequent changes in the market trend and customer preferences

• The scope of study is limited to sample size of 200

• Our observation is confined to New Delhi and Chandigarh only

• The data which will be collected from customers and telecom retailers is
through questionnaires and is subject to response errors

Research Methodology

Primary Data Collection for Customers and Retail Outlets

Descriptive Research Design:

The research design adopted in this study is Descriptive Research Design. A

descriptive research design is the one which is description of the state of affairs as
it exists at present. It includes survey and fact finding enquiries of different kinds.
The researcher has no control over the variables. The researcher used this research
design to describe the consumer buying behavior and the retailers’ outlook towards
changing trends in Indian Food Retailing and their future perceptions.

For Customers: This research design is used to find out the respondents attitude
and their customer satisfaction level.

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For Retail Outlets: This research design is used to find out the comparative study of
competitive Retail Outlets which are being preferred by the respondents.

Sampling Design: A sample design is a definite plan for obtaining a sample from a
given population. It refers to the techniques or procedures the researcher would
adopt in selecting items for the sample.

Convenience Sampling:

The researcher adopted convenience sampling. It is the non probability sampling in

which sampling procedures does not have any basis for estimating the probability
that each item in the population is included in the sample. The researcher selects
the people according to their convenience.

For Customers: For selecting respondents, random sampling was used, due to
factors like convenience and for each market there was a set quota of 25
respondents.

For Retail Outlets: For selecting respondents, random sampling was used, due to
factors like convenience and for each market there was a set quota of 5 outlets.

Sample Size:

For Customers: The target sample for this study is 200 respondents in various
areas of Mohali and Chandigarh that was done independently and they are further
divided into age group of 20-60 including business class, service class, students and
house wives.

For Retail Outlets: The target sample for this project is 5 Competitive Brands and
further 3 Outlets of each competitive Retail Brands in various areas of Chandigarh
and New Delhi that was done independently.

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Sampling Area:

The sampling unit may be a Geographical one such as state, District, Village etc.
The geographical sampling unit under study has covered the area of Ludhiana and
Chandigarh. The various locations where survey was conducted include:

For Customers:

New Delhi: Mainly eating joints and food courts of various shopping malls like also
covering various food retail outlets

Chandigarh: Mainly eating joints and food courts of various markets like Sector 17,
Sector 35, Sector 22 and Centra Mall also covering various food retail outlets

For Retail Outlets:

For New Delhi: Mainly outlets in various shopping malls

For Chandigarh: Mainly outlets in various markets like Sector 17, 3B2, 7 Phase
Mohali

Secondary Data: As far as the secondary data is concerned, data was taken from
various websites, journals, industry database and annual reports.

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