It's boom time for mobile phones in India. And people are looking forward to more information, faster data access and multimedia services through their mobile phones. 3G technology is here to turn this dream into reality. It's a technology anxiously awaited by telecom operations and subscribers in India.
How long do you have to wait?
Not very long! India is all set to launch 3G mobile telephone services by June 2007.
According to Telecom Regulatory Authority of India chairman Nripendra Misra, a total of 32.5 MHz is available for allocation within the next 6-9 months.
Trai has also recommended auctioning 200 MHz for broadband wireless access services like Wimax (worldwide interoperability for microwave access) and has proposed a national frequency management board to oversee spectrum availability and its efficient use.
He hopes that the allocated spectrum would be enough for the next two years and said Trai would recommend freeing up more spectrum for those who lose out in this auction.
So what is 3G spectrum all about? Read on.
What is spectrum?
Radio spectrum refers to a range of radio frequencies. The bandwidth of a radio signal is the difference between the upper and lower frequencies of the signal.
For example, in the case of a voice signal having a minimum frequency of 200 hertz (Hz) and a maximum frequency of 3,000 Hz, the bandwidth is 2,800 Hz (3 KHz). The amount of bandwidth needed for 3G services could be as much as 15-20 Mhz, whereas for 2G services a bandwidth of 30-200 KHz is used. Hence, for 3G huge bandwidth is required.
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.
Currently, Japanese company NTT DoCoMo and Samsung are testing 4G communication.
How will 3G services help you?
3G services will enable video broadcast and data-intensive services such as stock transactions, e-learning and telemedicine through wireless communications
All telecom operators are waiting to launch 3G in India to cash in on revenues by providing high-end services to customers, which are voice data and video enabled. India lags behind many Asian countries in introducing 3G services.
What is Trai's recommendation on 3G pricing?
The Telecom Regulatory Authority of India has recommended auctioning radio frequencies for 3G telecom services at a reserve price of Rs 1,050 crore (Rs 10.50 billion) to companies seeking to offer nationwide high-speed Internet and streaming video.
The base price for spectrum in cities like Mumbai and Delhi and Category A telecom circles is Rs 80 crore (Rs 800 million); in cities like Chennai and Kolkata and Category B circles Rs 40 crore (Rs 400 million); and in all other cities Rs 15 crore (Rs 150 million).
What are the frequency bands and quota for CDMA?
Trai has recommended three sets of frequency bands - 450 mhz, 800 mhz and 2.1 ghz. For CDMA players like Reliance [Get Quote] and Tata Teleservices [Get Quote] 1.25 MHz each is offered. CDMA operators are free to bid both in the 2.1 GHz and the 450 MHz bands, but they will be allocated spectrum only in one. The pricing of these two bands is linked to the auction in the 2.1 GHz band.
CDMA operators will pay the same as the second-highest GSM bidder. And if there is more than one claimant in the 450 MHz band, the reserve price will be half of that arrived at in the 2.1 GHz band. Another rider is that if the highest bid is a quarter more than the lowest, the lowest bidder has to raise its bid to 75 per cent of the winning bid.
But CDMA operators are likely to face problems. Operating 3G services on 450 MHz is a problem because we they do not have dual-band phones that work both in 450 MHz and in 800 MHz (the band in which CDMA operates in India).
What are the issues regarding 3G for providers and users?
3G has successfully been introduced in Europe. But several issues continue to hamper its growth.
High spectrum licensing fees for the 3G services
Huge capital required to build infrastructure for 3G services.
Health impact of electromagnetic waves.
Prices are very high for 3G mobile services.
Will 2G users switch to 3G services.
Takes time to catch up as the service is new.
What are the issues regarding 3G pricing?
Pricing has been a cause of concern. Spectrum auctions ran into billions of euros in Europe. In Europe, spectrum licensing fees were collected years before the 3G service was developed and it required huge investments to build 3G networks, hitting mobile operators' margins.
However, in Japan and South Korea, spectrum licensing fees were not applicable as the focus of these countries were national IT infrastructure development.
Which companies have applied for 3G license?
3G spectrum has been provided to GSM players like BSNL, MTNL [Get Quote], Bharti, and Hutch to carry out an interface check on a non-commercial basis ahead of the start of 3G mobile services.
Trial spectrum has been given for a period of one month. This will be only 1/1000th of the actual 3G spectrum capability. Apart frm 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 specially for rural penetration.
The Cellular Operators Association of India and the Association of Unified Service Providers of India are studying TRAI's recommendations and have not given their comments.
However, Trai chairman Nripendra Misra has said that there is no reason to worry as players will not bid exorbitantly and derail the auction. Misra said telecom operators had matured from their experiences and global developments, and would bid sincerely.
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.
In how many countries does 3G exist?
There are about 60 3G networks across 25 countries . In Asia, Europe and the USA, telecom firms use WCDMA technology. The WCDMA standard provides seamless global evolution from today's GSM with support of the worlds' largest mobile operators.
WCDMA technology is built on open standards, wide ranging mobile multimedia possibility, and vast potential economies of scale with the support of around 100 terminal designs to operate 3G mobile networks.
3G services were introduced in Europe in 2003.
