Impact Of 3g In India

IILM

INSTITUTE FOR HIGHER EDUCATION

Impact of 3G & 3G Norms in India

Contents Telecom Industry............................................................................................. .......4 Major Players.........................................................................................................6 What is 3G?......................................................................................................... ...6 Evolution from 2G to 3G.....................................................................................7 GSM evolution to 3G...........................................................................................8 What will 3G mean to users?.................................................................................9 Features of various services................................................................................. 10 How is 3G different from 2G and 4G?..................................................................10 Limitations of 2G.............................................................................................. ....11 How 3G works?....................................................................................................11 The Advantages of 3G Technology.......................................................................12

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Impact of 3G & 3G Norms in India

Telecom Industry 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. Market Shares of Key India Mobile Operators, 2008

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)

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 [Type text]

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Impact of 3G & 3G Norms in India 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. 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.

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Impact of 3G & 3G Norms in India Evolution from 2G to 3G

Evolution Of 3G Technology: 1G: First-generation wireless telephone technology, cell phones. These are the analog cell phone also known as AMPS that were introduced in the 1980s. 2G: Digital mobile phones, including those that use GSM, CDMA or TDMA networks, are the second generation phones. 2G networks were built mainly for voice data and slow transmission. They offer data-transfer rates ranging from 9.6 kb/s to 19.2 kb/s. 2.5G : Technologies such as i-mode data services, camera phones, high-speed circuitswitched data (HSCSD) and General packet radio service (GPRS) that provide some functionality domains like 3G networks, but without the full transition to 3G network. Interim hardware and software solutions are emerging that promise to have real or perceived data transfer rates ranging from 56 kb/s to 170 kb/s. 3G: Third-generation digital-phone networks will have a nominal maximum data rate of 2 Mb/s, which can handle streaming video, two-way voice over IP, and Internet content with high-quality graphics and plug-ins to a wireless phone. According to Ericsson, 3G is a generic term that actually describes different flavors of wireless: Code Division Multiple Access 2000 (CDMA2000) : CDMA2000, also known as IS-136 and IMT-CDMA Multi-Carrier (1X/3X) is a radio transmission technology for the evolution of narrowband cdmaOne/IS-95 to 3rdgeneration adding up multiple carriers. cdma2000 will be deployed in two phases.

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Impact of 3G & 3G Norms in India Universal Mobile Telecommunications System (UMTS): The name for the third generation mobile telephone standard in Europe, standardized by ETSI. General Packet Radio Service (GPRS): A packet-linked technology that enables high-speed (115 kilobit per second) wireless Internet and other data communications. GPRS will offer a tenfold increase in data throughput rates, from 9.6kbit/s to 115kbit/s. Using a packet data service, subscribers are always connected and always online. Wideband Code Division Multiple Access (WCDMA): A technology for wideband digital radio communications of Internet, multimedia, video and other capacity-demanding applications. WCDMA, developed by Ericsson and others from CDMA, has been selected for the third generation of mobile telephone systems in Europe, Japan and the United States. WCDMA uses variable rate techniques in digital processing and can achieve multi-rate transmissions. WCDMA has been adopted as a standard by the ITU under the name IMT-2000 direct spread. Enhanced Data rates for Global Evolution(EDGE):s A technology that gives GSM and TDMA the capacity to handle services for the third generation of mobile telephony. EDGE was developed to enable the transmission of large amounts of data at a high speed, 384 kb/s. EDGE uses the same TDMA (Time Division Multiple Access) frame structure, logic channel and 200kHz carrier bandwidth as today's GSM networks, which allows existing cell plans to remain intact. Cellular mobile telecommunications networks are being upgraded to use 3G technologies from 1999 to 2010. Japan was the first country to introduce 3G nationally, and in Japan the transition to 3G was largely completed in 2006. Korea then adopted 3G Networks soon after and the transition was made as early as 2004. The 3G Policy In Brief : •

The policy calls for an auction for spectrum with different reserve price fixed for separate telecom circles. As against the demand of certain lobby groups, the government has opened the market for local as well as foreign players, as long as they meet certain criteria — holding a unified access service (UAS) license or being eligible to hold UAS license. The foreign players who will be eligible to hold a UAS license will have to form JVs with local partner and can hold a maximum of 74 per cent in the JV as per the existing FDI norms in the telecom sector. However, in addition to the auction price, they will have to pay UAS license fee.

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The spectrum will be auctioned in blocks of 2×5 MHz in 2.1 GHz band. There can be a maximum of 10 players in any circle and in most cases the number will vary between 5-10 players. The license will hold for 20 years and besides 3G license fee firms will have to pay spectrum usage charge. However, in the first year, the firms will not have to pay this spectrum charge which will amount to 1 per cent of annual gross revenue from the second year onwards.

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The reserve price for the auction of spectrum in Delhi, Mumbai and other Circle A categories has been fixed at Rs 160 crore. Kolkata and Circle B areas will have a reserve price of Rs 80 crore and Circle C will have a floor price of Rs 30 crore. A pan India license will have a reserve price of Rs 2,020 crore.

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Impact of 3G & 3G Norms in India •

The government is looking to garner as much as $10 billion from the auctions. While this may be small money for India (the second fastest growing emerging market in the world and also the second largest wireless market after China) compared to 3G auctions worth $34 billion in UK eight years back, one needs to factor in the disaster that the high prices caused in the British market as telecom operators struggled to generate returns.If the number of bids is less than or equal to the number of spectrum blocks in a particular circle, spectrum will be allocated to all the bidders at the highest bid price. If the number of bids are more, then the e-auction rules will be applicable. The government will appoint an external agency for the auctions.

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The PSU operators — MTNL and BSNL — will get a preferential treatment. They will be allocated one block in the circles in which they are operating. They need not participate in the auction but will have to shell out an amount equal to the highest bid price for that area.

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At the time of allocation of the spectrum blocks will be given to bidders according to their bids. In case of a tie those having an existing operation in a circle will get a preference and in case of another tie on that criteria, those having more subscribers in that circle will get the preference.

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The government has also put a mandatory rollout plan for 3G services to dissuade hoarding of spectrum. The licensee has to rollout services in 90 per cent of metro areas within five years and for other circles the license holders have to cover 50 per cent of the area which would have to include 15 per cent rural areas. There are also penalties for not meeting the rollout obligations.

Guidelines for 3G Services: •

The 3G (3rd generation) mobile telecommunications is the generic name for the next generation of mobile networks that will combine wireless mobile technology with high data rate transmission capabilities. The 3G networks will be capable of providing higher data rates and will also becapable of supporting a variety of services such as high- resolution video and multi media services in addition to voice, fax and conventional data services.

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3G spectrum will be permitted in the 2.1 GHz band.

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The 3G licenceswould be granted through a controlled, simultaneous ascending e-auction, by a specialisedagency to ensure transparency in the selection process.

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Besides the initial, one time spectrum charge, it has been decided that the successful service provider would pay additional spectrum charge of 0.5 % of their totalAdjusted Gross Revenue (AGR), as the recurring annual spectrum charge. This additional revenue share is proposed to be 1% of AGR after 3 years from the date of spectrum assignment.

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The roll out requirements, including rural roll-out, as well as stiff penalties for non compliance of the same has been stipulated.

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Impact of 3G & 3G Norms in India •

Mergers will not be allowed during the initial five years. No trading/ reselling of spectrum is allowed.

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The CDMA spectrum in 800 MHz band for EV-DO applications would be treated separately from 2.1 GHz spectrum. If the CDMA based service provider(s) ask for the EV-DO carrier of 2 x 1.25 MHz, they would have to pay an amount proportionate to the highest bid for spectrum in 2.1 GHz band.

Implementation Of 3G Technology: ➢ BSNL and MTNL will be allotted one slot of the 3G spectrum. ➢ Five operators will be allotted the 3G spectrum at present and five more operators are likely to be allotted the spectrum on a later date. Impact Of The 3G Technology: ➢ Sensex up 301 pts as govt introduces 3G Norms. ➢ New radio spectrum to relieve overcrowding in existing systems. ➢ More bandwidth, security, and reliability. ➢ Interoperability between service providers. ➢ Fixed and variable data rates. ➢ Always-online devices. 3G will use IP connectivity, IP is packet based (not circuit based). ➢ Rich multimedia services. For the exchequer: Mega inflow from foreign players (including many new firms) For Consumers: High speed internet enabled and valued added services (VAS) straddling enhanced voice, video, data and downloading facilities on their mobile phones for the consumer. Other Stakeholders: Exciting times for Venture capital and private equity backed telecom VAS firms.

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Impact of 3G & 3G Norms in India

Suggestions: ➢ The cost of upgrading base stations and cellular infrastructure to 3G is very high. ➢ Requires different handsets and there is the issue of handset availability. ➢ Base stations need to be closer to each other (more cost). ➢ Tremendous spectrum-license costs, network deployment costs, handset subsidies to subscribers, etc. ➢ High power requirements. ➢ 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

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