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Operators’ 3G strategies
Operators have a three-fold strategy
across service pricing, coverage and
content, to increase 3G growth in India:
Service affordability: Operators have
reduced the 3G service pricing significantly. At the launch of 3G, 2G and 3G
price differential was about 8x. This has
reduced to about 1.3x primarily on
account of decline in 3G tariffs, with an
increase in 2G prices also playing a role
in reducing this gap. Given this reducing
price differential, and the fact that data
tariffs in India are already one of the
lowest in the world, we do expect another significant decline in 3G tariffs from
operators.
Coverage: Given high spectrum prices,
operators have initially been selective in
their 3G deployments, limiting to metros
/ tier1 cities, with somewhat patchy to
begin with. However operators will now
need to improve and expand coverage
into Tier 2/3 cities to increase their reach.
Content: Operators are actively collaborating with content / app developers to
provide relevant content to the consumers across the realm of education,
healthcare and entertainment.
These strategies are bearing good
results for the operators, with the 3G
SIMs increasing from 9.3 million in 2011
to 21 million in 2012.
3G growth
Although the leading operators
have launched 3G across various
cities, a lot of these places have
patchy coverage, with optimum
coverage restricted to dense urban
areas in metros and tier-1 cities.
Tablets are a much smaller market
as compared to smartphones, with
an installed base of only 4 million in
2012. Moreover, a large proportion
of these being Wi-Fi only devices,
and hence not using 3G data SIMs.
Forecast of 3G
3G SIMs are expected to grow from 35 million in 2012 to about 272 million
by 2017 as more and more high-end 2G users upgrade their services. This
growth will be driven by wider network coverage, better affordability of 3G
services and increasing affordability of 3G capable devices.
Social media has had a significant role to play in the 3G uptake, especially
among the youth, as they look for uninterrupted connectivity to post
pictures and share videos among friends. With youth driving majority of the
internet usage, social media still remains one of the leading use cases
among 3G users.
Operators plan rural 3G
In order to take 3G to the masses,
operators will need to improve
network coverage in and beyond
metros / tier-1 cities. The reduction
in 3G service pricing by operators
and device pricing by OEMs will
further assist in driving the uptake
of 3G in tier 2/3 cities. We believe
that all dense urban and urban
areas will be covered by 2017, with
remaining suburban areas / towns
to be covered by 2018. Rural coverage is expected to begin in 2017,
with about 50 percent rural population coverage achieved by 2020.
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