Can fibre decide the fate of 3G players?

It is time for some lateral thinking. Last week, the government announced winners of third generation telephony spectrum auctions, with a higher-than-expected revenue for the Finance Minister. N Madhavan writes.

It is time for some lateral thinking.

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Last week, the government announced winners of third generation (3G) telephony spectrum auctions, with a higher-than-expected revenue for the Finance Minister. The Centre will now get around Rs 68,000 crore from 3G spectrum alone, while Broadband Wireless Access (BWA) auction that is due to start on Monday is broadly expected to get Rs 20,000 crore.

That is more than Rs 35,000 crore that the government expected from both put together. While telecom stocks are getting rattled over the high price that they are said to be paying, there is a sobering view that this money is for 20 years of spectrum control. That is not that big a drag on resources.

Whatever the spectrum rate, operators have to make 3G services such as video phone calls and streaming affordable amid cut-throat competition to attract and retain customers.

How will the networks ensure profitability?

On the side of data usage, it is clear that better content applications will keep the airwaves buzzing. But then, there will be competition for content providers and that is not network specific. Consumers also will not stay with a company unless the service is good at the right price — because the emergence of Mobile Number Portability will ensure that customers can ditch one network for the other.

If mobile networks get clogged, customers will complain of poor quality (and the telecom regulator also watches this and puts out reports).

What will separate the men from the boys?

I think service providers may have to do some smart thinking and use the right technologies and network management principles to boost efficiency. Suddenly, it seems that the more data traffic that an operator can route through data pipes on the ground than airwaves, the more elbow room there will be for them to economise on the use of spectrum.

This is a lot like an airline managing to partition the economy and business class in an aircraft such that it can get more premium passengers.

The Universal Access Service Licence does not discriminate between mobile, fixed-line or long-distance networks. The smart guys will be those that put their fibre to best use, or invest in optic fibre networks to get more bang for their 3G buck.