India, for Paul E. Jacobs — CEO of $11-billion telecom research and hardware company Qualcomm — has been like a box of chocolates, in a very Forrest Gump way. The good surprise came on June 11, 2010, when Qualcomm won the licence to offer broadband wireless access (BWA) in Mumbai, Delhi, Haryana and Kerala for $1 billion. The nasty one arrived on September 7, 2011, when the Department of Telecommunications rejected its application on flimsy grounds. “It was a silly technicality and the message being sent out by the government was: Even if you commit to investing $1 billion in India, you will be uncertain of your fate,” says B.K. Syngal, a 40-year veteran of Indian telecom and a principal with advisory firm Dua Consulting.
Jacobs was surprised, but it was Sunil Mittal, CEO, Bharti Enterprises, who must have been stunned.
Airtel was set to buy out Qualcomm’s spectrum, at least in Delhi and Mumbai, to roll out its fourth generation (4G) services. “For months, Airtel’s body language among vendors and partners suggested it viewed Qualcomm’s circles as its own,” says Kunal Bajaj, the India head of Analysys Mason, a telecom consulting firm.
But Qualcomm’s rejection meant Airtel would not be able to offer 4G services in Delhi and Mumbai till the issue is sorted out.
Laying a data cable to every Indian home is prohibitively expensive and time-consuming. Prakash Bajpai, founder and CEO of Tikona Digital Networks, a wireless broadband company that bought BWA spectrum in five geographies, says it costs between $1,200 and $1,500 to lay a dedicated optic fibre cable to a household. “The consumer isn’t going to pay more than $12 per month. Assuming you make 20 percent as the margin, think how much time it will take to recover the investment,” he says.
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(This story appears in the 21 October, 2011 issue of Forbes India. To visit our Archives, click here.)
See 2 gaps I see in the strategy outlined. 1 - Coverage or Service penetration. From what I understand the frequency for BWA is in the 2.6 GHz band which is 3 times the freq predominantly used for mobile voice services. Higher the freq lower the penetration. Overlaying a BWA network using the same set of cell-sites will just not work. Will leave large gaps in areas covered. This is especially critical when most of services offered - browsing & video are expected to be consumed indoors. Airtel & Vodafone (and also some other GSM operators) have a small advantage here. They have been continually expanding their inbuilding solutions infrastructure over the last 7-8 years, primarily to prepare for 3G. Don't think Reliance & Tata have done that. 2 - Video services over mobile have never really taken off anywhere, even in bandwidth surplus networks. Especially peer-to-peer services such as video conferencing. Though, would love to see Reliance crack this.
on Oct 19, 2011