The Headline 3G Data Revenue Numbers are disappointing on the face of it with < 5% Revenue Contribution and thus the popular perception that 3G in India so far has been a failure, three years after the 3G auctions.
In our analysis, most of the top cities are already under 3G coverage for leading telcos, and 13-14% of mobile voice traffic is already flowing through 3G networks. This 3G voice offload is helping free up precious capacity on the spectrum starved 2G networks— opening up bigger opportunities, particularly on 2G data. Indeed, more than half the increase in data traffic in recent quarters has come from 2G and not 3G.
Telcos have resorted to smart 2G data packaging. In fact, customers could be encouraged to upgrade to higher data plans (even 3G) once they get hooked on 2G data—a trend clearly visible in the increasing data ARPU trend for last few quarters.
Recently, leading smartphone brands have been waging a price war of sorts on top-end smartphone models (operators are not involved). With discounts of up to 30% on iPhone and Galaxy smartphones, sales have been rising sharply. We believe that telcos could benefit from the subsequent data uplift when their customers upgrade to smartphones (telcos have no role / costs in this smartphone price war).
So I am still hopeful that 3G uptake will be a reality and hope to see Operators reducing tariffs if not get into a pricing war like Android SmartPhone vendors have gotten into, Thanks to Google.