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 Legend has it that in the 1800s there was such a thing called the Great Indian Rope trick, a stage magic act where a magician would suspend a rope erect in mid air and ask his assistant to ascend the rope. Upon reaching the top the little boy would disappear into thin air. After a while boy’s limbs fell down. The magician would then breathe life into the bone heap and boy would be seen walking on the ground.
Centuries later, the rope has disappeared in the world’s second largest wireless market but the show has gotten more interesting. For example, the much delayed 3G /BWA spectrum auctions, now scheduled for April 09 are getting more exciting by the day. The latest stir came when Qualcomm announced its intent to bid for the 2.3GHz unpaired BWA spectrum band to deploy its favorite TD-LTE network.
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If you look closely, this is not the first time Qualcomm has participated in a spectrum auction. In 2001, Qualcomm successfully participated and won CDMA 1X/1X EVDO license for USD 79 mil to deploy services in 8 major metros of Australia, addressing a potential 12.3 mil PoPs (in 2001). In fact, Qualcomm seems to have used this strategy successfully to gain entry and deploy its own technology in other emerging markets such as Mexico, Chile and Brazil earlier on.
Qualcomm, one of the strongest proponents of LTE is keen to not allow what some believe might actually become one of the world’s largest BWA markets to become fertile breeding ground for WiMAX. Naturally, this is not music to the ears of Intel, a major WiMAX founder-visionary. Intel, for its part jointly has invested in some of the world’s largest WiMAX service provider businesses such as Clearwire and VMax in Taiwan either directly or through its investment arm Intel Capital. Some experts believe that Intel too may directly or indirectly support.
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As India launches 3G / BWA auctions on April 09, all eyes will be trained on the participating companies who have thrown their hats in the ring: Bharti Airtel, Reliance, Vodafone Essar, Idea Cellular and Aircel together with Tata Communications, Tikona Digital, Qualcomm and others will vie for the spectrum. There is much hope as the on-again off-again auction has become a reality and the government is expecting to raise about USD 7.5 billion in the process. Buoyed by the unprecedented growth of cellular market from zero to 550 million users in 15 years triggers investor / operator imagination that similar growth might suddenly be possible as the Indian broadband market sits on the cusp of the next big revolution. Everyone agrees this one will be different as it will not be PC-driven and perhaps there is no killer-application. But could there be a killer-device instead?
At least that’s what Qualcomm would like to believe. As it prepares its war chest of entry level, mid-tier and premium data devices for the upcoming onslaught. Intel is certainly planning its own portfolio of Atom enabled Nettops / Netbooks. The key is to figure how to enable the right partners, so that device proliferation can facilitate the most rapid broadband penetration in what could easily be the most under-served broadband market. At this time, the Indian cellular market is transitioning out of being a pure voice-centric business to a higher-ARPU data-centric model and USB dongles are flying off the shelves to meet urgent data connectivity demand.
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The floor price for BWA spectrum is set to about USD 390 million per license and nobody is complaining. Current average USB dongle user ARPU believed to be over USD 15 which means a 0.25 million subscriber base could generate a top-line of USD 90 mil in two years. A nation-wide BWA /3G operator could easily build up substantial subscriber base considering retail / SOHO / SME and enterprise subscribers. Integrated operators will particularly sweeten offerings with an array of goodies.
Industry observers question the choice of TD –LTE, a far too early technology introduction in an emerging market where stable, proven, low-cost solutions should be the preferred choice. But then the Indian market is unique where the predominant access device will be a portable / smart phone and not a PC. So why stick with the old? Or is Qualcomm securing its own roadmap as it continues to battle an aging CDMA technology across the globe? Indian Operators have their baggage of problems to solve too with several of them now carrying multiple generations of networks. As MNP sets in, consumers will feel empowered to move and roam at will. And demand to be connected to their favorite social networks, bank accounts and their local markets for commodity pricing information on the fly.
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In the meantime, WiMAX eco-system is beginning to hit mainstream with expected total shipping in 2010 likely to be 10 million chipsets. Mobile WiMAX chipset shipments have already grown 332% in 2009 over previous year clocking over 5.2million chipsets. Leading device makers are finding the mobile WiMAX devices will likely fly off the shelf at this rate as consumers will find cool new devices simply too attractive to resist. The timing of this augurs well for dormant markets such as India which require low ASP triggers to ignite market. Indian WiMAX has so far been an outdoor-CPE driven market enabling simple Internet-access but massive demand lies dormant in specialized applications for security, surveillance, education, transportation and logistics many of which will be of unprecedented scale. LTE components are still behind and will take a while to get there.
For India, the magic will happen over specialized data apps as Voice ARPUs are no longer enticing. But the most important step in that direction is the spectrum auctions, scheduled this week. Stay tuned for more. |
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