Business | Technology
Delays could stunt growth of market in India
Alcatel-Lucent boss urges quick action
- By James Lamontin, Financial Times
- Published: 00:00 November 21, 2009
New Delhi: Delays in bringing third generation (3G) mobile telephone technology to India threatens to stunt one of the fastest growing markets in the world, according to the chief executive of Alcatel-Lucent, the telecommunications equipment supplier.
"That you [India] do not have 3G established [in India] yet is an issue. You need to get that established," Ben Verwaayen said last week.
India's auction of third-generation telecommunications services is expected to go ahead in January, after repeated delays shifted the event more than a year later than it was originally planned.
In spite of the economic downturn, expectations of revenues from the auction have been steadily rising. A ministerial panel earlier this year almost doubled the reserve price for pan-India 3G spectrum from Rs20.2 billion to Rs35 billion (Dh2.77 billion).
Companies already operating in India such as Bharti Airtel, the largest mobile network, Vodafone and Reliance Communications are expected to bid for spectrum that will give users improved access to the internet and allow them to download music, videos and other value-added services.
‘Tech-savvy'
Verwaayen's concerns are based on the growing needs of what he called a "tech-savvy" Indian telecoms market that was moving quickly from voice to other value-added services.
"People are very selective about where they invest. It's different from the past. It's no longer use of words — words for voice, words for e-mails… it's much more diverse with video and pictures and [so on]," said Verwaayen.
He said companies were operating in India in a competitive environment and had adopted low-margin, mass-market models to offer some of the lowest-priced communications in the world. But he warned that they needed to be ready to adapt to changes in consumer behaviour to keep these business models working. "The world is moving very fast. This market is moving very fast," he said. "India [as a business environment] is becoming instrumental around the world."
Earlier this month, several mobile telephone companies launched services that charge by the second in a price war led by new entrants trying to capture greater market share. In the meantime, serious doubts have built up about regulatory standards in the telecommunications ministry.
Last month, the Central Bureau of Investigation raided the offices of the Department of Telecommunications in connection with the earlier allocation of 2G spectrum.
Verwaayen predicted that global telecoms revenues would fall 8-12 per cent this year as a result of the downturn. But he forecast a swift recovery returning "normal" growth next year.
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