Legend has it that in the 1800s there was such a thing called the Great Indian Rope trick ¾ 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 assistant would disappear into thin air. After a while the assistant’s limbs fell down. The magician would then breathe life into the bone heap and the assistant 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 become 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.

If you look closely, this is not the first time Qualcomm has participated in a spectrum auction. In 2001, Qualcomm successfully participated and won a CDMA 1X/1X EVDO license for USD 79 million to deploy services in 8 major metros of Australia, addressing a potential 12.3 million 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 a 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 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.

When 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 the cellular market from zero to 550 million users in 15 years, investors / operators now anticipate 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 that enables a full suite of appslications.

At least that’s what Qualcomm would like to believe, and they are preparing their 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 determine 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.

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 is 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 a substantial subscriber base considering retail / SOHO / SME and enterprise subscribers. Integrated operators will further sweeten offerings with an array of goodies. Government agencies will trigger broadband demand in unprecedented ways as rural schools / police stations and offices get on to the Net. A rich multi-media local content and entertainment industry will augur well for fresh new demand from hitherto unconnected quarters.  

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, and will demand to be connected to their favorite social networks, bank accounts and local markets for commodity pricing information on the fly.

In this fascinating medley of multiple technologies, everyone from modem chip set vendors to device makers, cellular operators to ISPs, media houses to banks, investors to policy makers, consumers and enterprises is looking to see how the magic will unfold! Stay tuned to learn more…

For more information, contact the author at stpai@tonsetelecom.com