'via Blog this'
On the income aspect, there are again 2 factors at play: the first is perception and the second has to do with expenses. Given that the internet has not yet become a need, a necessity for the majority of users outside the top 8 - 10 cities of the country, there is a perception in place that expense on broadband connectivity is a luxury, or a needless expense. This perception will only recede with the increasing awareness levels and usage of technology. The second factor is actual expenses: shelling out Rs. 1000 for a true broadband connection with 1 mbps speeds calls for a heavy investment for a typical household: this expense takes the total expense on communication to above Rs. 2000 per month given that there will also be 2 mobile connections at least in operation. That makes this a very significant share-of-wallet for a normal household, and places high-speed broadband firmly out of reach of most normal middle class consumers. Further, when people have not even experienced high-speed connectivity and the supporting applications for the same, one cannot expect them to upgrade to 4G. Please note that I am talking about high-speed plans with decent usage limits: 1 mbps unlimited with 5 GB high speed limits at least.
This factor can be seen in the various prepaid broadband and 3G plans in evidence - 1-day, 7-day vouchers; 1GB limit vouchers, cheap postpaid plans with low limits of 1GB - 3GB at less than 500 Rs. which are meant to pull in non-users and get them to experience the world of high-speed connectivity. This fact itself is a powerful indicator of the state of the market, and that things are on a learning curve. This market is still at 256/512 kbps, and the customers first need to experience the high-speed phenomenon. Further, the awareness of applications needs to increase. And third, either rates have to come down - or PPP has to increase for it to be a mass market. This does not mean that there is no market: indeed, there is a very large market as evidenced by increasing penetration of smartphones, PC and Laptop Sales, Data Usage on 2.5G networks (GPRS). The challenge is to convert these customers to high-speed customers through exposure to applications through any means that are available - for example, net-kiosks; bundled handsets (as tried by idea and vodafone); gaming parlours and websites; support to application developers; links via sms; co-advertising with events / websites / applications etc. There can be any number of strategies for that. And this is precisely what the telecom industry is currently working on.
The last point is that the trade needs to settle down and get into working mode after the tough 2011 year. Some sense of order needs to emerge especially as a huge amount of investment has gone into 3G networks, completing 2.5G rollout obligations, network upgradation. This is painfully evident on the stock market performance and the ballooning debt of the sector due the above factors. Thinking about a further upgradation does not seem to be warranted in this scenario. This does not mean that the industry forgets 4G. I am advocating an increased focus on content and application development, customer education initiatives etc: in other words, the development of an entire ecosystem that engenders increased usage of data. Data consumption increase will directly translate into revenues for the industry: which will make 4G far easier to introduce.