The future of Unlimited Mobile Broadband in India

Sprint Nextel Chief Executive Dan Hesse said that in about two years, monthly cell phone bills will focus on the amount of data used and move away from the number of available voice minutes. Sprint has already driven much of that migration with its own aggressive rate plans, which lump in unlimited data, minutes and text messages at a single, flat-rate price. Sprint is expected to provide improved 3Q results as their positioning of aggressive rate plans, with unlimited data, minutes and text messages at a single flat-rate price, was welcomed by their customers. Sprints unlimited data plans starts around $ 69.9 with 4G connectivity.

We watched MetroPCS taking similar philosophy as that of Sprint with the launch of “all you can eat plans” in their new LTE network in Vegas and Dallas. I would say that both operators are targeting high end data hungry customers in their network. Recent trends in mobile data proclaim the fact that data is being positioned as the centre of business strategy, with operators aiming to offset their weakness in voice revenues with increasing data revenues.

We observed trends in TeliaSonera LTE network in Nordic region, and Sweden. The operator is targeting high end customers with differentiated services and bigger pipes. I do not observe any content driven model, but QoS based charging as a differentiation to promote 4G. The reason consumer would like to buy a 4G services could be twofold. First, if his monthly consumption is between 10-100 GB; and his speed requirement is higher than HSPA delivery capability.
The debate pertaining to positioning of 4G services were also heard in India, where operators are busy is deploying 3G networks with 4G spectrum waiting for their attention. The real challenge for Indian operators is the positioning of 4G. But, if we look TeliaSonera who is positioning 4G as premium services over 3G with higher QoS, speeds and Usage.

India has other challenges in broadband which is not comparable to their western counterparts. The country is lacking broadband penetration and has modest 10 million broadband connections which are less than 5% of households in country. Compare this with China, which has more than 20% penetration or Sweden with over 55% household broadband penetration. 4G in India has the potential to bridge the gap between low broadband penetration and affordable service. India has one of the lowest voice ARPUs among other nations and demands similar delivery models over wireless from broadband services.

A 1Mbps average unlimited plan in India is around US$ 20 currently. Indian wireless market is predominantly prepaid. A three Gigabyte prepaid data connection in India is roughly US$ 13. With five new 3G operators expected to launch data services in next 3-6 months, prices of mobile broadband services is expected to decline fast.

MTNL the state owned operators has launched 3G services earlier this year could be the precursor of 3G tariffs in India. A one gigabyte prepaid data over MTNLs 3G network is around USD 10.

Indian operators has earlier warned that prices for its 3G services will not be cheap, particularly for its city-dwelling customers, as mobile operators look to recoup the high cost of acquiring spectrum. The exorbitantly high cost of 4G spectrum, and pressure of delivering broadband at current levels would not encourage unlimited mobile broadband plans. We will have to wait for a while to see if India operators are willing to support unlimited broadband services in their upcoming 3G and 4G networks.