China has 38.6M 3G users vs India’s very slow 3G start and 2G Auction scandal

China – the world’s largest mobile market – had 38.64 million 3G users by the end of October 2010, a threefold increase year-on-year, according to figures from the country’s Ministry of Industry and Information Technology (MIIT) cited in a Xinhua report. Approximately 25.38 million users were new subscribers in the past year.

The number of 3G users of each of China’s top three operators – China Mobile, China Unicom and China Telecom – exceeded 10 million by the end of October. China Mobile had 16.98 million 3G connections as of 31 October, while China Unicom had 11.66 million. China Telecom, the country’s third-largest operator, doesn’t disclose its 3G user numbers every month but earlier said it had 9.15 million 3G users at the end of September. Interestingly, China Mobile’s 3G lead doesn’t reflect its dominance in the market overall; it has only around 5 million more 3G connections than number-two player China Unicom, but controls a huge 70 percent market share of China’s total mobile sector, according to Wireless Intelligence. However, China Mobile’s 3G rollout uses homegrown technology TD-SCDMA, compared to its rivals’ use of the global, more popular technologies W-CDMA and CDMA EV-DO. China’s 3G base now equates to around 5 percent of its total mobile market, meaning the three operators have a long road ahead of them in converting their customers to the faster mobile broadband technology. Xinhua notes that earlier this month the ministry said that China aimed to have 150 million 3G mobile users by 2011.

Business revenue of mobile telecommunications made up 69.84 percent of the total, while fixed-line revenues accounted for 30.16 percent, dropping 3.2 percentage points year on year, the MIIT said


Meanwhile, a recent study has concluded that 3G adoption in India will be slow. This goes contrary to the high awareness campaigns currently being doled out by service providers for their 3G offerings, and the technology’s famed capabilities to deliver broadband content.

Only one in five urban mobile subscribers would opt for 3G services in the short term, a new study by the Nielsen Company has found. It further noted that it may take as long as 8-10 years before a majority of mobile users move onto a 3G plan. The study was released by the Nielsen Company in New Delhi on Wednesday at the `Consumer 360′ conference.

However, “The response from consumers has been encouraging, though it is too early to comment on the numbers since we have launched early November,” Deepak Gulati, executive president, mobility of Tata Teleservices Ltd (TTSL) said. Tata DoCoMo, the GSM service arm of TTSL, provides 3G services in nine of out of 22 telecom circles. On early adopters of 3G, he said, “Obviously the high end customers go for it initially.”

The study found that nearly 70 per cent of urban mobile subscribers are aware of 3G services and 63 per cent were familiar with it as a concept. “While service providers have succeeded in popularising the concept and articulating its promises, consumers seem tentative about their disposition to embrace the technology” said Arjun Urs, director – Client Solutions India of Nielsen.

The study also found that the most eager group ready to adopt 3G was “Power users largely made up of working professionals and internet-savvy youth. They told Nielsen they were eager to embrace higher speeds to access the internet and download large attachments,” Urs added.

The survey noted that 36 per cent of those polled indicated a strong disposition towards 3G adoption. Not surprisingly, less tech reliant groups, showed little enthusiasm about the next wave of mobile services.

While government-owned Bharat Sanchar Nigam Ltd and Mahanagar Nigam Ltd have already launched their 3G services, the response to it has been rather poor, stated market observers. TTSL was the first private telecom provider to launch 3G services.

Market leader Bharti Airtel is expected to launch its 3G services in December, and Vodafone Essar is gearing up to launch its offering in January 2011, to be followed by the Aditya Birla Group-owned Idea Cellular Ltd.


The slow start expected for 3G in India comes on the heels of the much delayed 3G spectrum auctions and that country’s 2G auction scandal.  The November 24 2010 Financial Times reports that:

Mobile carriers in India have come under scrutiny this week, after a report by the national auditor concluded that the country’s telecoms ministry had sold off its 2G spectrum at a “throwaway price”, on a “first come, first serve basis”.     The report by the Comptroller and Auditor General of India estimated that undervaluations of licences allocated to domestic and foreign telecoms groups in 2008 might have cost the government a total of about $39bn in lost revenues. The report said about $8bn was lost from the excess allocation of spectrum licenses to existing wireless telecom operators.  A further $31bn was lost due to the undervalued sale of spectrum to new entrants into the market. Analysts think this is likely to have a harmful impact on one of the country’s most successful industries.

Bharti Airtel, India’s biggest telecoms group by sales, and Vodafone of the UK risk becoming the first leading companies to be targeted by the government for having been awarded more spectrum than the auditors claim they should have, without paying any upfront charges.

There has been a huge public outcry over the cheap license given to new telecom firms in 2008 in a scam which cost the government `1.76 lakh crore. The Comptroller and Auditor General’s (CAG) in a report has castigated the former telecom minister, Mr A. Raja, for allocating 2G licenses to new players in a process which “ lacked transparency and appeared to have been done with the objective of favouring a few firms”.

After getting cheap licenses, these firms sold stake to foreign firms at huge valuation. This despite the fact that these new firms had no infrastructure on the ground. The government is facing heat from the opposition parties over the scam. They are demanding an investigation by the joint parliamentary committee (JPC) on the issue.


On November 14th, 2010, Mr. A Raja resigned as India’s Telecom Minister due to this 2G Scandal.  It was reported that the ruling Congress party leadership had advised Raja to step down so that parliament could function peacefully.  The opposition Bharatiya Janata Party (BJP) said Raja should be prosecuted under the provisions of the Prevention of Corruption Act and a first information report should be registered against him.  Mr. Raja is accused of causing a loss of Rs1.76tn ($40bn) to the exchequer by allocating 2G spectrum at 2001 rates. 

Opinion:   This author heard Mr Raja speak two years ago at the India Community Center (ICC) in Milpitas, CA.  His presentation was not at all impressive (most of it was in Tamil) and we tend to side with the BJP party regarding prosecution for his role in this fiasco.  Corruption is rampant in India and those that benefit from it must be shown that they won’t be able to get away scott free.  Economic growth will suffer if corruption by government officials is not punished.