In order to use this to engineer an unparalleled human revolution, the 3G auctions should actually become the pivot point for re-engaging consumers, investors, service providers, government and civil society to debate the impact of a mobile telephony-led revolution that will rapidly unfold over the next five years.
Clearly, 3G technology is set to substantially change the experience and expectations of consumers by transforming the basic use of the phone from pure voice to data services like m-health, m-commerce, m-governance, m-education and others.
Urban consumers will be exposed to high-speed data access, which will drive stronger productivity and competitiveness. The experience will be far more life-altering for rural consumers. Not so much because they will use 3G for data, but because telecom operators will be forced to roll out networks in unserved rural territory to recover additional 3G spectrum costs. Millions will hear the proverbial dial tone for the very first time in their lives.
The experience and benefits of ubiquitous 24x7 connectivity is set to change the world of millions of Indians forever. Anyone doubting this should think of their own life before and after the mobile phone. These consumer-led changes are expected to have a profound impact on policy issues relating to health, education and governance as increased access fuels expectations.
As India moves towards higher teledensity, 500 million citizens who were once in a rural cocoon will experience the power of being in touch with each other, with the bureaucracy and politicians. As the asymmetry of information declines it will put serious pressure on politicians and bureaucracy to deliver on governance and development objectives. Logically, this implies that there will be very few information black holes left in the country by the time elections are held in 2019.
This engagement has the potential of pushing development to the forefront as a key election plank rather than caste and regional issues, which have dominated India's electoral process since independence. The information revolution will ensure that citizens know more, expect more and hopefully demand more. While this is great news for honest change agents politicians and bureaucrats who are battling distance and illiteracy for the dishonest, the mobile-led information access rural India will get could be the next big curse.
The telecom competitive landscape will also witness serious changes by 2011. Operators hold 5.7 MHz of 2G spectrum in India, which is a third of the international average. At present 12 to 13 operators compete for customers in each of the 22 telecom circles. The 3G auctions will give five of these 13 access to additional spectrum as there is only provision for five 3G operators, taking their average to slightly over 10 MHz of spectrum (2G plus 3G) while the rest will continue to struggle for spectrum.
Unless the government releases more 3G spectrum quickly, which it will be constrained to do, this will force rapid consolidation between 3G spectrum haves and have-nots. New operators who entered India's telecom market in 2008 with merely 4.4 MHz of 2G spectrum can hardly compete with large established operators, one of which has already crossed the 100 million subscribers threshold with some others likely to follow over the next year or so.
This implies another policy reversal is on the cards. The same government that fragmented spectrum and the industry in 2008 to create an average of 11 operators per circle, will be forcing consolidation barely a year on, on grounds of spectrum scarcity.
The 3G auctions will also ensure that spectrum pricing undergoes permanent change. For the first time since 2001, market-based pricing will be used, though it is debatable whether the government's intervention to decide the number of slots, reserve price and qualifying criteria really leaves the market to play its full role in determining the price.
Despite this, there are upsides: India will have at least four private operators providing advanced 3G services to urban subscribers by the end of 2010 with more coverage for rural subscribers in the following years. But none of this can be taken for granted considering that India over the last 15 years has quietly endured the most cruel digital divide possible. To ensure equal distribution of the benefits of mobile technology and penetration, a national debate involving all stakeholders is essential. This exercise carries the potential of impacting more citizens socially and economically than any other single policy move in India's history. Hopefully, this will not be yet another missed opportunity.
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