CSPs in China, Latin America, Africa, India and other regions are finding that complexity commonly associated with rolling out 3G is not nearly as great as thought – and that equipment and handset costs have been driven down substantially. And the market demand is huge. People in developing countries are more than ready to make use of improved Internet access that mobile broadband can bring – and many are, of course, waiting for their first ever basic connections in the many areas of the world where fixed line communications is not a workable proposition. In urban centres, there are also many relatively high income subscribers willing to pay for more sophisticated service packages.

If the argument for rolling out 3G is making increasing sense for CSPs, the complementary driver from international agencies of connecting more people to the Internet and to voice communications is also more important than ever. In projects such as the International Telecommunication Union’s Wireless Broadband Partnership (the flagship of its Connect the World initiative), and the GSM Association’s Development Fund for promoting mobile solutions for people living on under $2 a day, mobile technology – and increasingly 3G – will be the solution of choice to bring widespread social and economic benefits. Indeed, wireless is now seen as a critical engine for bringing new economic avenues to people in these difficult financial times – economists have directly linked mobile numbers to GDP growth.

The latest round of 3G activity suggests that many more countries will have faster and more flexible connections for much of their populations. What’s more, if the experience of CSPs and 3G in developed countries is

replicated, it is those providers that move first that will tend to do best even if initial business models are not optimal. But with substantial experience now available around the globe, and with much more sophisticated solutions for managing subscriber data, and for billing and charging, CSPs going for 3G now should be able to make the right business decisions first time.

CSPs in China are leading the charge into 3G in emerging markets with the main operators, China Mobile, China Telecom and China Unicom now investing billions of dollars this year in 3G infrastructure, including rollouts to rural areas, such that as much as 70% this vast population could be covered. In India, an auction for 3G frequencies has been delayed, but several 3G services have been launched by CSPs already allocated spectrum. BNSL, for example, has started small with a 3G service in Chennai, but it is said to have plans for a very ambitious rollout in several hundred cities.

Key factors that are converging to make these 3G deployments possible are:

• Low cost handsets, notebook PCs and broadband ‘dongles’ – prices of 3G phones are dropping below the $100 mark and deals for low income users – who may share handsets and SIM cards – can now

be as low as $7 a month • Costs of 3G radio technology are also

falling – prices are in any case mostly lower than fixed broadband and offer connectivity both for mobile customers and desktop PC users in homes and offices. The use of 850/900 MHz frequencies, in addition to the original 3G specification, requires a quarter of the number of base stations for the same coverage (although there is a trade-off in data capacity).

Broadband access for people starved of the Internet is certainly a major opportunity for CSPs. Take TEF, the most successful 3G operator in Chile – after deploying 3G technology it saw traffic soar to 4 TB a day from 450 GB in just 60 days – with a majority of this new data traffic coming from outside urban areas. In the Philippines, mobile operator Smart Communications has had a 3G network for some time – but after introducing a USB broadband dongle subscribers zoomed up six fold in just nine months, to some 750,000.

These success stories have of course been seen first in Western Europe – where the broadband dongle has also been a huge success – but for many people in emerging countries a 3G connection on a smartphone or desktop PC may well be their first ever experience with the Internet. In Peru, for example, with a GDP per head of less

The recipe for 3G success in emerging markets includes providing simple, easy to use services at the right price targeted to the right segments and using the right access and payment methods.

than $4000 a year, in 2007 12.9% of the population had access to a PC, but only 2.5% had Internet access – 3G can rapidly unlock this potential. In many locations, the key to 3G take-up is not mobility but simply access. As Abdul Razzak, CTO of Egyptian provider, Etisalat, has commented: “The mobile handset is becoming the most important means of accessing the Internet in Egypt.”

Another main driver for 3G in emerging countries is offloading voice traffic. With the massive uptake of mobile phones – and the vast populations of cities in countries such as India – CSPs are running out of 2G spectrum and need to install 3G overlay networks that can handle much more voice traffic more cost effectively. This can also be a strategic play for licensing. From Egypt again: “3G profitability comes from the offload of our 2G network, and from the extension to our 2G license,” noted Guillaume Van Gaver, VP of Mobinil, speaking recently.

A key decision is whether to provide a ‘Model T Ford’ service – low cost, high volume broadband connections with little technical and organisational difficulty – or a ‘Rolls Royce’ premium pricing strategy, perhaps with a range of value-added services – or a combination of the two. While the low cost, high volume strategy is widely in play, it is notable that several CSPs in regions such as Africa and the Far East have first targeted premium users for their 3G rollouts, as licence costs have been high and fixed-line Internet is also pricy. But a dual-market strategy – targeting both high-end urban subscribers, and lower-income urban and rural subscribers – can be highly desirable.

There are several effective ways to move forward. Take Indosat, a fixed line operator

in Indonesia, which is offering high speed packet access (HSPA) service in addition to fixed broadband – and is bringing in a high ARPU that would require many more voice subscribers to replicate. In Peru, mobile player, Claro, launched a separately branded 3G service last year with broadband and multimedia applications aimed largely at the youth market, and with prepaid tariffs that include just a day’s use. Vodacom and MTN in South Africa have had major success by promoting broadband and multimedia applications from the start of 3G operations.

Experience from Western Europe shows that CSPs that launched 3G early tended to establish the brand and reputation that has kept them ahead of the pack and they have since adapted to the open access, flat rate Internet model that is now proving so popular with consumers. The recipe for 3G success in emerging markets includes simple, easy to use services at the right price targeted to the right segments and using the right access and payment methods.

The key difference with mature 3G markets, however, is that demand for basic voice communications is still surging ahead, and there is still huge scope for early mover advantage in the mobile Internet space. There is also the challenge of meeting the

dual-market strategy – well-off urban and less well-off rural/urban customers.

As the latest rush to 3G plays out in countries such as India and China, the focus will soon change from rapid subscriber sign up to managing and segmenting customers with appropriate charging, billing and data management solutions, with particular emphasis on more intelligent prepaid systems, including micro-payment capability. And of course the 3G evolution for CSPs means finer segmentation: it was General Motors that forged ahead with new, targeted brands – Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac – covering all bases from Model T to Rolls.

The 3G market in developing countries offers similar potential to be in the driving seat in one of the true growth markets in 2009 and beyond.

For the simple truth about 3G, visit:www.nokiasiemensnetworks.com/3g

Any communications service provider (CSP) looking for a near perfect fit for expanding mobile offerings in developing countries at present should be looking at rolling out 3G infrastructure, with the broadband speeds and extra voice capacity it brings.

3G conquers the world