3G License Auction Closed, New Opportunities For SaaS Market In India

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With the closing of 3G license auction at Rs 67710 Crore, new doors for the growth of SaaS market has opened...

With the closing of 3G license auction at Rs 67710 Crore, new doors for the growth of SaaS market has opened. 3G is expected to revolutionize internet scenario on mobile industry in India. Though it will put burden on operators initially as operator need to pay huge sum for the license therefore initially services may not be cost effective, however it is expected to give better results in near future.

In the auction, Operators like Airtel, Reliance and Aircel bagged 13 Circles where as Vodafone has to satisfy itself with 9 circles.

Shobhit Agarwal, Director, Protiviti Consulting Pvt Ltd said, 3G spectrum should usher in better broadband prospect in India. Operators have bid high for the 3G licenses in excess of Rs 50,000 across all of them (excluding BSNL/MTNL). In addition to this they will incur costs on network upgrades and provision of such services. . In order to recover the base cost/ license fee, it is imperative for the telecom operators to pus

h for 3G subscription penetration in current subscriber base so that returns can be expedited. Even if we consider current fixed 3G rentals per month per subscriber (of Rs 25/month over and above voice plan of BSNL) and a penetration of 20% of total mobile subscriber base, operators would generate just about Rs 3,000 crore per year from rentals. Thus operators will have to work overtime to ensure 3G services usage generates enough revenues per annum to enable normal pay back and returns.

Apart from cost the service will offer end consumers and business consumers blessings of mobility. Praveen Bhadada, Engagement Manager, Zinnov Management Consulting Pvt. Ltd stated, While 3G will allow subscribers to download high speed data and stream video on mobiles, the providers are expecting to increase the ARPU with the 3G enabled services. The monthly ARPU has continued to slip down steeply for the last 6 quarters and is currently at INR 128 per month. In due course in time, 3G

would also enable better citizen services especially in rural areas and mobile would be increasingly used towards rural education, transactions, healthcare, farming etc.

Predicting the future outlook Bhadada added, This also brings good news for the fast growing SaaS market (USD 120 million, current growth of 56% per year) in India. Mobile is increasingly being seen as a key form factor (delivery device) and with 3G coming in, it would enable business to access critical applications anywhere anytime at a greater speed. The SaaS market is expected to cross USD 500 million by 2015 and 3G will be a key driving factor towards the same.