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'3G technology as cost-effective as 2G'

Last updated on: June 01, 2009 12:20 IST
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With the state-owned BSNL's 93-million-line tender once again the subject of a controversy, it's but natural to elicit the views of Ericsson's global president and CEO Carl-Henric Svanberg on this.

Svanberg, however, refuses to bite, except to say that the tendering procedures for BSNL have to be so transparent, it is not surprising they take so long. He is more concerned about how telecom can save the world from global warming and how India can transform itself with 3G technologies. Excerpts from an interview with Business Standard's Sunil Jain:

How big is India in your overall scheme of things?

We operate in 175 countries and the largest of them -- India, China, the US and Africa -- each account for around 8-9 per cent of our business. We do around $1.5-2 billion of business here every year; we have around 300 people here in R&D and manufacture everything that is used for India in our plants here.

We also do part of our managed services business from here. In terms of incremental growth, India is one of the strongest markets, but so is China. While the US market for new subscribers is not growing as fast, technology changes mean there is new equipment to be sold to phone companies there as well.

Does India's patchy regulatory record bother you? Your clients who need to grow are starved of spectrum, others who don't have the funds to rollout have the spectrum . . .

India has very good regulation. In 2003, when the regulatory system was not good enough, you had 5 million subscribers. Today it is over 300 million. So that shows things are working. Who wants to invest billions if there is no certainty?

There are still concerns here and there that need to be sorted out -- this will spark off another telecom revolution in India. But I'm not really involved in day-to-day regulation.

I don't think the problem is of the issues per se -- coming up with regulation to deal with issues of technology change (for instance, should VoIP be allowed for firms who don't have voice licences?) is something that happens everywhere. The issue is really of how long it takes to come up with solutions.

When Sunil Mittal got 100 million subscribers, he said the spectrum policy was not really the issue, the issue was really to speed up the process of allotting spectrum.

Isn't India trying to favour one type of technology in the WiMAX space?

I will not comment on the rights and the wrongs, but it is important that the regulations are seen as fair by those who are investing money. Globally, there is a TDD spectrum band and there is an FDD band and it is rather unusual to specify a certain technology for a certain use. The regulator's job is not an easy one.

The BSNL tender process has been a controversial one. First, the minister cut the tender size, then he wanted price reductions after the bids were in and delayed the process by months, then he floated another tender …

As a state-owned company, BSNL has to be extra transparent. So, it is not as easy for it to select vendors as it is for private sector players. So it is not surprising that the tender process takes so long.

There is a view India doesn't really need 3G, that the business case for 2G is far more compelling.

First, 3G technology is as cost-effective as 2G today -- the cost of handsets is an issue, but that's also getting resolved. A new phone operator could just as well start with a 3G network. No one in Europe is investing in 2G anymore. In the first quarter, we sold more 3G than 2G.

3G, in fact, is far more important in countries like India than in, say, Germany since the OECD countries have large internet penetration anyway. 3G is the only way to get that in India. In Africa, we have been involved with the UN in a project to provide wireless broadband.

We identified 79 villages in the poorest parts of Africa, in Kenya and Rwanda. Farmers now know that if they buy fertiliser for their crops, productivity rises three times.

Small businesses have come up, it has changed lives in schools, there is a laptop in health clinics; the camel herder in Darfur no longer has to walk for a week to find out which market he needs to go to -- one call takes care of this.

Our research showed the service providers needed $100,000 in annual revenues to break even. After 60 days, they were up to $30,000 and this is the poorest part of Africa!

We had the Gram Jyoti where we covered 20 villages, 70 km away from Chennai, and we did ECGs/X-rays and things like that, using low-skill paramedics in the villages -- the doctors sitting 70km away were able to correctly diagnose the problems. These 20 villages could be catalysed to 200,000 -- there is a very compelling business case.

Is there an environmental angle to 3G as well?

There are lots of numbers which we have. But, very broadly, if you drive a car for an hour, you emit as much greenhouse gas as you do by talking on a phone (given normal usage habits) for a full year. ICT emits 2 per cent of all carbon emissions in the world, but it can drive overall emissions in other parts of the economy by 15-20 per cent.

We're not the problem, we're part of the solution.

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