To 3G or not to 3G: Too late on the bandwagon or timed to perfection?

With the developed world moving towards 4G, many question Pakistan’s adoption of 3G.

KARACHI:

The technology is more than a decade old. The first thought that comes to mind is that this is probably obsolete technology and like everything else, the wool is once again being pulled across our eyes and we are being bumped off with first- generation technology

This is a misconception. It is true that the technology became commercially available back in the year 2001 and that now many countries have moved on to 4G, there is already talk about LTE-A or Long Term Evolution-Advanced and even 5G. In fact many tech experts say that LTE-A will be the first true 4G.



But as mentioned before, it is a misconception that 3G is old technology that is obsolete and no longer has any uses. The bulk of the global telecom user base is still on 2G (using feature phones) and a very large portion of the telecom subscriber base using smartphones is still using 3G.

According to estimates by the International Telecom Union (ITU) (June, 2013), there are 2.1 billion active mobile-broadband subscriptions in the world with either a 3G or 4G connection. This is less than a third of the global population so the potential for growth is tremendous.

If we break this down by regions the lack of broadband inclusion is even starker. For example, in India, only about 7% of the population currently has 3G. Other developing nations with significant population bases like China and Indonesia are slightly better off. Indonesia has about 19% 3G penetration and China is at about 24%. Global 3G penetration right now is about 24%.



As I said earlier many consumers are under the impression that the world has already moved on to 4G but a look at the numbers suggests that nothing could be further from the truth. Some countries like the US (20%), Japan (21%), South Korea (47%), Singapore (22%) and Australia (17%) have significantly high 4G penetration but the global level is still very low at 1.8%, according to Paul Lambert, a Senior Analyst at Informa Telecoms & Media. These are all 2Q13 numbers and are an indication of three things.

The market is far from saturated; it is not even being adequately served yet. So is it justified for Pakistan to get on the 3G bandwagon this late in the game or should the move be straight to 4G and beyond?

In our opinion, this is just the right time for the move to 3G. Cellular penetration in the country is at about 70% now with approximately 125 million subscribers. Or more accurately put with 125 million SIMs in existence, the actual number of subscribers may be much less. But most players in the telecom industry do not think that there is lot more room for vertical growth in the industry and now it will have to be horizontal.



There is also the belief that future growth lies not so much in voice and text as much as it does in data. And with smartphone penetration growing rapidly, fuelled by the availability of cheaper devices Pakistan probably couldn’t have timed the launch of 3G – or for that matter 4G - better. As one CEO of a major player in Pakistan said, the market has matured enough that there is now pent-up demand for 3G.

Once this evolution has been made, 4G and beyond is just a natural step.

Published in The Express Tribune, October 14^th, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.