Let the battle begin!

After multiple delays, the auction of 3G spectrum has finally begun today in India. The month long auction is expected to fetch INR 42000 crore for the Indian government. Although the number of Indian mobile subscribers is grossly inflated ( claim is 550 million which is 40% inflated), the auction is an incredibly significant event for India's mobile operators. The reasons,though, maybe different from what people think.

Even though 3G is primarily aimed at triggering data consumption, the operators by themselves are not in any position to drive this data consumption all by themselves. Mobile operators are too focused on numbers ( subscribers, revenues) to understand what "experiences"  their customers really want. Just creating an app store and pushing apps down the throat through a WAP portal does not work. Quality of product and Quality of experience matters. Infact, now with 3 of India's leading operators claiming 100 million subscribers each           ( Airtel, Reliance and Vodafone)  their scale has begun to work against them. With their number-focused mentality, cost efficiency and process improvement now becomes significantly more important than innovative services.  They need the 3G spectrum to carry voice and relieve their already overburdened 2G spectrum. This is the prime reason that the big operators have no choice but to bid and win.

This leads to a scenario where product managers at these companies will have to backup any new innovative/unproven service with massive adoption potential ( e.g. a million users atleast.). This fact alone will throw innovation out of the roof.  Monetization of the long tail goes for a toss.

Our belief is that in such an ecosystem, innovation will have to come from elsewhere. The biggest contenders are those service providers , content providers and application developers who have no legacy and can find ways to market and sell their products without operator's assistance.

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