Vendors to share BSNL's 3G ad spend

Communications Minister A Raja is pushing an innovative plan under which vendors which supply equipment for 3G mobile services to state-owned Bharat Sanchar Nigam Ltd (BSNL) will share the bill for advertising and marketing the services in the first six months of the launch.

In a meeting a few days ago with Huawei, whose contract with BSNL for 20 million lines in the south has been finalised, Raja told the Chinese telecom equipment manufacturer that it should co-invest with BSNL to popularise 3G in the country. He also told it that similar arrangements would be made with vendors who have won the bid in other zones. This includes Ericsson (in the north and east) with which price negotiations are going on.

Informed sources said that Huawei has been asked to give a plan and also indicate how much it will invest in the marketing and advertising exercise which will include electronic and print advertisements, 3G kiosks where you can experience the technology, and below-the-line activities. In Tamil Nadu, the plan is to go into 22 to 30 cities and towns in eight districts.

Asked whether it will take part in the joint marketing effort, the Huawei India spokesperson said: “BSNL is a prestigious customer of Huawei and we will be happy to partner with BSNL on all 3G development programmes. At the request of BSNL, Huawei conducted the soft launch of 3G activities in the Chennai and Tamil Nadu circles in March 2009.”

Industry experts have estimated that the marketing and advertising for launching 3G across the country could cost between Rs 250 crore and Rs 350. But some of them said that it could cost more as it will also require educating the consumer.

The Department of Telecommunications has pointed out that one out of ten mobile subscribers actually uses all the services which are offered to him; therefore, there is a need to educate customers on the new service. The initial soft launch of 3G services by both MTNL and BSNL has not taken off — both only have a few thousand subscribers.

Equipment manufacturers, however, pointed out that with profit margins of not more than 3 to 5 per cent in sale, the extra cost will adversely impact them. These expenses were not factored in when they bid for the equipment order.

Joint development of the market is of course not a new concept. In India, Qualcomm in its initial days of launching its CDMA technology for mobile telephony services used to run joint advertising campaigns with service operators to explain to the consumers the advantages of the technology. Chipmaker Intel has had many joint advertising programmes across the globe with makers of personal computers.