India 3G market in tatters -

Cut throat market conditions plus a weary bunch of mobile operators are forcing the network equipment vendors in India to slash their prices.

And some are so downtrodden they are offering systems for free in order to retain their customers, according to Light Reading.

Last month the Indian government finally auctioned 3G spectrum to India's privately held carriers. This was expected to generate network upgrades and rollout deals worth billions of dollars. And for a while it did. Huawei got lucky and signed a deal and Tata got NSN.

However, it seems expectations were not met and 3G in India is now shaping into a highly competitive market with thin margins.

An anonymous source told Light Reading: "There is a bloodbath in the industry. The market was always competitive, but now even the premium vendors like Nokia Siemens Networks and Ericsson AB are undercutting and offering freebies to retain the operators as customers."

And 3G operators are keeping their hands firmly in their pockets after spending billions on securing 3G spectrum opting for a phased 3G network rollout, which spreads their planned 3G capital expenditure over a longer period.

India's 3G infrastructure market in the current financial year, ending March 31, 2011, had previously been valued at about $3 billion: Now, almost overnight, it looks to have shrunk by about a third.

According to Light Reading, in the past, pricing pressure has often been caused by the marketing tactics of the Chinese equipment vendors such as Huawei Technologies Co. Ltd. But in India, the dynamics appear to have changed. In the 3G market, it seems the cut-throat infrastructure offers are being made by the European vendors, while the Chinese vendors highlight their professional services offerings in order to retain and attract carrier business.

The suggestion that it's now the European vendors that are squeezing the network deal margins is corroborated by another industry source, who also wished to remain anonymous because of the sensitive nature of the subject: "In the last two deals, Nokia Siemens has actually beaten Huawei in price, so there is a new-found aggression in them -- they are going all out to get the maximum share of this market."