The Hindu Business Line : Govt to auction spectrum for 3G, Wi-Max services

New Delhi, November 12 In yet another blow to the existing GSM operators, the Communication Ministry has decided to auction spectrum for third generation (3G) mobile services and wireless broadband services through technologies such as Wi-Max.

The auction will be open to new companies wanting to foray into the telecom sector as well as established foreign telecom players. The existing operators had wanted the auction for 3G services to be limited to the licence holders.

The Ministry’s decision to open up the bidding to all players is also a move away from the telecom regulator’s recommendations that it be restricted to existing operators. The move gives a chance to the likes of Deutsche Telecom, AT&T and new Indian players such as Unitech and Hindujas, which may not get spectrum in the 2G band given the huge rush, to enter the high growth telecoms market. This means that existing GSM operators such as Bharti Airtel and Vodafone Essar, after being asked to rope in more subscribers for being eligible for more spectrum for 2G services, will now have to fight it out for a piece of 3G spectrum.

As per the guidelines worked out by the Communication Ministry, 30 Mhz of spectrum in 2.1 Ghz band for 3G services is available which can accommodate between 3 and 6 players depending on whether the Government allocates 10 Mhz or 5 Mhz per operator. A decision on this and other modalities such as the date for the auction will be taken shortly by the DoT.

CDMA operators

For CDMA operators such as Tata Teleservices and Reliance Communications, the Government has identified the 800 Mhz band in which 1.25 Mhz will be given to each operator. There will be no auction for the CDMA operators wanting to offer 3G services but they will have to pay an amount that is proportionate to the highest bidder in the auction for GSM players.

This is good news for CDMA players as they are currently using the 800 Mhz band for offering 2G services and, therefore, can start offering low-cost 3G services using the same equipment with minor investments. However, the DoT has not allowed the use of 1900 Mhz band and 450 Mhz band for CDMA players for now, which means that they will have only 1.25 MHz in all to offer 3G services.

In another major decision, the Government has decided to auction spectrum for Wi-Max services in the 2.5 Ghz band. Three operators would be given 10 Mhz each based on an ascending e-auction. The base price would be 25 per cent of the amount quoted by the highest bidder for 3G spectrum.

Besides the initial one time spectrum charge, an additional spectrum charge of 0.5 per cent of the operator’s annual revenues will be levied on both 3G and Wi-Max operators. Mergers will not be allowed during the first 5 years to prevent reselling or trading of spectrum. Both 3G and Wi-Max technologies will enable consumers to access high- speed data and entertainment services such as Interent Protocol TV and Video on Demand on mobile handsets. These technologies also allow the operators to offer better quality of service.

Mobile number portability in phases

Mobile Number Portability, which allows subscribers to change their operator without having to change the phone number, is finally here. The Minister of Communication, Mr A. Raja, has decided to introduce this system in phases, starting with the four metros.

This facility is likely to be available to the mobile subscribers by the fourth quarter of 2008. All the investments required to launch number portability will be made by the mobile operators.

Though the telecom regulator had recommended introduction of this system more than a year ago, the Government was facing resistance from the operators who were concerned about losing subscribers to rivals.