The Indian industry has been waiting keenly for several years for the introduction of 3G. 3G is nothing but mobile broadband, which will bring access to the global information society for millions of unconnected Indians. In India fixed line broadband connectivity is very low; so it is quite likely that many people will probably first use and experience broadband on their mobile handsets (which have percolated widely, even in the rural areas). Thus, 3G will bring in the much needed broadband connectivity for both rural as well urban India. The automatic extension of the underlying 2G licences to make them co-terminous with 3G allocations will ensure continuity and stability of service and is in the interest of Indian consumers. In the 2G space today, the average spectrum availability per GSM player in India is much lower (7-8 MHz spectrum per operator) than international norms (around 22MHz) and operators are facing spectrum crunch. For existing 2G players, 3G being a continuum of 2G will alleviate some of the 2G spectrum crunch if they are able to win 3G spectrum. 3G will also bring many more multimedia applications and will thus result in being a great experience for consumers & operators and will also be a good growth driver for the industry.
Government's decision to award spectrum through an auction process is welcome. A well-structured auction is a fair and transparent way of allocating spectrum amongst competing bidders. However, there is always the danger of over-bidding which can have disastrous impact on business viability, service tariffs, penetration and rollout. The quantum of 3G spectrum available in the different service areas will play a crucial role on how the bidding actually turns out. In terms of spectrum availability, it seems that around six circles may have full 60MHz available in 2.1GHz band, whilst majority of the other circles have around 40-50MHz. With Government deciding only one block of 5MHz spectrum be awarded to successful bidders, there is ample opportunity and scope to allow for fullest play of competition in 3G services in the country. However, lower spectrum availability in a few circles might lead to over-bidding in such circles driving up costs, and thus up-take of service and even viability. BSNL/MTNL will be given spectrum immediately ahead of private players but because these are government operators and their processes are government driven they will have certain constraints in rolling out their services rapidly. Moreover, not knowing the number of operators and the final bid price, the PSUs would be constrained to make a meaningful business case. There is some ambiguity on spectrum entitlement to CDMA operators. It appears from the policy that they can get allocations in 800MHz, 450MHz bands besides also being eligible to bid for 2.1GHz. Trai had recommended that if the CDMA operator opted for the 450MHz band, it would not be eligible to bid for the 2.1GHz spectrum.
And that if it opted for 1 carrier of 1.25MHz in the 800MHz band, it could only get maximum 3.75MHz in the 2.1GHz band. Thus as per Trai, CDMA operators too, could only get a maximum of 5MHz of 3G spectrum. This clarity is not there in these guidelines and it does raise concerns about level playing field. Though 3G policy is a welcome one and undoubtedly a step in the right direction to transform India into a mobile information society, a question arises about vacation of spectrum by Defence. There is no idea on when will the 3G spectrum be available for auctions? It is not possible for an operator to make any business case without knowing the availability of spectrum. Thus, early availability of spectrum is of prime importance for faster rollout of broadband services in the country
Government's decision to award spectrum through an auction process is welcome. A well-structured auction is a fair and transparent way of allocating spectrum amongst competing bidders. However, there is always the danger of over-bidding which can have disastrous impact on business viability, service tariffs, penetration and rollout. The quantum of 3G spectrum available in the different service areas will play a crucial role on how the bidding actually turns out. In terms of spectrum availability, it seems that around six circles may have full 60MHz available in 2.1GHz band, whilst majority of the other circles have around 40-50MHz. With Government deciding only one block of 5MHz spectrum be awarded to successful bidders, there is ample opportunity and scope to allow for fullest play of competition in 3G services in the country. However, lower spectrum availability in a few circles might lead to over-bidding in such circles driving up costs, and thus up-take of service and even viability. BSNL/MTNL will be given spectrum immediately ahead of private players but because these are government operators and their processes are government driven they will have certain constraints in rolling out their services rapidly. Moreover, not knowing the number of operators and the final bid price, the PSUs would be constrained to make a meaningful business case. There is some ambiguity on spectrum entitlement to CDMA operators. It appears from the policy that they can get allocations in 800MHz, 450MHz bands besides also being eligible to bid for 2.1GHz. Trai had recommended that if the CDMA operator opted for the 450MHz band, it would not be eligible to bid for the 2.1GHz spectrum.
And that if it opted for 1 carrier of 1.25MHz in the 800MHz band, it could only get maximum 3.75MHz in the 2.1GHz band. Thus as per Trai, CDMA operators too, could only get a maximum of 5MHz of 3G spectrum. This clarity is not there in these guidelines and it does raise concerns about level playing field. Though 3G policy is a welcome one and undoubtedly a step in the right direction to transform India into a mobile information society, a question arises about vacation of spectrum by Defence. There is no idea on when will the 3G spectrum be available for auctions? It is not possible for an operator to make any business case without knowing the availability of spectrum. Thus, early availability of spectrum is of prime importance for faster rollout of broadband services in the country
ARTICLE WRITTEN BY: C.A RICHA SAINI
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