Updated: 3G Auction completed after 34 days of bidding

[Honest 836]

DoT may nearly double number of 3G licences

New Delhi July 18, 2008, 0:15 IST

Ministry 'identifies' additional spectrum for 4 more players.

The Department of Telecommunications (DoT) is examining a proposal to auction around nine licences for 3G — or third generation — services among incumbents and new players in place of an earlier proposal to allow five players in this space.

This will be made possible because wireless experts in the ministry have reportedly identified bands for over 20 MHz of additional spectrum that would accommodate at least four more operators (each operator will be given 5MHz).

The move could resolve the year-long controversy over scarcity of spectrum, the radio frequencies that enable wireless communication, for telecom services in general and 3G services in particular.

Incumbent operators have been opposing DoT's decision to open the auction of 3G services — to provide high-speed access to the internet, entertainment, information and e-commerce — to new players including foreign telecom companies.

They have argued that there is already enough competition, so allowing more players would only lead to over-bidding and unduly high licence fees that would make services expensive and unviable.

DoT has already earmarked 25 MHz spectrum for 3G services on the 2.1 giga hertz band to be auctioned to five operators. Of this, one will be reserved for state-owned BSNL.

Some spectrum is also available on other bands that can accommodate two CDMA operators, taking the total number to seven. But lack of equipment might deter the two incumbent CDMA players from taking this option.

There are currently ten to 12 operators offering 2G services in each circle, including incumbents and companies that were recently granted licences and yet to start operations. Industry experts expect another three or four new players that want to enter India's rapidly growing mobile services market to bid for 3G licences.

DoT had doubled the reserve price recommended by sector regulator TRAI for ‘A' category circles — Delhi and Mumbai — to Rs 160 crore.

For ‘B' category circles — Chennai and Kolkata — the reserve price is Rs 80 crore. For the ‘C' category, it is Rs 30 crore.

The government had expected to earn around Rs 20,000 crore from 3G auctions. With more licences available, operators may lower their bids, but the revenue generated from them will be much higher than initial government targets.

[Honest 836]

Bharti Airtel for global 3G auction

23 Jul, 2008, 0151 hrs IST, ET Bureau

MUMBAI: Bharti Airtel, India’s largest cellular operator, is in favour of a global auction of spectrum for 3G (third generation) services. It has called for equity and objectivity in the process that could bring billions of dollars to the government’s kitty.

“We are a product of liberalised India. We favour competition. Our only request is that there should be a level-playing field. Finally, a better company and better brand will win,” Bharti Airtel president Manoj Kohli told ET. He said the terms and conditions for 3G spectrum auction should be fair to existing as well as new operators and there should be “equity, objectivity and balance”.

The department of telecom (DoT) is formulating guidelines for auctioning spectrum for 3G services, which include video calls, video streaming, high-speed Internet browsing and movie downloads besides others. Allowing foreign players to bid for 3G spectrum is expected to weed out smaller players and generate revenues for the government as global players can bid at higher rates. In 2001, the UK raised over $25 billion though auction of 3G licences, an amount which was the UK government’s half-year income tax revenues then

Airtel, which is already offering 3G in Seychelles, has also tested them in Mumbai, Delhi and Bangalore and is ready for rollout whenever spectrum is allocated.

Terming telecom as the “showcase sector”, Mr Kohli said spectrum is the raw material required for growth. “Existing operators should get requisite spectrum, and proactively, so that we can ready network before traffic comes.” Earlier this year, Bharti received additional spectrum in seven out of the 23 circles where it operates.

On tariffs, which are already the lowest in the world at 40 paise (2 cents) per minute, Mr Kohli said customers are increasingly becoming tarrif agnostic, even in rural areas. Of Bharti’s monthly new additions, 50% are from rural areas. “They want features, value-added services, good quality of services and good brand.” However, there remains scope for more cuts if the government reduced various levies from the current level of around 30%. “If these come down, the benefit will be passed on to the customers. If the per unit rate goes down, the revenues will also grow (due to increased usage),” he said.

The government is targeting 500 million connections by 2010 and Mr Kohli said the actual subscriber base could be 10% over this, helped by reduced tariffs.

On the controversy around BlackBerry services in the past few months, he said it had not affected business at all. “People are signing up for BlackBerry. Many statements have come from the government and the customers are assured that there is nothing to worry about. It is a short-term issue and will be resolved soon. We would like to be fully compliant with guidelines,” Mr Kohli added.

[Honest 836]

Govt to announce 3G policy soon: Raja

23 Jul, 2008, 1405 hrs IST, PTI

NEW DELHI: Fresh from winning the confidence vote in Parliament, the UPA government is all set to usher in next generation (3G) mobile services and will soon announce guidelines for the same.

"We will be announcing the policy for 3G and WiMax broadband services very soon," Communication and IT Minister A Raja said.

He, however, did not give any time frame, but officials said that since changes suggested by sector regulator TRAI had already been incorporated, the policy should be made public within a week or two.

TRAI had, on July 11, recommended a minimum price of Rs 60 crore to acquire spectrum through auction for offering 3G and wireless broadband services in metro cities.

The regulator had said that besides reserve price, the operator would have to give a performance bank guarantee based on the circle.

The Department of Telecom (DoT) sources said that foreign players would be allowed to participate in the auctioning of 3G spectrum and new licenses would be issued to successful foreign players.

The government is hoping to garner up to Rs 40,000 crore through auctioning of 3G spectrum (radio frequency) and all the existing telecom players like Bharti Airtel, Vodafone- Essar, Idea Cellular and other new players are expected to participate in auction along with foreign players.

According to officials, the financial bids for spectrum would be invited by the end of next month and the process is likely to be completed by October this year enabling the players to start rolling out networks by the end of 2008.

Asked how many players are likely to be issued 3G licenses, the officials said that it would depend on the quantum of spectrum available with the government.

Senior officials said that DoT was also talking to defence ministry for vacating spectrum and would decide on number of licenses to be issued.

TRAI had earlier endorsed DoT's suggestion of revising the reserve price of 3G spectrum upward and the same would be considered in the Telecom Commission in its next meeting, they said.

[Honest 836]

CDMA cries foul over govt decision

Press Trust of India / New Delhi July 27, 2008, 16:38 IST

The association of CDMA telecom operators, AUSPI, today said the government decision to go ahead with the 3G policy without deciding on the spectrum band for them is likely to benefit the rival GSM service providers.

AUSPI Secretary General S C Khanna said in a statement that the 3G policy under which spectrum would be made available by auction only in 2.1 GHZ band which is suitable only for GSM operators.

The CDMA operators do not have network equipment to operate in in 2.1 GHz and handsets.

"If 3G policy is announced without providing 3G path for CDMA operators, it is going to benefit only the established GSM operators and create serious level playing field disturbances," he said.

The equipment and handsets for operating in the band are unlikely to be available for a couple of years at affordable prices.

This means the established GSM operators who are able to get 3G spectrum would have a two-year lead time over CDMA operators creating consciously level playing field imbalances, Khanna said.

The Department of Telecom (DoT) in its 3G policy announced in November 2007 had accepted the specific TRAI recommendations for for 3G services by CDMA operators and said that two carriers in 800 MHz band would be reserved for CDMA operators.

AUSPI has made a presentation to DoT to take into account the requirements of CDMA operators before announcing the 3G Policy, otherwise 80 million CDMA subscribers would be deprived of the benefit of 3G services.

[vmsanghrajka 0]

Ultimately all CDMA operators are shifting to GSM, so why this hue cry?

[Honest 836]

Raja may announce 3G, WiMax, MNP policy on Friday

29 Jul, 2008, 1749 hrs IST, ET

NEW DELHI: After settling differences with telecom regulator TRAI on reserve price of spectrum, the Government is likely to announce the much-delayed 3G and Wi Max policy on Friday, sources said.

The announcement may come amid indications that at least 10 players would be issued 3G licenses as against five proposed earlier.

According to highly-placed sources, the government has about 60 MHz of spectrum (radio frequency) for the next generation (3G) mobile services and this can accommodate at least 10 players.

The differences between DoT and TRAI also delayed the 3G policy announcement. The political uncertainty following the Left parties withdrawing their support to the UPA government also played a part in the delay.

The other key proposal which is likely to see the light of day is Mobile Number Portability which will allow subscribers to retain the mobile number even after changing the service provider.

On 3G proposals, TRAI has already agreed to the proposals of DoT for hiking pan-India licence fee for third generation mobile services to Rs 2,200 crore and pan-India broadband wireless access (BWA) spectrum, popularly known as WiMAX, to about 840 crore -- Rs 60 crore for five metros and category A circles, Rs 30 crore for category B and Rs 10 crore for category C circles).

DoT has also fixed the base price at Rs 160 crore for metros and category A circles, Rs 80 crore for category B, and Rs 30 crore for C circles, respectively for 3G spectrum auctions.

[Honest 836]

3G policy tomorrow

30 July, Business Line

The much awaited policy on third generation mobile services will be announced by the Communications Ministry on Friday. The Ministry is also expected to announce the policy for broadband wireless services and also mobile number portability on the same day.

According to sources in the Department of Telecommunications, it has been decided to allow foreign and new players to participate in the auction for 3G spectrum. However, new players will have to pay an entry fee of around Rs 1,600 crore before they can bid. These players will be given a universal access licence, but will not be eligible for 2G spectrum. DoT may also put a rider that new players should have previous experience of running 3G services.

Sources said that each successful bidder shall be given only 5 MHZ of spectrum in each circle. DoT has also fixed the reserve price for each circle. For Mumbai, Delhi and category A States, bidders will have to pay a minimum of Rs 160 crore. For Chennai, Kolkatta and category B States, the reserve price has been pegged at Rs 80 crore and category C States including Bihar, Orissa and North East has a base price of Rs 30 crore each.

Online auction

The policy will also outline the auction process which is likely to be done online.

The e-auction process will be a multi-stage process wherein the lowest bidder will be eliminated. The bidding will continue till the number of operators left is equal to the number of block of spectrum being auctioned. All the bidders will have to match the highest bidder.

The 3G mobile services are expected to bring high speed Internet services on mobile handsets. Consumers will be able to access services like video on demand and other data services on the handset. For mobile operators this technology will enable them to offer better quality services and more efficient utilisation of spectrum.

While spectrum will be given to GSM-based cellular operators in the 2.1 GHz band, for CDMA players DoT is likely to offer capacity in the 800 MHz and 450 Mhz bands.

[Honest 836]

Panel formed to issue guidelines for e-auction of 3G spectrum

1 Aug, 2008, 0306 hrs IST, ET Bureau

NEW DELHI: A day ahead of unveiling the policy for third generation (3G) services, the Department of Telecom (DoT) on Thursday constituted a high-level committee headed by its member (finance) to frame guidelines for the e-auction of these radio frequencies.

While the communications & IT minister will spell out the 3G policy on Friday, these guidelines will be limited to specifying the reserve price, the eligibility criteria, revenue-share and rollout obligations of successful bidders.

The policy will also state that a ‘simultaneous ascending e-auction’ will be conducted on a circle-wise basis, but it is this committee that will spell out the finer details of how exactly the auction will be conducted, sources close to the development told ET .

The broad guidelines for the e-auction have already been finalised. The auctions will begin at the reserve price, which has been fixed at Rs 160 crore for Mumbai, Delhi and Category A circles, Rs 80 crore for Chennai, Kolkata and Category B circles, and Rs 30 crore for Category C circles. A slot of 3G spectrum will be reserved for state-owned telcos BSNL and MTNL, at a price equal to that of the highest bidder. International communication majors and new entrants will also be allowed to participate, but these players will have to pay an entry fee of Rs 1,651 crore (the cost of a telecom licence) over and above the auction price.

The e-auction will be conducted separately for each circle—this is because the reserve price is different across circles and the availability of 3G spectrum is uneven across the country.

Here’s how the ‘controlled ascending’ auction, which will be conducted online, works: If only four operators are to be chosen for Delhi, all players will first place their bids. If more than four players place bids above the base price, the auction will continue after eliminating the lowest bidder and the second-lowest bid will be the base price for the next round.

At the same time, the amount of the second-lowest bid and the highest bid will also be made public. In the next round, bidders can increase their bids or keep them at their older value. The process will continue till four operators emerge as winners. Finally, all four players will have to pay the same spectrum charge as the highest bidder. This method was first developed for the US Federal Communications Commission’s (FCC) spectrum auctions in 1994.

The top bidders are called in the decreasing order of their bids to choose which block of spectrum they wish to be allotted. In case of a tie, the operator with the higher subscriber base will be given preference, but, if the subscriber base too is tied, then the operator with higher revenues will be selected. In the case of a tie between an existing player and a new entrant, the former will be preferred. In the case of a tie between the new entrants, the player with the higher net worth will be selected.

[Honest 836]

Govt releases guidelines for 3G service, MNP

1 Aug, 2008, 1245 hrs IST, ET

NEW DELHI: The government today set the ball rolling for introduction of next generation (3G) mobile services, as also mobile number portability that would allow users to switch operators while retaining existing numbers.

The new guidelines for 3G spectrum, released today, provides for a reserve price for availing of radio frequency.

The price for a 2x5 Mhz block of spectrum for Mumbai and Delhi and category-A shall be Rs 160 crore and for Kolkata and category-B Rs 80 crore and for category-C Rs 30 crore.

Government has also decided to allow up to 10 players in the 3G space, including eligible foreign players.

The guidelines for Mobile Number Portability, also released by the government today, proposes dividing the country into two zones for implementing the scheme that is prevalent in most mature telecom markets.

The 3G spectrum will be auctioned in 450 mhz band, 800 mhz and 1,900 mhz and the guidelines exempt operators from paying any annual fee in the first year of operations.

Operators, however, shall be liable to pay an annual spectrum charge of one per cent of AGR after a period of one year.

All those who hold a Unified Access Service Licence or those who are otherwise eligible for obtaining UASL as per DoT guidelines of December 14, 2005 would be eligible to apply for 3G radio waves.

As per the guidelines, "the applicant company shall have a minimum paid-up capital of Rs 10 crore on the date of application. Foreign equity shall be subject to extent guidelines and regulation. However, equity of foreign partner in the company shall not be less than 26 per cent."

On MNP front, the guidelines said a one time non- refundable entry fee of Rs one crore is required to be paid for securing the service license.

"No single company/legal persons/MNP license applicant or MNP licensee company, either directly or indirectly, will have any equity in any of the telecom service provider and vice-versa," the guidelines said.

[HetalDP 947]

This time Government is very Serious about the 3G auctioning as Very Few month is Left with Them Before Election they want to Sanction as much as they can before that.

Now Expect 3G Juggernaut running Very Fast and Also the MNP (Mobile Number Portability)

[P. K. Daga 3]

Finally the MNP guidelines are here

http://dot.gov.in/2008/Aug%202008/mnp_1.pdf

[KumaarShah 143]

All depends on which telco gives how much to whom and when..... But yes we can hope the process will get expedited....

[Arun 795]

BSNL has already announced 3G rollout plans since 1 slot is reserved for them...

Kuldeep Goyal, CMD, BSNL said that his company would be rolling out 3G services within six months. The prices could be higher than the base price that the government announced, he said. Goyal said that MTNL would operate in Delhi and Mumbai and BSNL in rest of India. He estimates a good market for 3G services.

BSNL to roll out 3G in six months, MTNL in four

Saturday, August 02, 2008

CIOL

NEW DELHI, INDIA: Following the announcement of the much awaited 3G policy, Bharat Sanchar Nigam Ltd will be rolling out 3G services in the important metros in country in another six months.

Speaking to CIOL, chairman-cum-managing director (CMD), BSNL, Kuldeep Goyal said decks for 3G roll out have been cleared and BSNL will be offering services in the another six months. "We will be inviting tenders for our 8-9 million lines soon and final roll out will be in another six months," said the CMD.

BSNL and MTNL have got a head start over its rivals as they need not participate in the 3G spectrum bid and can roll out its services any time they are ready to roll out.

Goyal's statement follows the guidelines from the telecom ministry, which opened the 3G spectrum for bid to five operators for now, and another five more operators in future, provided there is additional spectrum. However, in Delhi and Mumbai, only three players can bid for auction of spectrum due to the scarcity of spectrum in these metros.

However, both the state PSUs have to pay the highest bidding price following the auction of the 3G spectrum that will be completed in another four months.

RSP Sinha, CMD of MTNL or Mahanagar Telephone Nigam Ltd , while welcoming the 3G policy told CIOL that the company will take close to four months to roll out the services in Delhi, and a little later in Mumbai.

Undue advantage?

On whether the head start over the other rivals gave BSNL and MTNL undue advantage over its rivals, the Department of Telecom (DoT) said that the PSUs need to have to some concession from the government for they are incumbents and need some support to take on the big players.

However, the DOT chairman added that rolling out the 3G policy is very tough process and will take considerable time, and a little head start won't be undue advantage for these players.

The Minister of State for Communication & IT also didn't agree that the state PSUs were getting a head start. "BSNL has to pay the same amount as the other bidders, and hence, doesn't entail undue advantage," he added.

[Arun 795]

Press Release from Press Information Bureau: Guidelines for 3G and Broadband Wireless Access (BWA) services

DoT Press Release: Detailed Guidelines for Auction and Allotment of Spectrum for BWA Services

DoT Press Release: Guidelines for Auction and Allotment of Spectrum for 3G Telecom Services

[KumaarShah 143]

BSNL has already announced 3G rollout plans since 1 slot is reserved for them...

Kuldeep Goyal, CMD, BSNL said that his company would be rolling out 3G services within six months. The prices could be higher than the base price that the government announced, he said. Goyal said that MTNL would operate in Delhi and Mumbai and BSNL in rest of India. He estimates a good market for 3G services.

What about TATA INDICOM then? How come they are also selling 3G so brazenly?

[Honest 836]

We will match 3G bid at any price: MTNL

Updated on Aug 01 at 17:57

Source : CNBC-TV18

In the government's announcement of the 3G spectrum guidelines, Telecom Minister, A Raja said the government would invite global bids for the 3G spectrum. Five operators will be allotted the 3G spectrum as of now and five more operators are expected to be allotted the spectrum on a later date. He added that BSNL, MTNL would be allotted one slot of the 3G spectrum today.

RSP Sinha, CMD of MTNL or Mahanagar Telephone Nigam Ltd, said they will be able to launch 3G in in Delhi within next three to four months, but Mumbai may take a little longer.

Sinha said during the auction process they will match the bid whatever be the price.

Excerpts from CNBC-TV18's exclusive interview with RSP Sinha:

Q: How would you react to it? How much time do you think it will take to roll out the 3G services?

A: We have got the first fair treatment vis-à-vis other operators in GSM play, because we were the third to get the license. They had already launched their operations. As far as 3G is concerned, in Delhi we will be able to launch within next three to four months, Mumbai may be taking a little longer time because in Delhi we have already got our four equipments, now we only have to take some notes to fully start the services.

Q: The private GSM operators are likely to get it in three months because the government says that the entire auction process will take at least two to three months, so you will have a significant head start over your competition in Delhi and Mumbai?

A: We started our GSM service after six to seven years after they had done. So this is no time to compare these three months with six years. I do know that as a government company, we have to follow certain procedures. So that will take a longer time because for them they can order across the board, but we cannot.

Q: As far as bidding is concerned, you will have to match whatever is the highest bid given the fact there are only two stocks available for Delhi and Mumbai; do you fear that this is likely to be very aggressive bidding because among the private players you will have to end up matching a bid that could be very unbuyable?

A: That is not an issue, we are going to match it whatever be the price. Our 3G is really going to be in great demand because of the data capability and other things. Therefore we do not want to miss the bus again like before.

Q: In your assessment, what will be the price? The government has come out as a result price of Rs 2020 crore?

A: This is very difficult value; very aggressive pricing will be taking place especially in metros. So it is difficult to predict, but I am comfortable whatever price is finalised, we will be doing it.

Q: One word on the merger with BSNL - no word from the government yet, but the BSNL CMD said that they are looking at an option of hitting the market with an IPO. Post an IPO, I guess the merger would be feasible. Originally MTNL has reservations to a merger with BSNL. Do those reservations still remain?

A: We have no reservations because it was not a listed company; our shareholders should not suffer due to the merger and I am sure whatever step the owners of both companies will take, they will keep in mind the interest of American Depository Receipt (ADR) and Global Depository Receipt (GDR) holders or the people who are the shareholders of MTNL.

[Honest 836]

Govt announces new 3G norms; BSNL, MTNL benefit

Updated at Fri, Aug 01 at 19:37

Source : CNBC-TV18

The government has announced the 3G spectrum guidelines.

Telecom Minister, A Raja said the government would invite global bids for the 3G spectrum. Five operators will be allotted the 3G spectrum as of now and five more operators are expected to be allotted the spectrum on a later date. He added that BSNL, MTNL would be allotted one slot of the 3G spectrum today.

Currently 60 Mhz of the 3G spectrum is available. Raja said that three slots of the 3G spectrum would be allotted to CDMA players. He added that only two or three operators would get the 3G spectrum in Mumbai and Delhi. He said that the reserve price for Pan India 3G Auctions would be Rs 2,020 crore.

A Raja said that the rollout obligation of the 3G would be the same as that of the 2G spectrum. He further said that the 3G-spectrum fee is to be 1% of the adjusted gross revenue from the second year and there would be no annual spectrum fee for the 3G auction in the first year.

Raja expects the auctions to be completed in two months. Raja said the bid winner could get 20 Mhz of spectrum for broadband. He said the auction crosses would be conducted by a specialised agency. He also said that the the ministry would implement the mobile number portability by mid 2009.

Kuldeep Goyal, CMD, BSNL said that his company would be rolling out 3G services within six months. The prices could be higher than the base price that the government announced, he said. Goyal said that MTNL would operate in Delhi and Mumbai and BSNL in rest of India. He estimates a good market for 3G services.

Goyal said that ITI has presented a merger proposal with BSNL, which the BSNL employees have opposed.

Bharti said it is ready to launch 3G services as soon as the company gets spectrum.

COAI (Cellular Operators Association of India) said it welcomes the 3G guidelines. However, it fears over bidding in Delhi Metro Circles.

Sanjay Chawla, JPMorgan said that the base prices have increased compared to what the TRAI suggested. He added that the risk of high price is to be paid by the telecom companies. He expect the bid price to be very significant and said it could hurt MTNL.

Excerpts from CNBC-TV18's exclusive interview :

Q: What does it strike you as? Who are the winners and losers now?

A: We are still waiting for the fine print and the detailed guidelines from the DoT. Based on what the Minister has said, it is pretty much in line with what we had been anticipating, based on the press reports.

The base price has increased as compared to what the TRAI had suggested. It is a pretty hefty price at over Rs 2000 crore.

Since most of the potential is in the metro circle and the ‘A’ circles, it is very likely that the ultimate bid price for these circles could shoot through the roof and that is a risk. The premium that operators would eventually end up paying for circles like Mumbai and Delhi over the base price could be pretty significant, whereas for the remaining circles the premium over the base price may not be that significant.

Given the fact that one slot is already going to be allotted to MTNL and BSNL and that in Mumbai and Delhi there might be just one or two additional slots, I expect the bid price to be pretty significant.

In that scenario, it is going to hurt MTNL because they may be required to pay the same price for the 3G license and the spectrum.

Q: Do you expect it to hurt even the other players like Bharti, and Idea who would be seriously bidding for it?

A: Yes. But ultimately to some extent a high bid price from a Bharti or a Vodafone can be justified because they have that kind of a customer base. But for a complete newcomer they may get deterred looking at the aggressive bidding and the prospects of bidding in the market.

Q: Just a quick word on R Com, I believe you would be one of the analysts who has got a negative view after the kind of results that came out. Assuming that they bid on a very high frame from hereon for the Mumbai and Delhi circles, since in the concall they said that they want CDMA in both these circles. How negative could it turn out for R Com from what it already is?

A: I would not specifically point out this issue for R Com. The government has raised the base price and have opened the door to completely new entrants, the cost of just the spectrum acquisition could be pretty significant.

In this environment, investors are just going to write off any original capex. For example; if Bharti ends up paying say USD 600-700 million for pan India 3G spectrum and they may incur additional overall network cost of USD 500 million initially. Investors may just want to write off USD 1 billion initially.

[Honest 836]

GSM operators hail 3G policy

1 Aug, 2008, 2033 hrs IST, ET

NEW DELHI: GSM industry on F hailed the 3G mobile telephony guidelines announced by the government saying the move will boost mobile broadband in the country.

The world-wide association of GSM operators (GSMA) and lobby of domestic players COAI in a joint statement said, "The Indian government's 3G policy is a fair and transparent way of allocating additional spectrum among the service providers."

Further, the automatic extension of the existing 2G licences would ensure continuity and stability of services, the associations added. A leading telecom vendor Ericsson termed the 3G policy a next step in the telecom revolution.

"This will help bridge the urban-rural digital divide and lead to penetration of broadband services in the country," P Balaji, Vice President (Marketing and Strategy), Ericsson India, said.

CDMA operators' association AUSPI, however, said they were still studying the guidelines. But the CDMA Development Group, a CDMA user group, welcomed the policy and said DoT's decision to open globally harmonised band in 450 MHz, 1900 MHz and 2100 MHz is good for the industry.

Industry body FICCI said the 3G policy would attract huge investments in the country to the tune of 8-10 billion dollars over the next two to three years. "The 3G guidelines would allow an open global and transparent auction process consistent with best global practices," FICCI President Rajeev Chandrasekhar said in a statement.

CDMA technology innovator Qualcom said the 3G policy will benefit the entire wireless communication eco-system.

[Honest 836]

Handset, service costs key to 3G success in India

2 Aug, 2008, 0000 hrs IST, ET Bureau

MUMBAI: 3G or third-generation services are set to change the dynamics of the Indian telecom sector. While consumers will finally get to download movies on mobiles and make video calls, there’s a lot more they will be able to do if handset makers offer affordable mobiles.

The success of 3G will depend on pricing. The entry barriers will be handset prices, availability of content and cost of services. “Unless you have a lot of content for users, 3G will not take off,” Ernst & Young India’s telecommunications leader Prashant Singhal told ET .

Put simply, 3G is enhanced data application along with multimedia. It allows high-speed internet surfing, faster movie and music downloads, video streaming and video calls on handsets. 3G has been highly successful only in Japan and Korea, which are data-oriented markets. Gaming is popular in these countries and has been a key driver of 3G services.

In India, value-added services contribute 7-8% to operators’ revenues, which largely comes from SMS. Content revenues are not more than 2-3% and this is due to high pricing as well as inadequate variety of content.

Also, the high cost of getting 3G spectrum may be passed on to consumers. “The problem with the auctioning mode is that bids may be too high. In the past, auctioning has gone beserk in other countries and the cost is passed on to consumers. This will make services unaffordable to users,” said KPMG executive director (telecom) Romal Shetty. Further, 3G is going to work well only in metros and tier-I cities. There will be higher margins from few users and lower from the most, he added.

Mr Singhal agreed that the reserve price of Rs 2,020 crore for pan-India spectrum is too high. “Operators will not be ballistic in bidding for 3G. We may see 3-4 big companies bidding and new operators are unlikely to participate. Too high bids may lead to huge interest costs, leaving little focus on content development,” Mr Singhal added.

While operators will upgrade their networks to 3G, it will be left to users to opt for services. Those who want to go in for services will need 3G-compatible handsets, which are being offered by all major vendors. In India, the prices range from Rs 8,000 to Rs 62,000, but their features vary.

A major plus of the 3G guidelines is that they compare favourably with similar policies in other countries. “DoT’s policy of bringing in 3G services in internationally harmonised bands will lead to economies of scale in equipment manufacturing, competitive market for equipment procurement and increased spectrum efficiency,” said Accendia Consulting’s Alok Shende.

[Arun 795]

What about TATA INDICOM then? How come they are also selling 3G so brazenly?

uh, did they start already? Could you provide a link to it?

3G policy evokes mixed reactions

2 Aug 2008

Times News Network

The government’s 3G guidelines have evoked mixed reactions from industry, dividing existing operators who benefit from the policy and new entrants, who find themselves denied a level playing field.

New entrants — on condition of anonymity confessed to the entry barriers for new players being a serious disincentive. “There has never been any case in the world where new entrants are expected to pay more than double the price of existing operators even to start the bidding,” said an official in one firm.

Another aspirant stated that there was nothing new in the policy that allowed firms to start planning their bids. “The policy leaves many crucial issues unanswered which are critical to the financial modelling process,” he said.

“The ability to find an Indian company with nearly $2 billion of cash as a 26% equity holder and getting an FIPB approval within the next three to four months is virtually impossible. Unless FIPB approval is waived or FDI limit raised to 100%, global telcos have no hope of meeting the deadline,” said a global operator.

However, industry body Ficci said the 3G auctions will be watched by investors all over the world in terms of addressing many years of controversies in licence and spectrum allocation. “This will help build greenfield pan-India state-of-the-art communications infrastructure and services and bring in fresh investments to the tune of $8 to 10 billion over the next 2-3 years,” said Rajeev Chandrasekhar, MP and Ficci president. However, FICCI urges government to announce as early as possible the details of e-auction and number of blocks of 3G spectrum available in each service area as this will allow bidders to plan and execute bids efficiently.

The GSMA, the global trade body for the mobile industry, and the Cellular Operators Association of India (COAI) said the automatic extension of the underlying 2G licenses will ensure continuity and stability of service and is in the interest of Indian consumers.

“The rollout of mobile broadband in rural India will bring access to the global information society to millions of unconnected Indians,” said Tom Phillips, GSMA’s chief government & regulatory affairs officer.

TV Ramachandran, director general, COAI said, “The government’s plans to allocate additional spectrum should ensure the fullest possible breadth of competition in 3G services. Equipment maker Qualcomm said the policy will benefit the entire wireless communications ecosystem. 3G will bring efficient voice and rich data services to Indian consumers. CDMA Development Groups (CDG) India country head, B V Raman said CDG hopes that DOT will make spectrum available in the 450 & 1900 MHz bands for auction at the earliest.

[Honest 836]

MTNL, BSNL jump 3G queue

Business Standard, New Delhi

August 2, 2008, 0:26 IST

State-owned telcos to launch services in 6 months.

Indian consumers will have their tryst with 3G telecom services in the next six months, with the Department of Telecommunications (DoT) announcing that it is issuing state-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) spectrum to roll out all-India services.

3G or third generation services offer consumers internet access at speeds that are at least 30 times faster than 2G.

The move will give the state-owned corporations a four-to five-month head-start in the 3G space over private sector rivals.

The government, which announced the broad guidelines of the 3G policy today, said details of the auctioning of spectrum — radio frequencies that enable wireless communications — and the number of players allowed in each circle will be finalised within four months.

The state-owned corporations, for which spectrum has already been reserved, will have to match the highest bid after the auction for private companies is completed.

Announcing the new 3G initiative, Communications Minister A Raja said: “We expect to earn Rs 30,000 to Rs 40,000 crore through this 3G auction.”

BSNL Chairman Kuldeep Goyal added: “We will roll out an all-India 3G network in six months starting from the north and east.” The company has placed orders for equipment and said 25 per cent of the 40 million-line GSM order is for 3G services.

Industry experts predict 45-70 million 3G customers by 2012, roughly 10 per cent of the mobile customer base. New players that win bids will, however, have to pay additional cash (Rs 1,650 crore for an all-India 3G licence) for mandatorily taking a universal access service licence (UASL) also.

A SPECTRUM SHIFT

(Key telecom announcements by the government on Friday)

• Spectrum to be auctioned in blocks of 5 MHZ for 20 years

• Number of licences to be auctioned would vary from five to ten in each circle

• Licence holders and new players with 3G experience to be allowed

• The reserve price for auctioning in Mumbai, Delhi and category A circles set at Rs 160 crore, for Kolkata and category B circles at Rs 80 crore and Category C circles at Rs 30 crore

• One block of 5MHz reserved for BSNL and MTNL

• A new player who wins a 3G bid also has to take a UASL licence

• Roll-out obligation imposed; in metros have to cover 90% of the area in five years and 50% of cities in all other circles

• Spectrum withdrawn if roll out obligation not met after giving a grace period of another one year (from 5 years)

• Auction to be conducted by an independent expert agency

GUIDELINES FOR MOBILE NUMBER PORTABILITY

• Two players to be licenced for number portability services

• Number portability in metros to be launched in six months and across the country in a year

GUIDELINES FOR BROADBAND WIRELESS ACCESS SERVICES

• Reserve price will be 25% of the 3G service price

• Licence to be given through e-auction

• Licence holders as well as new players with experience in running internet service

The industry is divided on today’s announcement. "The government’s plans to allocate additional spectrum should ensure the fullest possible breadth of competition in 3G services," said T V Ramachandran, director general, Cellular Operators Association of India, which represents GSM mobile operators.

“This will surely push our valuations up since new players who win bids for 3G, will have to tie up with us for 2G,” said Mahendra Nahata, a shareholder in all-India licence-holder Datacom Solutions.

But new players interested in entering the country (AT&T, Sprint and some West Asian telcos) said the guidelines will make it unviable for them until they also get 2G spectrum simultaneously.

“You can’t sustain a business in which 10 players are fighting for only 70 million 3G customers. You need a mass consumer base of 2G subscribers to survive, so getting 2G spectrum with 3G is essential,” said a senior executive of a telco with plans to enter India.

Although new players have to pay more for a UASL, there is no guarantee that they will get the 4.4 MHz start-up 2G spectrum that comes bundled with the licence because such spectrum is in short supply.

Also, a new player would need $3 billion to $3.5 billion to roll out a 3G network from scratch. A 2G incumbent can roll out 3G operations for half the cost, giving it a huge competitive advantage.

[KumaarShah 143]

@Arun,

AFAIK, TATA-INDICOM is also offering 2.4mbps wireless broadband. Tata is also offering speeds upto 2.4mbps openly with its PHOTON service.

The link is right here: http://www.rimweb.in/forums/index.php?showtopic=13982

Maybe I am wrong, correct me if so....

The Tata link is also here:

http://www.tataindicom.com/HSIA-service.aspx

[Honest 836]

Govt starts download of 3G bids, number switch

2 Aug, 2008, 0338 hrs IST, ET Bureau

NEW DELHI: India's 300-million mobile subscribers have reasons to cheer. From mid-2009 they will be able to access third-generation (3G) services such as high-speed internet, interactive gaming, and instant downloads of movies, video clips and music on their mobile phones. And that’s not all. They will also have the option of changing their telecom operator without having to change their mobile numbers.

After nearly two years of debate and controversy, the government on Friday finally announced its plans for a global auction of third-generation (3G) radio frequencies, a move that could bring in billions of dollars for the government. The government also announced the introduction of mobile number portability (MNP) as well as a separate auction for broadband wireless access (BWA) services spectrum, popularly called WiMAX.

All this will of course come at a price for the consumer. Monthly phone bills went up by as much as 50% for subscribers in some countries when they switched from the normal 2G services to 3G services. Moreover, many subscribers may have to upgrade their handsets to avail 3G services.

The starting price for a 3G-enabled handset is about Rs 6,000 compared to an entry level phone of Rs 700. Finally, India is primarily a ‘voice’ market and it remains to be seen how many subscribers take to 3G-driven data services. It took nearly eight to ten years for customers in Europe to adopt 3G services in a big way.

3G rollout in India may be impacted by a parallel WiMax rollout. WiMax, an evolving technology is considered a threat to 3G as it offers data download speeds that are 10-30 times faster than 3G. And so while consumers can choose between opting for the two services, telcos would probably want to offer both services.

Addressing a press conference here on Friday, India’s communications and information technology minister Andimuthu Raja said that the government hopes to raise between Rs 30,000-Rs 40,000 crore from the auction of 3G spectrum. The government will try to award 3G spectrum for five players per circle in the first phase though for spectrum-scarce cities such as Delhi and Mumbai, only two to three 3G service providers may be allowed.

The minister said the DoT, within the next fortnight will issue a request for proposal (RFP) for selecting two centralised operators who will administer and implement mobile number portability (MNP). The DoT has said that the centralised agency must port the customers number within of 48 hours of the consumer’s request. ET first reported this development earlier this week.

The global 3-G auction offers a lifeline to both new entrants and international communication majors such as AT&T, Verizon and others to gain a foothold in the world’s fastest-growing mobile market. DoT has set a reserve price for a pan-India 3G licence, which is the minimum price that a company must pay for these frequencies at Rs 2,020 crore.

This is double the reserve price recommended by telecom regulator Trai. In addition, new entrants, who are successful in their 3G bids will have to acquire a telecom licence which costs Rs 1,651 crore, over and above their bid price, Mr Raja explained. “International players will have to furnish proof that they are experienced in providing 3G services, but this is not applicable to Indian telcos,” he added.

One slot of 3G frequencies will be reserved for state-owned telcos, BSNL and MTNL. “The PSUs will not participate in the auction, but will match the price of the highest bidders. They will be given the 3G spectrum immediately — as of today,” Mr Raja said. This implies that both these telcos can launch 3G services about three months ahead of private operators.

While telcos have welcomed the 3G policy, concerns of over-bidding have been expressed. COAI, the industry body that represents all GSM operators in the country has pointed out that the reservation for MTNL and BSNL may result in over-bidding in circles such as Delhi and Mumbai where spectrum is limited and demand will be more. The chairman of India’s largest private telco, Bharti Airtel, said: “Sensible bidding should be the case, but who knows,” An international operator said Friday’s policy did not shed any light on when the auction would take place, and how many slots would be available in each circle.

The 3G auctions in India also offers business opportunities for global telecom hardware bigwigs such as Nokia Siemens, Ericsson, Alcatel Lucent, Motorola, ZTE and Huawei as successful bidders are set to spend billions of dollars to set up 3G networks.

Mr Raja said the government proposes to conduct the 3G airwaves auction by the year-end. “There will be an e-auction conducted on a circle-wise basis by a specialised agency,” he said. According to him, in the first phase, the government would try to accommodate up to five operators in every circle for 3G services. At the same time, he also cautioned that the availability of 3G airwaves was limited in key circles such as Delhi and Mumbai and these zones could therefore accommodate only about two to three players. “When more radio frequencies are vacated (by the defence forces), at a later stage, we can look at the possibility of up to 10 operators per circle,” Mr Raja said, while refusing to specify a time frame for this.

The Rs 2,020-crore reserve price for a pan-Indian licence has been computed as follows. The base price of Delhi, Mumbai and A category circles is Rs 160 crore, while for Kolkata and category B circles it is Rs 80 crore and for C circles it is Rs 80 crore and Rs 30 crore respectively. India has five category A circles, eight category B circles and 6 category C circles.

Mr Raja also added that the government will auction spectrum for broadband wireless access (BWA) services, also called WiMAX services, while adding that the reserve price for this has been set at 25% of that for 3G. Initially, about three licences would be offered for WiMAX services, which will be doubled at a later date depending on the vacation of spectrum by the defence forces.

Defending the government’s decision to award 3G spectrum with immediate effect to both BSNL and MTNL, Mr Raja said that government-owned operators would require more time for clearances for their network deployment when compared to private players. “The head start would help the PSU operators have their plans in place and compete effectively with private players,” he added.

GSM operators will be awarded 3G spectrum in the 2.1 GHz band, while for CDMA players the policy lists out three frequency bands — 450 MHz, 800 MHz and 1900 MHz. A the same time, the DoT has also added a rider that CDMA players will be allotted spectrum in these radio frequencies ‘as and when they will be available’. “We are trying to get spectrum in these frequencies for CDMA players. I am confident that the auctions for both sets of operators can be held at the same time. We hope to have space for at least two CDMA players,” Mr Raja added. CDMA players such as RCOM and Tata Teleservices, who are set to roll out their GSM networks, are expected to bid for both CDMA as well as GSM 3G spectrum.

For MNP, the DoT has said that two centralised operators will be given 11 circles each. These operators will be chosen through a techno-economic evaluation. Only those companies which have a combined net worth of over Rs 100 crore and have provided this service successfully to not less than 25 million customers in a minimum of two countries during the last two years will be eligible to participate in the process, he added. The centralised operators will have to pay an entry fee of Rs 1 crore and also a license fee of 1% of their total revenues. Besides, the FDI cap for these operators will be similar to that of telecom companies, which is fixed at 74%.

Market surveys have shown that between 25-50% of mobile users in India are unhappy with their operator, and are willing to switch to another service provider if allowed to retain their number.

The introduction of MNP will result in a significant churn in the telecom market and is likely to impact well-entrenched bigger players the most. The move will benefit new entrants such as Datacom and Unitech. Besides, CDMA majors such as Tata Teleservices and Reliance Communications, who are launching GSM services, also stand to benefit.

While telcos say that MNP may not impact their subscriber base as the number of exits will be balanced by the addition of new users, the introduction of this facility may hit their bottom lines as operators will be forced to increase the costs of retaining one’s subscribers.

[Honest 836]

Operators eye more revenues from 3G services

Sify, Saturday, 02 August , 2008, 17:01

New Delhi: Third generation mobile policy couldn’t have come at a better time for cellular service providers. At a time when their average revenue per user is slipping to below Rs 250 and when most operators are faced with severe crunch in spectrum, 3G services is being looked at nothing less than the messiah for operators.

“It will take a while for operators to get returns but as volumes pick up they will be counting on 3G to lift their average revenue per user,” says Prashant Singhal, head of telecoms practice, Ernst &Young.

Over the past two years, GSM-based operators have been reporting declining ARPUs, one of the indicators of their financial health. They have tried to bring in a number of new value added services to counter the declining tariffs for voice calls. However, with existing cellular technologies only so much was possible.

With 3G technology operators are hoping to introduce high speed data services that will bring new services such as video on demand, mobile TV, video telephony and other entertainment related services. At speeds that are almost 10 times the existing technologies, 3G will provide a better user experience.

“While consumers get more applications, wider coverage, unwired broadband it also will result in more revenues to the service providers,” said P Balaji, vice-president, Ericsson India.

Other than revenues, 3G will allow operators to enhance their capacities even for voice traffic. Operators are facing severe 2G spectrum crunch in top 20-30 cities due to which their future growth will be hampered. The Government has already indicated that it has limited spectrum left for 2G services.

In this scenario if the operators want to sustain the current momentum of adding 6 million subscribers every month, the 5 Mhz spectrum being allocated for 3G services will be more than useful. While 3G is good for data services, it is also 3 times more efficient than existing technologies in terms of packing in subscribers.

“3G will help operators to better their quality of service. This is very efficient technology for both voice and data,” said T V Ramachandran, Director General, COAI. The association has projected 75 million 3G subscribers by 2012.

However, some of the new players have expressed concern that 5 Mhz may not be sufficient for a standalone 3G operator to do both voice and data. “The policy is skewed in favour of existing players. On one hand Government is not giving any more 2G spectrum to new players and on the other hand only 5 Mhz is being given for 3G,” said a prospective bidder.

New players will also have to cough up nearly Rs 4,000 crore to just qualify for the auction.

[Honest 836]

5 to 10 3G operators in a circle. But the spectrum?

Sify, Saturday, 02 August , 2008, 17:49

In the backdrop of scarce spectrum or airwave; the government has announced a global auction policy for 3G (third generation) telecom and wireless broadband services, all on the condition of availability.

Union communications minister A Raja said on Friday the number of operators in a circle or a service area offering 3G could go up to 10, while the initial number will be 5. He added that the number of operators would be subject to availability of spectrum.

Despite all the uncertainties related to spectrum availability, the government is targeting revenue worth Rs 30,000 crore to Rs 40,000 crore from 3G and wireless broadband auctions.

Delhi and Mumbai, the two most happening telecom markets in India, for instance, cannot accommodate more than 2 to 3 telcos offering 3G services, out of which one slot will certainly go to Mahanagar Telephone Nigam Ltd (MTNL). Realistically speaking, Delhi and Mumbai cannot have more than one private operator each for 3G, where the demand for the service is expected to be the maximum. The other telecom PSU, Bharat Sanchar Nigam Ltd (BSNL), would get a reserved 3G slot across the country except in Delhi and Mumbai. Raja admitted that, while pointing out that most other circles (except Delhi and Mumbai) could have 3 to 5 operators in "the near future". And the number could go up to 10, if more spectrum is available.

When asked about the status of spectrum availability with the Department of Telecommunications (DoT), Raja failed to come up with a clear answer. He only said that effort is on to get unused spectrum vacated from defence forces and space agencies. The National Security Advisor, Raja said, was advising the defence ministry on the matter, and that within two months the issue could be resolved. However, the defence ministry's stand is that an alternate communications system should be in place for the forces (army, navy and air force) before it could vacate any spectrum. But, DoT is insisting on phased vacation of spectrum after an alternate network for the air force is in place. It is learnt that there hasn't been much interaction between the defence ministry and DoT over the matter in the recent months.

According to DoT officials, the 3G global auctions could be completed over the next four months. Players like Bharti are saying that they could roll out 3G services within 6 months after grant of spectrum. Going by the DoT version, the 3G-auction process will be completed by the end of this year, and that should be the timeframe for spectrum allocation as well. So, by June 2009, many players like Bharti could be ready to roll out services. The current UPA government's regime would come to an end around April-May 2009.

For the global auction, the reserve price for pan-India 3G licence has been kept at Rs 2,020 crore. While for the A circle cities and towns (Delhi, Mumbai, Maharashtra, Gujarat, Andhra Pradesh, Karnataka, Tamil Nadu) the reserve price is Rs 160 crore each, that for B circle (Kolkata, Kerala, Punjab, Haryana, UP (West), UP (East), Rajasthan, Madhya Pradesh and West Bengal) it is Rs 80 crore each. For C circle towns (Himachal, Bihar, Orissa, Assam, North East and Jammu and Kashmir), the reserve price has been kept at Rs 30 crore each. Spectrum in the 2.1 GHz band would be allocated for 3G services.

For broadband wireless services, the reserve price for auction would be 25% of the 3G prices. Separate auction would be conducted for each telecom service area or circle by a specialized agency. For both 3G and broadband, the highest bid price has to be matched by all successful players in a circle. Besides existing telecom players in fixed telephony and 2G mobile services, new and foreign players will also be allowed to bid. The new players should have 3G experiences in some part of the globe.

Also, the new players have to pay an entry fee equivalent to the Unified Access Service Licence (UASL) currently at Rs 1,650 crore for a pan-India presence. The recent entrants in the telecom space like Swan, Videocon and Unitech would be permitted to bid for 3G as they already have the UASL licence. While there won’t be any spectrum usage charge in the first year of 3G operations, thereon 1% of the AGR would have to be paid to the government. DoT has fixed rollout obligations and penalty for spectrum hoarding as well. The 3G licence would be for a period of 20 years.

But, the government has made it clear that it reserves the right to amend or modify these terms and conditions before the commencement of the auction process. And, the final conditions shall be indicated in the bidding document. CDMA Development Group (CDG) India country head B V Raman said, "We welcome DOT's decision to open internationally harmonised bands, namely 450, 1900 & 2100 MHz. bands for 3G services. CDG also hopes that the DOT will make spectrum available in the 450 & 1900 MHz. bands for auction at the earliest." CDMA represents players like Reliance Communications and Tata Teleservices.

GSMA, the global trade body for the mobile industry, and the Cellular Operators Association of India (COAI), have welcomed the government's plans to award licenses for 3G spectrum via an auction and to automatically extend the underlying 2G licenses to make them co-terminus with the 3G allocations.

"The Indian Government's 3G policy is a fair and transparent way of allocating additional spectrum amongst the Indian service providers. Furthermore, the automatic extension of the underlying 2G licences will ensure continuity and stability of service and is in the interest of Indian consumers," they said. GSM players include Bharti, Vodafone, BSNL, Idea and Aircel.