Updated: 3G Auction completed after 34 days of bidding

[Honest 836]

MTNL to begin 3G services in 3 months after getting spectrum

3 Aug, 2008, 1105 hrs IST, PTI

NEW DELHI: State-run MTNL is ready to roll out its 3G network within three months once the PSU gets spectrum from the government, company CMD R S P Sinha said.

"Our core network is ready... we are expecting formal allocation of spectrum from Department of Telecom. The indoor testing of 3G equipment from the trial spectrum has already been done in Delhi but outdoor trial is yet to be done as we have not got the spectrum and once this is completed, we should be able roll out the services in three months," Sinha said.

Only two private players, alongside a state-owned firm, would get licences for New Delhi and Mumbai due to shortage of spectrum there, as per the policy announced last week.

But government would initially permit up to five operators, including a state carrier, although that could be raised up to 10 later.

In Mumbai, Sinha said MTNL would be ready to roll out in maximum five months. In fact MTNL shares surged 4 per cent after government announced the reservation of spectrum for PSUs on Friday.

He said MTNL had floated the tender on 3G much earlier. The total investment incurred by it on 3G, Sinha said is about Rs 100 crore.

The government, which announced the broad guidelines of the 3G policy yesterday, said MTNL and BSNL would be allocated one block each in Delhi/Mumbai and rest of the country respectively. The spectrum would be reserved for them and they just would have to match the highest bid after the auction for private companies is completed. This would give the PSUs a first-mover advantage of a minimum four months over private sector rivals.

Sinha said the tariffs of the 3G service would be market-driven.

[Honest 836]

DoT to seek more spectrum from Defence forces for Delhi, Mumbai

Business Line

New Delhi, Aug. 2 Telecom subscribers in Delhi and Mumbai can hope to get more number of 3G players if the Defence forces play sport. The Communications Ministry, on Friday, had said it had spectrum to accommodate only two operators in these two cities. However, senior Government officials said that the Defence could release another 15 Mhz, which will be adequate for three more operators.

“The Air Force is occupying this frequency band at the moment for some key installations in the two cities. Compared to other cities, Delhi and Mumbai have more number of Defence installations and therefore, the amount of spectrum available for commercial use is also less. But as per our analysis they can release some more spectrum in the 2.1 GHz band, which will be used for 3G mobile services,” said a Government official.

With just two slots being made available in Delhi and Mumbai, 3G services for consumers in these cities could be expensive.

That’s because, on one hand, State-owned MTNL has been given one slot and on the other, there could be at least eight-nine operators in the fray for the remaining slot. Since Delhi and Mumbai are both highly lucrative markets for telecom services, operators are expected to bid aggressively. If the operator ends up paying a high cost for acquiring the spectrum, then the services will become expensive.

Therefore, the industry is now pushing the Government to negotiate with the Defence to release more spectrum. The armed forces had earlier said that they would not vacate the spectrum unless the Government provides it with an alternative medium of communication at a cost of around Rs 5,000 crore.

Operators said that the Government could fund the armed forces’ network from the money collected during the auction.

The Communication Ministry expects to collect over Rs 30,000 crore from auctioning 3G spectrum.

However, Government officials said that even if an agreement is reached with the Defence, it will take more than a year before the spectrum is actually made available for auction. They said that more 3G operators for Delhi and Mumbai could be possible in the next phase of auctioning.

[Arun 795]

No 3G auction for CDMA players - Reliance Communications has advantage

The Hindu Business Line

New Delhi, August 2, 2008

CDMA-based mobile operators can get third generation spectrum without having to participate in any auction.

The policy announced on Friday stipulates that CDMA operators including Reliance Communications and Tata Teleservices can seek one slot in the 800 Mhz, which is the most efficient and cost effective frequency band for 3G services as far as CDMA is concerned.

The catch, however, is that Communications Ministry has decided that spectrum in this band will be allocated to the operator with most number of subscribers in a circle.

4 players

There are 4 pan-India CDMA players at present – Reliance Communications, Tata Teleservices, State-owned BSNL and the new entrant Sistema-backed Shyam Telecom.

However, there are only two slots available in the 800 Mhz frequency band. Of these, state-owned PSUs MTNL and BSNL will get one slot, leaving space for only one more operator in this band.

According to the subscriber-related data (for June 2008) put up on the Web site of the Association of Unified Telecom Service Providers of India (AUSPI), which is the industry body for CDMA operators, Reliance Communications has the most number of subscribers in almost all the circles across the country except Delhi and Maharashtra, where Tata Teleservices is the number one player.

This means that Reliance Communication will probably be the only private operator to get bandwidth in the lucrative band in most circles unless the Department of Telecom manages to convince the Defence to release more.

First mover advantage

Even if the Defence does agree to release additional spectrum, it will take at least a year more to set up an alternative medium of communication for the armed forces. By that time, Reliance Communications would have launched its services.

While the DoT has made additional provision for allocating spectrum in the 450 Mhz and the 1900 Mhz bands for CDMA operators, technical experts confirmed that these bands are inferior compared to the 800 Mhz band.

Rolling out 3G services in bands other than the 800 MHz band could be more expensive and also less efficient.

DoT is yet to get clearances from the Defence forces for allocating 450 Mhz and 1900 Mhz bands. The CDMA player will have to pay a fee proportionate to the amount quoted by the highest bidder during the auction for GSM-based 3G services. For example if a GSM player bids Rs 5,000 crore for 5 Mhz spectrum, the CDMA player will have to pay Rs 1,250 crore for 1.25 MHz in the 800 MHz band.

Rival operators said that they would be taking up the issue with the Communications Ministry. One option being suggested is to permit all CDMA operators to use their existing spectrum for rolling out 3G service.

[Honest 836]

Late fee for telcos who miss out in first 3G auction

4 Aug, 2008, 0737 hrs IST, ET Bureau

NEW DELHI: Telcos who miss out on the first round of 3G auctions will have to pay a much higher price for these radio frequencies when they are auctioned at a later stage. The DoT has decided to hold a second round of auctions as soon as the defence vacate more spectrum, but the reserve price will not remain the same as that of the first round. Instead, the highest bid in the first round will become the reserve price for the 3G frequencies in the second round.

For instance, cities such as Mumbai and Delhi are likely to have only one or atmost two operators who can be accommodated in the first round of auctions, which are set to take place by the year end. Currently, the base price for 3G spectrum in Delhi and Mumbai is Rs 160 crore. But, when the second round happens, the base price will be equivalent to the price that is paid by the highest bidder in Delhi and Mumbai.

On Friday, communications and IT minister A Raja said that the government would try and accommodate up to five players in the first round, while adding that this could be extended to 10 at a later date. Telcos, who were successful in the first round, are expected to launch services by mid 2009. ET has learnt that the second round of auctions could be held as early as mid 2009 as Mr Raja has sought a time frame for vacation of spectrum from the defence forces. Government sources said that the DoT is talks with the defence forces to release about 15 MHz of 3G radio frequencies in the spectrum-starved circles so that an additional three operators can be accommodated.

The circles where the second round of auctions will most likely be held include Bihar, Maharashtra, Punjab, West Bengal, Delhi, Gujarat, Himachal Pradesh, UP (West), the North Eastern states and Rajasthan. At present, there are only eight circles where sufficient 3G spectrum has been identified to accommodate 10 players: Andhra Pradesh, Chennai & Tamil Nadu, Haryana, Karnataka, Kerala, Kolkata, MP and Orissa. The DoT is yet to spell out if it will hold auctions for up to 10 operators in these circles directly, or, if it will allow five players in the first phase, and, allot radio frequencies for more players when auctions are conducted in the other spectrum-starved circles.

[KumaarShah 143]

All about 3G and what it means for you

On August 1, 2008, India joined the elite list of countries to announce a policy for third generation mobile service that will enable customers to enjoy voice, video, data and downloading facilities on their mobile phones.

The much-awaited 3G policy would allow up to 10 players in a service area including foreign companies. India has 60 Mhz of 3G spectrum available. The auction will take place in the 2.1 Ghz band.

The government has set a base price of Rs 2,020 crore (Rs 20.20 billion) for each bid for a pan-India license. Initially, there will be three to five operators to sell the 3G services, including state-run BSNL and MTNL. The state-run telecom firms have an edge to start the 3G services earlier than others as they do not have to bid for the spectrum as they only have to match the highest bid in their respective circles.

When will 3G services in India start?

There is no firm date set for the auction of 3G spectrum, but it is likely to take place before February 2009 since the government may need the money to keep its deficit within control; current estimates put the initial entry fee bids that the government will get at anywhere between Rs 30,000 crore (Rs 300 billion) and Rs 40,000 crore (Rs 400 billion).

In that case, by about December 2009, India may get broadband-type internet speeds on mobile phones. That, in turn, will allow users to view movies on their mobile phones, conduct video telephony while on the move, and so on.

What will 3G mean for you

3G is short for third-generation mobile telephony services. 3G guidelines will revolutionise the country's cell phone services, clearing the way for high-speed mobile connectivity in India.

3G phones work in higher bandwidths of 15-20 MHz. Currently, mobile phones work on 2G or 2.5G, and use 30-200 KHz bandwidth. Bandwidth is a measure of the width of a range of frequencies used while transferring data from one point to another and is measured in hertz.

How do 3G services help us?

3G services enable video broadcast and data-intensive services such as stock transactions, e-learning and telemedicine through wireless communications

All telecom operators are waiting to launch 3G in India to cash in on revenues by providing high-end services to customers, which are voice data and video enabled. India lags behind many Asian countries in introducing 3G services.

Packet-based data provides several advantages over the existing circuit-switched techniques used for carrying mobile voice. It allows higher call volumes and support for multimedia data applications, such as video and photography.

Users will be charged on how much data they transmit, not on how much time they are connected to the network, because with 3G you are constantly online and only pay for the information you receive.

Number portability

There is good news for all mobile phone users in India. The roadmap to introduce mobile number portability that will give cellphone users the freedom to choose their service provider while retaining their numbers has been readied too.

Cheaper, and better, phones

With 3G mobile services, which provide high-speed downloads of data, movies and videos, around six month away, mobile phone makers are getting ready to offer handsets for as little as Rs 3,500, against the currently available minimum price of over Rs 8,000.

Chinese telecom giant Huawei Technologies is already in talks with leading Indian operators of GSM mobile services to sell a 3G entry-level phone within $80 to $100.

South Korean electronics giant LG Electronics has the KU250 3G phone model, which is positioned as one of the cheapest phones in this category around the globe. "We will launch an adaptation of this model in India for around $100.

Motorola India also expects prices to fall dramatically. It expects the prices of phones to come down to Rs 4,000-5,000. Motorola has about three 3G models that range from Rs 14,000 to Rs 19,000.

Also, contrary to common belief, 3G will not be a premium service. Operators said a start-up package could cost around Rs 299, which is roughly what consumers pay for a fixed broadband service. Unlimited downloading may require subscribers to pay Rs 500 to Rs 1,000 a month.

What do 3G handsets look like?

3GSM phone designs are based on functionality and customer needs. To allow new Internet and multi-media services, bigger viewing screens are the norm. Thus, the size of 3G is likely to be bigger, yet some mobile phone manufacturers could offer small handsets too.

Can you receive 3GSM services from your current mobile handset?

3GSM is a new technology and thus you cannot access 3G multimedia services using existing GSM handsets. So you will need to upgrade your mobile to be able to use these services.

What exactly do 3G spectrums do?

Third Generation or 3G is a generic term used for the next generation of mobile communication systems.

With 3G spectrums, your mobile can work for you even while you sleep. It sets your travel schedule and checks for jams along your route, whether you take the car/bus or the train. It can double up as cash and plastic money, a one-instrument payment system to pay for your tickets and purchases by simply texting the bank.

It can be your one-stop entertainment box that holds music files, downloads programmes you love while you're on the move.

It can work out what to do with incoming phone calls and messages — direct voice calls to voicemail when you are in a meeting, for instance, but providing a discreet text summary of the caller and the nature of the call.

What is spectrum?

Spectrum refers to a range of radio frequencies. The bandwidth of a radio signal is the difference between the upper and lower frequencies of the signal.

For example, in the case of a voice signal having a minimum frequency of 200 hertz (Hz) and a maximum frequency of 3,000 Hz, the bandwidth is 2,800 Hz (3 KHz). The amount of bandwidth needed for 3G services could be as much as 15-20 Mhz, whereas for 2G services a bandwidth of 30-200 KHz is used. Hence huge bandwidth is required for 3G.

How is 3G different from 2G and 4G?

While 2G stands for second-generation wireless telephone technology, 1G networks used are analog, 2G networks are digital and 3G (third-generation) technology is used to enhance mobile phone standards.

While 2G is focused on voice, 3G supports high-speed data of at least 144 kbps enabling broadband Internet access on the mobile, and 'triple play' features like mobile TV and converged communication services.

3G helps to simultaneously transfer both voice data (a telephone call) and non-voice data (such as downloading information, exchanging e-mail, and instant messaging. The highlight of 3G is video telephony. 4G technology stands to be the future standard of wireless devices.

Currently, Japanese company NTT DoCoMo and Samsung are testing 4G communication.

Which companies got 3G license in India?

3G spectrum has been provided to GSM players like Bharat Sanchar Nigam Limited, Mahanagar Telephone Nigam Limited, Bharti Airtel and Vodafone Essar (then Hutch) to carry out an interface check on a non-commercial basis ahead of the start of 3G mobile services.

As per the guideline, any licensed telecom operator can bid for 3G spectrum and the radio waves will be auctioned in 5-10 blocks depending on the availability. Each successful bidder will be allocated only one block in a service area.

Spectrum will be auctioned in the 450 Mhz, 800 Mhz band for EVDO (for CDMA players) and in 1900 band when it is available.

What led to spectrum imbroglio in India?

The Telecom Regulatory Authority of India, in its recommendations, had suggested an increase in the subscriber norms by two to six times. However, with GSM operators opposing the move, the issue was referred by the DoT to its standards setting organisation, the Telecom Engineering Centre.

The latter recommended hiking the minimum subscriber number even beyond what the Trai had suggested. Earlier formulae had suggested the subscriber number be a mid-point between what the Trai and TEC suggested or a 25 per cent 'tightening' of the existing policy.

What are the issues regarding 3G for providers and users?

3G has successfully been introduced in Europe. But several issues continue to hamper its growth.

High spectrum licensing fees for the 3G services. <li>Huge capital required to build infrastructure for 3G services. <li>Health impact of electromagnetic waves. <li>Prices are very high for 3G mobile services. <li>Will 2G users switch to 3G services. <li>Takes time to catch up as the service is new. In how many countries does 3G exist?

There are about 60 3G networks across 25 countries. In Asia, Europe and the United States, telecom firms use Wideband Code Division Multiple Access (WCDMA) technology. The WCDMA standard provides seamless global evolution from today's GSM with support of the worlds' largest mobile operators.

WCDMA technology is built on open standards, wide ranging mobile multimedia possibility, and vast potential economies of scale with the support of around 100 terminal designs to operate 3G mobile networks.

3G services were introduced in Europe in 2003.

In which country was 3G spectrum first introduced?

Japan was the first country to introduce 3G on a large commercial scale. In 2005, about 40 per cent of subscribers used only 3G networks. It is expected that during 2006 the subscribers would move from 2G to 3G and upgrade to the next 3.5 G level.

The success of 3G in Japan also shows that video telephony was the killer application for 3G networks. Downloading music was the biggest draw in 3G services.

India, which has 287 million wireless subscribers, saw its mobile user base grow 25 times in the last five years making it the second largest wireless market in the world after China.

Link: http://abhishekkatiyar.wordpress.com/2008/...-means-for-you/

[Honest 836]

^^^

Thats a good piece of information my dear Kumaar.

Regards.

[KumaarShah 143]

^^^

Thanks, Kamal bhai. I got it by chance and thought it would be useful info for all though its very basic only.

[Honest 836]

DoT clears proposal to allot 3G spectrum to BSNL, MTNL

7 Aug, 2008, 0003 hrs IST, ET

NEW DELHI: Within days of 3G policy, the Wireless Planning and Coordination (WPC) wing of DoT has cleared the proposal to allot 3G spectrum to state-owned telcos — BSNL and MTNL. The WPC is responsible for allocation of radio frequencies to telcos.

Last week, telecom minister A Raja has said that both the state-owned telcos would be awarded 3G spectrum with immediate effect and would not have to wait for the auctions of radio frequencies, which are scheduled to be held later this year. This implies, BSNL and MTNL will be able to launch 3G services by the year-end, while private telcos are likely to come out with similar offerings only by mid-09. Third generation radio frequencies will enable telcos to offer high-end services on mobiles, such as interactive gaming, movies and video conferencing.

“The assessment of spectrum allotment and utilization records available with the WPC Wing reveals that some spectrum in 1920 - 1980 MHz band is not allotted to defence services and thus appears to be available, which could be considered for earmarking on a trial basis to MTNL for 3G services. MTNL will get these frequency bands paired with 2110 - 2170 MHz bands. It shall pay spectrum charges equal to the highest bid to be determined by the auction for each service area from the date of earmarking of frequencies. After completion of the auction, a demand note will be raised to MTNL for making the payment within 30 days,” the WPC said in its communication to the Department of Telecom. The WPC has sent a similar recommendation for BSNL too.

Justifying the move for immediate allotment to BSNL, the WPC said that BSNL has been given a target of providing 10 million broadband connections by 2010, but it had only 1.7 million customers at present who availed high-speed internet on optic fibre. “BSNL is planning to achieve this target of broadband using 3G and WiMAX as these wireless technologies are easier to install and rollout,” the WPC said.

Further, the WPC has also added that if BSNL were to rollout 3G services, it will increase broadband penetration in rural India and customers here would benefit by services such as e-education, e-health and entertainment.

It has also added that BSNL’s rollout of 3G services would be in the ‘larger public interest’ as the PSU catered to the needs of ‘people in far flung areas by adopting the policy of uniform coverage through their networks at affordable prices’.

[Honest 836]

3G movies still some time away

7 Aug, 2008, 0007 hrs IST, ET

MUMBAI: 3G is around the corner. But, all those dreams of downloading movies on mobile, making video calls or watching cricket using 3G or third generation devices may not come true anytime soon. And that’s because in a country with over 285 million wireless users, 3G is primarily going to improve voice services by reducing network congestion and not immediately offer you the goodies you have been dreaming of all this while.

Even though the Department of Telecom (DoT) has announced the guidelines for 3G and operators are gearing up for spectrum auction, it will be a long time before the masses get to experience the kind of services that actually qualify as 3G applications. “3G will be used for adding voice subscribers in India. 3G has the capability to offer high-speed data services but doesn’t have the scalability. It will reduce congestion to begin with and will be used for deploying more voice in dense urban and sub-urban areas,” an official at a telco told ET.

Definitely, more subscribers can be accomodated in a 5 Mhz 3G spectrum band as it is more efficient. “But if the same spectrum were to be used for data subscribers, it will be able to accomodate far less number of users and if most of them start using 3G applications at the same time, the system may not be able to take the load,” he said.

According to PwC associate director and telecom analyst Arpita Pal, “Primarily, it seems there will be more voice because 3G is spectrally efficient. Quality of voice services is poor right now. 3G is expected to address this and it will not be a mass market model initially,” she said.

Network congestion is very high in India. Insufficient and non-provisioning of circuit resource as per traffic requirements causes inter-network congestion and loss of calls. Allocation of 3G spectrum is expected to improve quality of services. According to Ernst & Young India’s telecommunications leader Prashant Singhal, “Initially, operators will take time to fill capacity and 3G will enhance voice services. But in about three years, products will be fully in place and there will be returns on margins. It will take a couple of years to get to the dream services stage.”

Further, handsets have to become affordable. “It’ll take time to develop the market. But by using 3G only for voice, operators will not be able to recover costs,” he added.

Cellular Operators Association of India (COAI) director general T V Ramachandran agreed that voice will be the main stay for some time. “But it doesn’t mean operators won’t provide 3G services. Initially, the offtake will be small, but it will grow exponentially,” he said, adding that this has been the experience in most countries.

He said 3G services will eventually catch on as rates will be very affordable in India, driven by large volumes. “It will be much more affordable here than other countries,” he added.

[Arun 795]

BSNL denies advantage in 3G field

7 Aug 2008

Times News Network

Bharat Sanchar Nigam Ltd (BSNL) has denied any first mover advantage in the 3G arena, despite the award of 3G spectrum ahead of private sector players. Last week, telecom minister, A Raja, while announcing the 3G guidelines, had said BSNL/MTNL would be given 3G spectrum with immediate effect and would pay the eventual highest bid price only after the 3G auctions.

"Our system of processing orders is agonizingly long and cumbersome. This will nullify any head start on spectrum, which means we will not be able to launch services ahead of private operators", a senior BSNL official told TOI.

BSNL's statements seem to point at a potential 3G launch not before 2009-10 or closer to the end of the UPA government's tenure despite the head start in terms of spectrum allocation.

This apart, how BSNL/MTNL will embark on business case planning with no clue about the total project cost which depends on the final spectrum bid amount, remains a mystery. It is quite possible that in the case of 3G, the cost of acquiring spectrum could be as high as half of the total project cost, depending on the total number of blocks available.

However, BSNL has already placed an order for 3G and 2G equipment for 10 to 14 million lines with Ericsson. BSNL sources further confirm that an advance purchase order for 18 million lines has also been placed on ITI, which will be serviced by Alcatel Lucent in the west and Huawei in the south.

Earlier, BSNL chairman, Kuldeep Goyal had said BSNL plans to invest upto $3 billion per year over the next 3 years on overall capex. With the imminent allocation of 3G spectrum, it appears the company would want to expedite its equipment orders hoping to at least match if not beat the private sector to a 3G services launch.

While BSNL believes that it owes this priority allocation of 3G spectrum to TRAI's recommendations, this was denied by TRAI chairman, N Misra. "We did not even discuss the subject in our recommendations. We never made any distinction between public sector companies and the private sector," he clarified. Finally, whether DoT will be in a position to allocate this promised spectrum and whether this will translate into a competitive advantage for BSNL, remains to be seen.

[rajat8676 0]

Suddenly, India seems to be moving towards 3G at full throttle. One small step towards becoming a developed nation.

[Honest 836]

BSNL to launch 3G services by next June

7 Aug, 2008, 1634 hrs IST, ET

NEW DELHI: State-run telecom major Bharat Sanchar Nigam Ltd (BSNL) hopes to roll out its third generation (3G) mobile services by June next year, using the technology of Sweden's Ericsson, a top company official has said.

"We hope to receive the equipment from Ericsson from December. It will take some six months to roll out the services. We will earmark around 10 million lines for the initial launch," the official, who did not wish to be identified, said.

He was referring to the tender for 45 million lines worth $1.75 billion floated two years ago, where Ericsson was given 60 per cent of the order - and out of that, 10 million have now been earmarked for the 3G service.

The 3G service not only allows much faster communications but also a wide range of applications such as high-speed net access, video calls, fast music and video downloads, interactive gaming and global positioning over internet.

The official said BSNL also proposed to open another mega tender for 90 million lines worth some $9 billion by the end of this month. Of this, 50 per cent of the lines would be set aside for 3G telephony, he said.

"But we will have a mid-term assessment of the roll-out since we are still not sure about the potential of 3G in the country. It is an expensive service and we have to understand how much demand there will be."

Communications Minister A Raja had August 1 announced the much-awaited guidelines for the auction of spectrum, or airwaves, to launch third-generation (3G) mobile phone services in the country.

State-run Mahanagar Telephone Nigam Ltd (MTNL) that provides telecom services in Delhi and Mumbai, and BSNL, which caters to the rest of the country, need not bid for spectrum allocation, but have to pay the highest price, he said.

BSNL officials, however, said that the perception that the state-run companies will get a head start of three-four months over private players due to the government norms was misplaced.

"The procedures we have to follow for buying technology or equipment are time-consuming because we are a state-run company. So whatever time we have in hand will be taken away by that," a BSNL official said.

"Besides, we have to pay the same amount for spectrum which the private player will be required to. So, it is not as though we have been given the licence and the airwaves on a platter," he added.

As in June this year, BSNL had 41.96 million wireless subscribers and 30.866 million wireline subscribers all across the country, excluding the two major metros of Mumbai and Delhi.

The state-run company has set aside a capital expenditure of Rs 16,000 crore for the current fiscal.

[Honest 836]

Expect 3G services and some mischief

9 Aug, 2008, 0725 hrs IST, ET

Following the guidelines for 3G issued by the department of telecommunications (DoT) on August 1, consumers can expect a new breed of services in the coming months. 3G services will make it faster and easier to access internet, download music or videos, mobile TV among other things. Although two years overdue, the guidelines are a good indicator of how far India has moved towards creating a coherent regulatory environment and the considerable distance still left.

The guidelines spell out how the government will allocate and price 3G spectrum or, more accurately, the radio frequencies required for such communication. Now, a company will have to procure 3G spectrum in an open auction. Unlike the case for 2G — where companies receive fixed amount of spectrum with the licence — 3G spectrum will need to be paid for explicitly. All 2G licensees — whether or not they have started operations — can bid. Prospective new entrants without 2G licences can also bid, provided they have 3G experience and pay an additional 2G entry fee of Rs 1,651 crore(US $400 million) for a nation-wide licence.

The guidelines explicitly separate entry fees for 3G licence from the amount bid in the spectrum auction. While we will return to the indefensibly huge amount proposed for entry fees, the conceptual separation between the two fees meets an important demand from experts for a change in India’s current rules, which include the price for spectrum in the licence fee. This has created several well-known distortions that prevent efficient use of a strategic scarce resource.

This will be the first time the price of spectrum is sought to be explicitly discovered through an auction. While the DoT bureaucrats have failed to say this unambiguously and some future mischief cannot be ruled out, it would be difficult to argue again that the price of spectrum allocated for commercial use can be determined administratively without a market-based process. Especially, since Trai too has recommended auction for all spectrum other than that for 2G operations. Current rules, where acquiring a set number of subscribers automatically entitles a licensed operator to additional spectrum, have drawn much deserved criticism for encouraging inefficiency. Acknowledging explicitly that the price of spectrum should be discovered in the market makes the current practice, which is economically indefensible, untenable. This is a plus.

But, the guidelines are also problematic. For a start, the claim that they promote competition is bogus. In a business where extensive infrastructure, large customer base, better market intelligence, etc., give incumbents massive advantages, it is absurd that new entrants will have to pay a whopping $400 million in addition to the bids for spectrum, expected to be in billions of dollars. New players need 3G experience to apply, not 2G players. This, when most regulators facilitate new entry by imposing additional restrictions on incumbents to prevent market abuse. New comers rarely pay any fees and are seldom regulated at all. To levy a large entry fee is then not to facilitate competition but to thwart it.

Indeed, the practice in most mature regulatory regimes — the European Union, US, Canada and Australia,for instance — is to have no licence (entry) fees at all. A prospective entrant to the market, typically, requires little beyond a virtually free ‘authorisation’. It must, however, pay for spectrum at market prices.

The nine companies — largely telecom novices — who are currently trying to sell at a premium the over 100 telecom licences they recently got at bargain prices will surely welcome the ’tax’ on new players. As newspapers confirmed, 3G guidelines have driven up the value of these licences, more so since they now have some spectrum. This will be far more attractive to the new 3G players who will still need a 2G licence even if they win in the spectrum auctions than spending $400 million for licence that is veritably a piece of paper with few rights. So, high entry fees mean that private speculators, not the exchequer, get the money.

Moreover, recent norms for mergers and acquisition of telecom licences made it easier for new players to acquire existing players and difficult for existing ones to merge. So, the new players will need to pay up before they bid for 3G and seek a UASL (Unified Access Licence Seekers) licence when mergers would be almost impossible. So, both cost and regulation are pitted squarely against new players.

The DoT has resurrected the old ghost of subscriber-base linked allocation of spectrum by proposing that for spectrum for CDMA services in 800 MHz band “the seniority for allotment shall be the subscriber base in telecom service area.” It says elsewhere that in case of a tie between two existing players, “preference will be given to the bidder with the larger subscriber base”. The guidelines have no explanation why, when it has been decided to conduct an auction, the final winner in each such a case should simply not be the company that bids the highest. This has dented the credibility of the government’s landmark decision to price spectrum along global best practices.

The provision to disallow companies from lowering their bids in subsequent rounds of auctions and to insist that the highest bids in the first auction will become reserve price for subsequent auctions, is equally questionable and will prevent a genuine correction if speculators play havoc in the early phases. The priority for government should be to discover a fair market price of spectrum and not to artificially raise its pickings. It has a duty to deter speculators in a strategic sector and create conditions conducive for serious players willing to compete fairly.

The bureaucratic flaws in the guidelines notwithstanding, at least some of the existing 2G players seem poised to offer 3G services in the near future. The proposed auction of 3G spectrum will deter — if not prevent — bureaucrats’ current practice of giving away valuable spectrum at arbitrary prices. But, to expect them to embrace time honoured regulatory principles and forgo an opportunity for discretion is perhaps too much to ask.

(The author is director, Com First, India)

[Honest 836]

Govt to finalise 3G spectrum auction process by Sept 30

11 Aug, 2008, 1842 hrs IST, PTI

NEW DELHI: Government is working towards finalising the online auction process of 3G spectrum by September 30.

"Technical and financial details are being discussed. Once that is done, this e-auction process for 3G spectrum would be finalised by September 30", Sidhharth Behura, Telecom Secretary said on Monday.

An inter-ministerial committee, with members from the Telecom Commission (DoT's apex body) and the finance and information technology ministries, will first set rules on who can bid or request interest in the bidding, DoT sources said. It would also shortlist eligible firms through technical evaluation and then the e-auction would be held, they added.

Earlier telecom Minister A Raja had said the government expects to finalise terms of auctioning five 3G phone service licences by October. With auctions slated to start by October, government is bullish about meeting good response to the bidding process to raise raise up to Rs 40,000 crore.

A 3G mobile phone service allows customers to surf the internet or download content, including music and video, at speeds faster than current technologies.

Depending on spectrum available number of licenses could be extended up to a dozen. One slot has been reserved for MTNL, in Mumbai and New Delhi and BSNL for the rest of India.

At least two to five operators can be accommodated.

[Honest 836]

Global majors may stay away from 3G auction

12 Aug, 2008, 0753 hrs IST, ET

NEW DELHI: A closer study of the government's recently announced 3G auction guidelines has managed to cool the ardour of several global telecom operators and potential new entrants , many of whom are now planning to stay away from the bidding ring.

Companies have downgraded their interest to "negative" as the implications of steep financial and regulatory barriers, coupled with pockets of uncertainty for new entrants, sink in.

Till recently, companies like NTT, AT&T, Deutsche Telecom and Etisalat had shown interest in India's mobile market. The absence of global telcos in the bidding ring threatens to affect government's ambitious plans of netting up to Rs 40,000 crore from the auction of third generation (3G) spectrum. If existing operators dominate the bidding, the auctions will fetch a fraction of telecom minister A Raja's ambitious target.

Speaking to ToI on condition of anonymity, potential new entrants listed four key reasons for their negative response to 3G. The first is what they describe as an "unjustifiable, discriminatory and burdensome payment" of Rs 1,651 crore to first obtain a unified access service license. Unlike for existing operators, for 3G entrants, this is the price of a paper without the 4.4. to 6.2 MHz of startup 2G spectrum.

"If the objective of the 3G policy was to raise revenues through new competition, then it has failed, as new entrants face a serious disadvantage against existing operators," said Arpita Agarwal, associate director-telecom, PwC.

"The second deterrent is the mindless application of April's M&A guidelines to 3G licences ," a potential bidder said. A 2G operator, under the present M&A norms, is not only allowed, but uniquely qualified to bid for and acquire 3G spectrum . In contrast, a 3G winner cannot merge with or acquire any 2G operator (existing or new) for three years.

The third concern arises on account of uncertainty of 3G spectrum allocation beyond 5 MHz. A 3G bidder can neither bid beyond a single block of 5 MHz nor acquire 2G spectrum. "Our growth is handcuffed from the start," said another potential bidder.

Agrees Kunal Bajaj, director-India, BDA, a global consulting firm. "A standalone 3G business will not work. Clearly, global firms will be constrained to find a business case given the severe policy limitations," he said.

According to operators, multi-billion dollar bids without line of sight on future 2G or 3G spectrum is a gamble too dangerous for them to take.

Potential bidders also grieve over the lack of clarity on several areas critical to bid planning, such as number of blocks per circle, timing of auctions, interim steps and rules regarding transfer and sharing of spectrum.

[KumaarShah 143]

^^^

As I have already said earlier, there will be a lot of problems and litigations, so let us not dream for 3G by June 2009. It will come only after Dec.'09 or March '10.

[Honest 836]

Bharat Sanchar Nigam places order for 3G lines

12 Aug, 2008, 2111 hrs IST, ET

NEW DELHI: The state-owned Bharat Sanchar Nigam Ltd (BSNL) has placed an order of five million lines for its third generation (3G) mobile services to Swedish firm Ericsson, the company said on Tuesday.

"We have already placed orders for five million lines to Ericsson for the 3G service," BSNL chairman and managing director Kuldeep Goyal told reporters here on the sidelines of a company event.

He said the service would take at least six months to be rolled out.

The BSNL chief was also hopeful of getting union support for the 10 percent disinvestment, which could raise up to $10 billion in the country's biggest-ever share sale.

"There are positive responses. They (the unions) are discussing it with employees... they have said they will have an open mind on it," Goyal said.

The company has about 314,000 employees and had met the Department of Telecom last week to resolve the disinvestment issue.

[Honest 836]

TRAI wants DoT to review 3G policy

Business Line

New Delhi, Aug. 12 The Telecom Regulatory Authority of India has told the Government that there should be a review of some parts of the recently announced policy for third generation mobile policy, including the decision to allocate spectrum to CDMA operators based on subscriber base criterion.

In a letter to the Department of Telecom, TRAI said allocating spectrum based on subscriber base would be against the principles of level playing field and equity as it could mean that new CDMA operators may not stand any chance of getting 3G spectrum. TRAI has suggested that the Department of Telecom may instead consider auctioning spectrum for CDMA players.

According to the policy announced last week, while GSM operators have to bid for 3G spectrum, CDMA operators, including Reliance Communication and Tata Teleservices, can seek one slot in the 800 MHz, which is the most efficient and cost-effective frequency band for 3G services as far as CDMA is concerned.

Spectrum in this band will be allocated to the CDMA operator with the most number of subscribers in a circle.

Four-page letter

In its letter to DoT, the telecom regulator said: “As various service providers have been given licences in different service areas at different periods of time, the Authority feels that keeping the subscriber base as the criterion for deciding the priority of allotment shall be against the level playing field and the principle of equity.

Therefore, the Authority suggests that in order to ensure equity, level playing field and optimum pricing in allotment in 800 MHz band, the DoT may consider the auction route.”

The four-page letter was sent by the TRAI Chairman, Mr Nripendra Misra, to the DoT Secretary, Mr Siddhartha Behura, on August 8.

On the issue of giving separate licences to new and foreign players, the regulator told DoT that the matter should be referred to the TRAI so that the terms and conditions for the new type of licence can be specified.

TRAI has also sought clarity on spectrum charges.

[vmsanghrajka 0]

These people review a policy then announce then again review the policy and god only knows when will they announce.. I think India will have 3G when world will be done with even 4G.. High time they just auction and allocate spectrum asap..

[KumaarShah 143]

^^^

Very true, The name of the game is, "Endless Wait" Keep waiting forever.....

[Honest 836]

Finance Ministry wants a say in 3G policy

Business Line, Thursday, Aug 14, 2008

New Delhi, Aug. 13 In what could muddle the third generation mobile roll out in the country, the Ministry of Finance is understood to have told the Department of Telecom that it should go ahead with implementing the recently announced guidelines only after consulting with the Ministry since the policy had financial implications.

Officials in the Finance Ministry said since the 3G policy contained clauses with financial implications such as determination of the spectrum acquisition price and reserve price for auction, fixation of spectrum usage charges and penalties for hoarding of spectrum, it is mandatory for DoT to consult with the Ministry.

They said the Transaction of Business Rules 1981 prescribed mandatory consultation with the Ministry of Finance as a pre-condition in respect of all issues which have issues which have financial implications. They added that the Union cabinet, in its meeting on October 2003 had decided that spectrum pricing would need to be decided mutually between DoT and MoF to ensure efficient usage of spectrum.

DoT stand

However, DoT officials said the Communications Ministry had several rounds of meeting with the Ministry of Finance before announcing the 3G policy guidelines. They said that it was at the insistence of the Finance Ministry that the base price and the spectrum charges were revised upwards. DoT officials said that stiff penalties for not fulfilling the roll-out obligations have also been imposed to ensure that no operator hoards spectrum.

Earlier the telecom regulator had also raised concerns with some aspects of the policy. TRAI had said DoT should conduct auction for CDMA players also to ensure level playing field.

TRAI has also sought to have a say in fixing the terms and conditions for allowing new players in the 3G space.

[vmsanghrajka 0]

Now finance ministry is 'aadoo taang' in between.. Our Govt. departments don't have integrated approach.. They should discuss, review, debate, agree and then announce.. Here everything works reverse!

[Honest 836]

Finance ministry wants 3G policy put on hold

14 Aug, 2008, 0238 hrs IST, ET

NEW DELHI/KOLKATA: In a move that may delay the rollout of 3G services in the country, the finance ministry has asked the Department of Telecom (DoT) to put the 3G policy on hold as it was not consulted on the financial implications of the guidelines. The finance ministry has said DoT has contravened an earlier Cabinet decision, which had stipulated that spectrum pricing would be mutually finalised between both the ministries.

Earlier this month, communications minister A Raja lifted the curtain on the 3G policy, which would enable telecom operators to offer high-end services such as video conferencing, faster downloads of music and movies, interactive gaming and high-speed internet. Mr Raja had announced a reserve price of Rs 2,020 crore for auction of pan-India 3G spectrum for GSM operators and about Rs 505 crore for pan-India WiMAX radio frequencies. As per the current schedule, the auction for 3G spectrum will be held within the next three months, spectrum allotted by the year-end and services launched by mid-2009.

The finance ministry has taken the line that DoT has breached protocol as it arrived at these figures (the reserve prices) without consulting it. Finance secretary D Subbarao, in a strongly-worded letter to the communications ministry on Wednesday, said: “The guidelines issued on August 1, 2008 by the Department of Telecommunications (DoT) on auction and allotment of spectrum of 3G and broadband wireless access (BWA, also known as WiMAX) telecom services, contain clauses with financial implications such as determination of the spectrum acquisition price and reserve price for auction, fixation of spectrum usage charges and penalties for hoarding of spectrum. However, the ministry of finance (MoF) has not been consulted in the matter.”

In a bid to drive home the seriousness of the issue, the finance secretary has told DoT that as per the Transaction of Business (TOB) Rules, it is mandatory to have consultations with the finance ministry “as a pre-condition to all issues which have financial implications”.

Mr Subbarao also added that the Union Cabinet, in its meeting on October 31, 2007 had decided that spectrum would be decided mutually between the DoT and the finance ministry. “The issuance of (3G) guidelines without any consultation with the finance ministry, either within the forum of Telecom Commission or outside, is inappropriate and contrary to the Cabinet decision,” the finance secretary’s communication read.

This marks the second instance of differences having cropped up between different government wings over the recently-announced 3G spectrum policy. As reported first by ET, telecom regulator Trai has asked the DoT to review the 3G policy while adding that the government’s decision to allot 3G spectrum to CDMA players without an auction was against the principles of equality.

This is because the policy gives CDMA operators one slot in the 800 MHz band — the most efficient and cost-effective frequency for CDMA players — to offer high-end services, with the rider that the largest operator in a circle would walk away with it.

[vmsanghrajka 0]

I was so sure of this.. Something like this has to happen or else it would have been policy decision elsewhere but India.. Lol..

[Honest 836]

TRAI, DoT lock horns on 3G policy

14 Aug, 2008, 0810 hrs IST, ET

NEW DELHI: TRAI’s recent letter to DoT, highlighting shortcomings in the government 3G policy, has kicked up differences between the telecom regulator and DoT.

TRAI, in its letter, has highlighted six shortcomings in the 3G auction guidelines that were announced recently. The most significant one that can impact exchequer revenue relates to the need for an “amended’ ’ unified access service licence (UASL), which needs to be acquired by every successful new entrant in the 3G space.

TRAI, in its letter to DoT, concludes that a reading of the 3G guidelines “implies that in case a non-licencee becomes successful bidder, he will be given a new (modified) UASL without the provision of 2G spectrum (spectrum in the 800, 900 & 1800mhz) at an entry fee equal to the entry fee of UAS licence’’ .

While announcing the 3G guidelines, telecom minister A Raja had confirmed that universal licences for new 3G entrants—costing Rs 1,651 crore— will come without 2G spectrum. Potential bidders have also complained that this is “unjustifiable and discriminatory’’ . Now, in contrast to TRAI and Raja’s conclusions, a senior DoT official told TOI that “new 3G entrants will, by virtue of their universal licence , be eligible for 4.4 MHz of spectrum as per the law of the land and can also join the 2G queue’’ .

This fresh twist is set to spark more confusion among potential bidders.

TRAI has thrown another spanner by informing DoT that it needs to receive recommendations from the regulator if any amendment of the licence agreement is proposed. “As this would require the terms and conditions of this new licence , including the annual licence fee, the authority would like to draw the attention of DoT to section 11 of the TRAI Act wherein recommendations of TRAI are necessary,’’ the regulator wrote.

DoT will find this letter tough to ignore, considering TRAI’s principled and legally valid stance on the matter. Equally, TRAI is obliged to engage in a public consultation process. All this could take months. Meanwhile, all this confusion could help new entrants make a killing. A shareholder in a pan-India 2G firm that received a letter of intent (LoI) on January 10 for 2G spectrum told TOI that 3G entrants will be better off while striking deals with new entrants before participating in auctions. The firm, which paid Rs 1,651 crore for 4.4mhz spectrum, has term sheets doing the rounds boasting of an enterprise value of Rs 6,000 crore, without even spectrum in hand.

“Even if new 3G entrants join the 2G spectrum queue, everyone knows there is no spectrum to give, so why should they pay the government Rs 1,651 crore for just a licence. They would be wiser to buy into a company like us which has assured spectrum,’’ he told TOI.