Updated: 3G Auction completed after 34 days of bidding

[KumaarShah 143]

^^^

The way things are moving, it will be no great surprise if 3G is launched by end 2010 or mid 2011. The DOT and TRAI are already at loggerheads, the finance ministry did not get "consulted" and so on and so forth. After all these are over the COAI will sue the AUSPI getting a favourable deal at Rs 505 crore for CDMA 3G as compared to the Rs 2020 crore for GSM 3G.

Maybe I am too optimistic, 3G will get launched by 2015!!!!

[Honest 836]

^^^

Very true my dear Kumaar.

Well, in my honest opinion, in India 3G will only be used by OUR THIRD GENERATION.

Yes we can surely expect 3G when we will be in our late 70's.

Ha Ha Ha.

[Honest 836]

DoT rebuts FinMin's charges; says spectrum Cabinet compliant

14 Aug, 2008, 1940 hrs IST, PTI

NEW DELHI: The Ministry of Communication on Thursday lambasted the Finance Ministry for questioning the procedure for 3G guidelines, saying the policy announcement was made after due consultations and there was no departure from the Cabinet decision.

"Since the spectrum pricing formula is auctioned, to which the Ministry of Finance is fully agreed, and the process, in which the Ministry of Finance is fully involved, we are consistent with the decision of the Cabinet," DoT said in a strong rebuttal to the issues raised by the Finance Ministry.

Responding to a communication from Finance Secretary D Subbarao yesterday, Telecom Secretary Siddartha Behura shot off a strongly worded letter today, saying: "It is therefore surprising that the Ministry of Finance has now decided to express its reservations on procedural aspects."

Asked about the issues raised by the Finance Ministry, Telecom Minister A Raja today dismissed any possibility of delay in 3G auction, saying: "As we promised, 3G auction will take place within the scheduled time... There will not be any deviation from the announced guidelines."

Charging that the Ministry of Finance had not been consulted on DoT guidelines on auction and allotment of spectrum for 3G and WiMax telecom services, Subbarao had said: "The issue of guidelines without any consultations with the Ministry of Finance, either within the forum of Telecom Commission or outside, is inappropriate and contrary to the Cabinet decision."

Telecom Minister Raja also said that if necessary Secretary (Telecom) will be directed to consult with the Ministry of Finance on the relevant issues.

Behura said in his letter that as announced an inter- ministerial committee has already been set up to oversee the spectrum auctioning process in which Finance Ministry has nominated its representative also.

"In addition, the Chairman of the Committee is Member (Finance), Telecom Commission. Any concern of Ministry of Finance can be considered by this Committee and action taken thereof," Behura said in the letter.

Unveiling the 3G policy earlier this month, Raja had said up to 10 players would be allowed in a service area, including foreign players, and the government would garner up to Rs 40,000 crore from the auctioning of spectrum for 3G services.

Government has set a base price of Rs 2,020 crore for each bid for a pan-India licence.

"The reserve price recommended by telecom regulator TRAI has been doubled and TRAI's concurrence also obtained. It is needless to say that there is no method of fixing reserve price for spectrum and the doubling of reserve price as indicated by TRAI is only the beginning of price discovery through auction," Behura said in his letter to Subbarao.

Asked whether the process of implementing the 3G policy could be delayed, Raja asserted that "as far as time-frame is concerned, there will be no deviation from what we announced on August 1, 2008".

[Honest 836]

DoT invites proposals for 3G e-auction agency

15 Aug, 2008, 0013 hrs IST, ET

NEW DELHI: The department of telecom has invited requests for proposal (RFPs) to select an agency to conduct the e-auction for spectrum allocation for third-generation (3G) and broadband wireless access services in 22 telecom circles.

The move comes just a week after the finance ministry asked DoT to put the 3G guidelines on hold until they get approval from the North Block.

The RFPs would be issued on August 18, while submission of bids would be allowed till September 3. Technical bids by eligible bidders would be opened on September 17, while the financial bids would be opened on September 19.

The bidder could be a registered company under the Indian Companies Act, a foreign firm incorporated in another country or a joint venture of such companies. It would have to pay a non-refundable processing fee of Rs 50,000 or its equivalent in foreign currency.

The bidder should neither hold any stake, direct or indirect, in an Indian telecom company or ISP nor have a telco/ISP as a stakeholder.

[Honest 836]

3G policy: Foreign players want PMO to intervene

Business Line

New Delhi, Aug. 14 Stung by the recently announced policy for third generation (3G) mobile services, a delegation of foreign telecom players has approached the Prime Minister’s Office seeking intervention for a review of the guidelines.

One of the demands made by the foreign players is to dilute the merger and acquisition rules to allow them to pick up stake in existing 2G mobile operators if they win the bid for 3G. According to the current laws, the Department of Telecom has put a three-year lock-in period on new 2G mobile players from selling out.

Global telecom operators, including AT&T, Verizon, NTT DoCoMo and Deutsche Telecom are interested in entering the Indian market.

Some of the foreign operators have told PMO that the guidelines for 3G auction were unattractive for any new player and, therefore, they may not participate in the bidding process. If that happens, the auction would be limited to existing players such as Bharti Airtel and Vodafone Essar, which would reduce the level of competition during the bidding and, therefore, result in lower revenues for the Government.

According to the 3G policy announced by the Communications Ministry, foreign players will have to cough up at least Rs 4,000 crore for acquiring spectrum. This includes Rs 1,650 crore for taking a unified access licence. In comparison, existing telecom players will have to pay a minimum of only Rs 2,020 crore.

Foreign players are also at a disadvantage because they do not get 2G spectrum along with the unified access licence. Existing players have been given between 4.4 Mhz and 6.2 Mhz after they were given 2G licence.

This means that even if a foreign player wins spectrum for 3G mobile services, it will be difficult for it to compete with existing players without 2G spectrum, which is essential to offer basic voice services.

[Honest 836]

Idea to use own funds for 3G spectrum buy

19 Aug, 2008, 0036 hrs IST, ET Bureau

MUMBAI: Idea Cellular, India’s fifth-largest cellular operator will not seek promoter funds to bid for the Rs 40,000-crore worth 3G spectrum. The AV Birla group company has turned almost debt-free following transactions with private equity firm Providence Partners and Telekom Malaysia ™ and will now bid for the spectrum on its own.

“We are practically a zero debt company and we have enough capacity to do it (bidding) on our own. ” Idea Cellular MD Sanjeev Aga said.

The Department of Telecom (DoT) guidelines on 3G allows foreign players to bid for the spectrum which is expected to push up the price for scarce airwaves. Mr Aga, however, ruled out any over-bidding for 3G. “There is enough international experience now. It is no longer a black box. The price that is being talked about is too high. I don’t see operators overbidding.” he said.

Idea Cellular claims it is now geared for the business with top quality vendors, in IT or networks and a lot of the investment is ‘nascent’. Idea is also set to launch operations in Mumbai later this month. It will be the seventh player in the market, which generates the highest average revenue per user per month in India. The networks here are also 3G-ready and expected to give competition to existing players.

With over 28 million subscribers, Idea is hoping to benefit from the partnership with Malaysian telecom giant TM, which already has 3G operations in three countries through its subsidiaries — Celcom in Malaysia, XL in Indonesia and Dialog in Sri Lanka. “TMI has experience of operating in international markets. They have experience in offering value-added services and this will be of value to Idea. Benefits will be in terms of know-how,” Mr Aga said. TMI has nearly 45 million users across 10 Asian markets.

After the acquisition of Spice Communications, announced in June this year, Idea will make a preferential allotment of 464.73 million shares to TM at Rs 156.96 per share, representing 14.99% of Idea’s equity capital post-allotment. This will bring in Rs 7,294 crore to Idea Cellular. Also, it sold 20% stake in Indus Towers through Aditya Birla Telecom (ABTL) to Providence for $640 million. The two transactions, when completed, will make Idea a debt-free company.

[Honest 836]

Policy tweak may help 3G winners buy telcos

19 Aug, 2008, 0031 hrs IST, ET

KOLKATA/NEW DELHI: The government plans to tweak M&A guidelines to facilitate the entry of foreign telcos in the 3G space. It proposes to allow winners of 3G licences to acquire or merge with existing or new 2G operators without waiting for the mandatory three-year time period to lapse.

Current guidelines bar a 3G licence holder (who is a new entrant) from merging with an existing 2G licensee for a period of three years from the time it secures a license. Existing guidelines also make it mandatory for successful 3G bidders to buy UASL licences for Rs 1,651 crore but do not provide them with 2G spectrum. These guidelines were being cited as major deterrents for the entry of international telcos in the 3G market. Foreign companies without a presence in the 2G market had complained that they would be at a disadvantage compared to the incumbents as they could not offer both voice and high-end data services with a mere 5 MHz of 3G radio frequencies. Existing telcos, however, can make do with just 5 MHz of 3G spectrum as a bulk of their services will continue to be offered via the existing 2G air waves and networks.

The revised regulations will dilute the objections of foreign entrants as it gives them to leeway to acquire additional spectrum through the inorganic route. ET has learnt that senior officials of the Department of telecom (DoT) thinks there is a strong case for introduction of the new dispensation to remove regulatory hurdles in the existing M&A norms.

“3G guidelines allow UAS licence holders who already hold 2G spectrum to bid for 3G. Which means, a 2G operator is not only uniquely qualified, but also in a position to combine 2G and 3G spectrum. But a 3G bidder cannot combine with a 2G licensee who hasn’t completed three years of operations. Accordingly, there is scarcely a chance for a new entrant to come into 2G unless he is determined to set up a 3G only network with a mere 5 MHz of 3G spectrum for at least 3 years. The M&A norms are discriminatory and impose an additional entry barrier for new entrants keen on consolidating 3G spectrum with 2G licenses. There is thus a need to allow a reverse merger of a new 3G licence with an existing operational 2G licensee,” an official said.

But since 3G spectrum and UASL licence have been de-linked, it’s unclear whether a successful 3G spectrum bidder would also be allowed to merge with a 2G licensee without first having to pay the Rs 1,651-crore license fee. This is because the DoT’s M&A norms involve the merger of two licences, and not between a standalone spectrum holder and a UASL licensee.

“It remains to be seen if DoT makes it mandatory for a global telco who successfully bids for 3G spectrum in the upcoming auctions to also shell out the requisite entry fee to procure a UASL licence, and only then proceed with a reverse merger with an existing 2G licensee,” said another government official.

Telecom regulator Trai has already pointed out that the ‘merger’ guidelines announced by the DoT in April 2008 has several loopholes that can be challenged in the courts. While Trai had issued recommendations for mergers & acquisitions in the telecom space, DoT, while announcing the policy, had dropped the word ‘acquisition’.

This led to some ambiguity on whether these norms seek to make a distinction between ‘mergers’ and ‘acquisition’ and led to several telcos seeking clarifications from the DoT on this issue.

[Honest 836]

'3G has potential to bridge digital divide in India'

21 Aug, 2008, 0248 hrs IST, ET Bureau

MUMBAI: Bharti Airtel is betting big on 3G. As India’s largest telecom operator readies to take on global biggies for third generation (3G) services, it’s keeping an eye on the rural market as well, which now contributes over 50% to its monthly subscriber addition. Airtel president for mobility Sanjay Kapoor spoke to ET about the company’s strategy on 3G, rural markets, tariffs and challenges ahead. Excerpts:

Will 3G change experience for users?

The change will be experience enhancement. For the bulk of users who started experiencing voice services, it was wireless because not many people had fixed line connections. Similarly, for internet, the first experience of most customers will also be on the mobile phone. This has the potential of bridging the digital divide between urban and rural India.

Is India ready for 3G?

The debate can go either ways. Personally, I feel it’s the right time. Most of the world got 3G when there were not enough devices. We are in a better position as there is a strong ecosystems around 3G now. We believe handset and data card manufacturers are working towards pricing points which will help us penetrate better.

What is Airtel’s preparedness level to offer 3G and what are the challenges?

We have gained experience on customer requirements through 2.5G (which Airtel currently offers along with 2G). Our content, applications and partners are 3G ready. From that perspective, we are well placed. The biggest challenge will be the availability of handsets at the right price. We don’t, as a policy, subsidise handsets and we will not subsidise 3G handsets as well. We believe the evolution of 3G handsets will begin with the launch of 3G iPhone. That should set the ball rolling.

Which will be the stickiest 3G applications? Which user group will drive 3G?

I believe the stickiest 3G applications will be voice and mobile internet. Besides these, India will pick up its own applications. Biggest utility for 3G will be for those seeking entertainment and there’s a large population of such users. They are the adopters of technology and they’ll determine the success or failure of 3G in this country.

How crucial are rural markets in Airtel’s overall growth strategy?

Growth will now be dominated by rural India. It is necessary to ensure that customer experience gets simplified in terms of value added services, tariffs and distribution. That’s what we are working on. Some collaborations (like with IFFCO, Nokia) have been put in place. There will be more tie-ups on money transfer (through mobile), m-commerce and microfinancing in rural areas.

Mobiles have a huge advertising potential. What are your views?

Because of the customer behaviour knowledge that resides with operators and because of the relationship with customers, I do believe there is scope for a lot better targeted advertising on mobiles. I see this application has the potential of being sticky and then we’ll see a big change in the structure of advertising and the way companies reach out to people.

[Honest 836]

DoT rejects TRAI’s call for 3G policy review

Business Line

New Delhi, Aug. 21 In a move that would keep the roll out of third generation services on track, the Department of Telecom has rejected telecom regulator’s call to review some parts of the recently announced third generation policy.

The TRAI had sought a review on several issues in the policy – the key one being DoT’s decision to allocate spectrum to CDMA players based on subscriber numbers. The regulator had also asked the Government to refer the issue of allowing new and foreign players back to TRAI so that it can suggest the terms and conditions of the new licence category.

Rejecting TRAI’s view on foreign players, an internal DoT note said, “ The unified access licence are authorised to provide triple play – voice, data and video without any limit on speed of data. 3G service providers are not new category of licensees and they shall be offering 3G services under terms & conditions of the UASL licence. Therefore, the provision of the TRAI ACT 1997 is not applicable in this situation.”

New category

TRAI had earlier shot off a letter to DoT saying that since foreign and new players will be given a unified access licence without any right to 2G spectrum, this would be a new licence category. The regulator had said that the TRAI Act stipulates that the Government should consult it before laying down the terms & conditions of the new licence category.

TRAI had also raised questions on DoT’s decision to allocate spectrum in the 800 Mhz frequency band to operators with most number of subscribers.

TRAI had said that this would not be fair to new entrants as they would have no chance of getting 3G spectrum in this band. 800 Mhz is the most efficient band as far as CDMA players are concerned.

Committee set up

The regulator had urged DoT to consider auctioning this spectrum to give everyone a fair chance of acquiring it.

In response, DoT said that a committee has been constituted to recommend the methodology to be followed for allocation of spectrum for telecom access providers.

“The methodology may also include subscriber base and such other criteria as shall be deemed fit by the Committee,” the DoT note said. The note has been put up for consideration of the Telecom Commission, the highest decision making body in DoT.

[Honest 836]

High bidding for 3G licences may inflate consumers' bill

24 Aug, 2008, 0000 hrs IST, ET

NEW DELHI: The next generation telecom services, or 3G, may not come cheap at all. Customers opting for 3G services may have to shell out double their current mobile bills if the forthcoming auction battle results into unreasonably high price for 3G licences.

According to international experience, customers should not pay more than 40% of their current bill if they opt for 3G services.

The department of telecom (DoT), which doubled the reserve price for 3G licences from what telecom regulator Trai had recommended earlier, fears that intense auctioning process for 3G may finally burden the customers, or even hinder the smooth roll-out of 3G services in India.

What’s more, if the finance ministry asks DoT to raise the reserve prices of spectrum, it may further put pressure on the final auction amount, and thereby on the billing of the end users.

Telecom secretary Siddharth Behura told SundayET that too much emphasis on revenue could spell doom for the roll-out itself. “I have no estimate of what could be the total revenue generated by this auction, but we should not be too revenue-centric either. Good, if we can raise a huge amount for the country, but if the 3G service providers are burdened with a heavy price for spectrum, they will pass that over to the consumers. There are some international examples where only technical capabilities of the service providers were weighed in for starting 3G. After all, rolling out the services is more important than anything else,” he argued.

Though the finance ministry has not asked DoT to raise the reserve prices so far, it may question the methodology to derive at the reserve price, SundayET has learnt. A senior finmin official said; “We are not happy with the content of the DoT’s reply after we had objected to the issuing of 3G guidelines without consulting us. Anyway, as spectrum is a scare commodity, we have every reason to know how they have derived at the reserve price. We are writing a letter to the telecom ministry asking the economic rationale behind fixing the reserve price for spectrums,” he said.

Significantly, the UK government in the 3G auction in 2000 gained a whopping £22.5 billion (Rs 182,500 cr), one of the highest amounts raised from such license sales globally. But it hurt the telecom companies and the roll-out was delayed by several years. Mr Behura said: “In the UK, the companies bought spectrum at such a high price that it became difficult for them to roll out the services. At times, companies bid for the sake of bidding and later find it impossible to execute the plans.”

KPMG director (telecom) Romal Shetty said India must learn a few lessons from UK. “India will have to make sure that it does not go the UK way where it took six years to launch the services. In India, I feel, the main market could be the metros, but the companies will have to struggle hard to get people interested in 3G. So far as the pricing is concerned, the customers have to be prepared to shell out at least 40% more of their current mobile bills after they opt for 3G services,” he said.

[Honest 836]

'India could have 270 mn 3G subscribers by 2013'

26 Aug, 2008, 1859 hrs IST, PTI

NEW DELHI: India could be the largest 3G market among emerging countries as 270 million subscribers are expected to use these high-end value added mobile services in the next five years, says a research agency.

The guidelines have been already issued for 3G services and the Government hopes to roll out high-end mobile services by December.

"In terms of subscribers, India is going to be the largest market for 3G users among all emerging markets...India could have 270 million users subscribing to 3G services by 2013," research agency Strategy Analytics VP, Wireless Practice, David A Kerr said.

The research agency said 3G subscribers would constitute more that one third of the total wireless users in the next five years.

Initially, the subscribers would come from metro and 'A' category cities, and enterprises and business customers would make the largest chunk of it, it said. "India has 700 million untapped customers and it is very much possible to have 270 million 3G subscribers in next five years."

At present, the country's total mobile subscriber base is about 290 million.

"At the initial stage corporate and enterprise users as well as tech-savvy young generation would drive this market," Kerr said.

[Honest 836]

DoT delays pre-bid meet for selection of agency for 3G auction

Press Trust Of India / New Delhi August 26, 2008, 17:14 IST

Department of Telecom (DoT) today revised the time schedule for the process to appoint an agency for the e-auction for 3G and Broadband Wireless Spectrum in the 22 circles in the country.

The pre-bid conference for receiving the request for proposals for the designated agency was to start tomorrow.

It will now start on September 8 and consequently all the earlier dates have been revised as per which the submission of the technical and financial bids will now be on September 22 instead of September 3, an official statement said here.

When contacted the Ministry's spokesperson said, "The revised time schedule would not delay the process. We had to made few modification in the original time schedule as a number of prospective bidders wanted more time."

The opening of covering letter and selection of bidders, who meet the eligibility criteria, is now also on September 22.

Qualified bidders make presentation on September 24 and government will also open technical bids on this date.

The financial bids of technically qualified bidders will open on September 26 in lieu of 19 of that month.

The date of finalisation of bids will be September 30.

Earlier, Sidhharth Behura, the Telecom Secretary, had said, "Technical and financial details are being discussed.

Once that is done, this e-auction process for 3G spectrum would be finalised by September 30."

[Honest 836]

3G spectrum auction to end by October-end

28 Aug, 2008, 1936 hrs IST, ET

NEW DELHI : The government on Thursday said the auction for allotment of 3G spectrum will end by October-end, while services will roll out before 2009.

"Auction of the 3G spectrum will be completed by the end of October, and the government plans to roll out services by the end of this year," Communications and Information Technology Minister A. Raja said at a function here.

In another major related development, the minister said the spectrum for CDMA operators for 3G services would also be auctioned now, like the way it is being done for GSM operators.

Earlier, with only two players in the CDMA segment, there was not much competition. Now with other players joining, competition is increasing.

The auction will be conducted as per the recommendations of the telecom watchdog, the Telecom Regulatory Authority of India, instead of allocations being made on the basis number of subscribers, the minister said.

Till date, Reliance Communication was the only contender in the 3G CDMA space on account of its high subscriber base. With Raja's latest announcement, other operators too can place bids.

[Honest 836]

Telcos must rejig business model for 3G success: Study

29 Aug, 2008, 0000 hrs IST, ET Bureau

KOLKATA: Telecom operators may be betting on 3G in India, but the latest study has indicated that operators will have to redesign their business models to make data services affordable for Indian consumers.

The study has highlighted that issues such as revenue sharing between operator and content developer are one of the main reasons behind premium pricing of data services, and hence their limited success.

The study is part of a report on 3G in emerging markets conducted by an international research and consulting firm, Strategy Analytics. The firm estimated that the total mobile phone subscriber base in India will reach around 800-850 million by 2013, of which around 271 million subscribers will be using 3G services.

The report said only limited number of services like ringtones have tasted success due to high price of mobile value-added service (VAS). The current data average revenue per user (ARPU) of operators in India is around $0.7 per month. “Though the rollout of 3G will definitely benefit the data services portfolio of operators, it does not guarantee its success,” said Strategy Analytics head (global wireless practice) David A Kerr.

There is virtually no demand for data services in the rural belt due to high tariffs and low user spend. “3G services will gain acceptance in rural areas only when localised content can be offered at a very nominal price,” the study notes.

[HetalDP 947]

First of All,

A BIG THANKS TO HONEST for All Updates in 3G, I have now stopped reading 3G news in EcoTimes, BS, BL hehe

[Honest 836]

^^^

Thanks my dear Hetal for the comments.

But I think ARUN deserves the BIG THANKS even before me, as he started this thread.

Regards.

[Honest 836]

Latest update my dear friends. Now Dot says the 3g auction will be over by September 30.

3G auction to be over by Sept 30: DoT

29 Aug, 2008, 2108 hrs IST, PTI

MUMBAI : The auction process for the third generation (3G) spectrum service are likely to be over by September 30, Telecom Secretary Siddhartha Behura said on Friday.

"The ideal time for the auctions will be between September and October this year."

"But the auctions should most likely be completed by September 30," he told reporters on the sidelines of the Energy Efficiency Summit organised by Nokia-Siemens.

[Honest 836]

BSNL to launch 3G services by year-end

30 Aug, 2008, 2318 hrs IST, PTI

CHENNAI: State-run telecom major BSNL on Saturday announced that it would launch 3G services across the country by the end of this year.

"We will be commencing the operations by the end of December starting from North and Eastern parts of the country and then South and West by March, 2009, so that within six months we will be able to roll out the 3G operations," BSNL Chairman and MD Kuldeep Goyal told reporters here.

"Mostly we will try to cover the state capitals in the first phase and then taking it to major cities and other towns," Goyal said.

On the demand for the services, he said, "The demand will pick up once 3G handsets are affordable. Applications suiting the people especially rural areas should be available in local language. Initially, we don't expect the demand to be very high," he said.

"Initially, we are talking to content providers for developing suitable applications, like video conferencing, video telephony, video streaming. A trial was carried out in Pune recently," Goyal said.

Talking about the company's business, he said BSNL was hoping to increase the revenue by more than 10 per cent as compared to last year.

"We are aiming to record 10 per cent growth next year", he said adding that last year the company recorded a turnover of Rs 38,000 crore.

He also hoped that the revenue would reach USD 45 billion by 2010.

[Honest 836]

Mobile cos want MoF to relax ECB norms for 3G funding

31 Aug, 2008, 1317 hrs IST, PTI

NEW DELHI: Mobile services providers, both GSM and CDMA players, have approached the finance ministry for granting one-off approval to successful bidders in the 3G and Broadband Wireless Access auctions to raise funds through the overseas borrowing channel. GSM operators body COAI and CDMA players lobby group AUSPI in a joint letter to Finance Secretary D Subbaro have sought one-time approval to the successful bidders to raise funds through the External Commercial Borrowings (ECBs).

"This would permit successful India bidders to augment their funding from domestic banks with potentially lower cost funds from the international banks," the associations said. They said spectrum being a limited resource, bid for a single block of pan-India 3G spectrum is likely to be very high (the reserve price for a pan-India 3G license is about Rs 2,000 crore).

With high financial capital involved, the operators want funding at affordable rates. "Keeping in mind the current tentative state of credit markets, interests rates in India and internationally and the liquidity available in the Indian debt markets, we believe it is necessary to widen market access for the successful bidders," they said.

Such bidders should have the ability to tap Indian and international debt and equity markets to be able to mobilise such quantum of resources, the COAI and AUSPI said. Current guidelines issued by RBI permits the use of ECBs exceeding 100 million dollars only for capital expenditure in foreign currency and these ECBs require a minimum tenure of five years.

"We would request that special one-off in-principle approval may be granted to interested domestic bidders in the auction to raise funds for spectrum auctions through ECBs. To give some flexibilities and reduce long-term forex exposure, companies may be permitted to raise ECBs with a minimum tenure of three years, said the letter. COAI and AUSPI have also sought relaxation in the ECB guidelines.

"Kindly permit us raising ECB from a foreign shareholder holding at least five per cent equity stake (current norm has 25 per cent of equity) without any cap on ECB amount to be borrowed from such a shareholder (present cap is borrowings not to exceed four times of the direct equity holding)," the association said. "We also seek a relaxation to provide that in case we borrow in Indian rupees for 3G licence fee payment, the same can be repaid by using a ECB," they added.

[Honest 836]

Foreign telcos should wait and watch 3G process: Report

2 Sep, 2008, 1355 hrs IST, PTI

NEW DELHI: Foreign telecom operators who are aspiring to enter the Indian telecom space through the 3G licence auction route should not participate in the auction process at present as their growth prospects are limited by regulatory and market factors, said a report.

They should keep themselves out of the race for the time being and wait for a better time, suggests a recent report by research firm Strategy Analytics.

"We believe that foreign operators should adopt a wait and watch approach as the licensing and pricing policies will most likely change," said Rahul Gupta, author of the report.

Foreign operators like AT&T, Deutsche Telecom, NTT Docomo and others who have been eyeing the domestic market for a long time now finally got a chance to enter world's fastest growing telecom market but looking at the current 3G auction policy, it is advisable for them not to participate in the race, it said.

The report "3G Scenario in Emerging Markets" by the firm says the government's 3G policy is not suitable for the foreign players at present due to a number of factors like pricing structure and strict timeline.

"The opening of 3G licensing process to global players would have been well received initially but on further review the complexity of the process, the upfront payment requirements and with very tight timeline proposed will limit international investment," said the report.

Recently the communications minister A Raja said that the 3G auction process would be completed by October.

Firstly, the upfront payment of almost 500 million dollar without any guarantee of being able to get licence will frighten many of the operators, it added.

The report said that smart international operators would simply wait until 3G licensing installs and enter the market, later picking up the licence at much more reasonable rate with less uncertainty.

Secondly, the timing of auction could prove a major hurdle for them as it is virtually impossible to get FIPB approval within the deadline.

Recently the communications minister A Raja said that the 3G auction process would be completed by October.

It takes several months to get through the FIPB process due to high level of bureaucracy.

This is another factor that we would hope that Indian regulators and relevant ministries would re-examine prior to the announcement of the auction if they are serious about opening up of the bidding process to major foreign players, the report added.

[Honest 836]

No issue with DoT on 3G: TRAI chairman

7 Sep, 2008, 1419 hrs IST, PTI

NEW DELHI: TRAI Chairman Nripendra Misra on Sunday dismissed rumours of differences with the DoT over the 3G issue, saying the role of regulator and power of the Department are well-defined.

"When it comes to a certain decision, if we find through detail reading that DoT has overlooked some aspects, then we bring it to their notice through letter. It is up to DoT to heed it or not. We know our responsibility and the power of DoT. We are here to complement them," he said.

With regards to 3G, the TRAI Chairman had earlier written to DoT that if new licences are issued to foreign players then as per TRAI Act, DoT has to turn to TRAI for working out the consultation and recommendations before issuing new licences.

In the guidelines, DoT had said new 3G bidders will have to pay Rs 1,651 crore to acquire a modified UASL, in addition to the bidding amount, which begins at Rs 2,020 crore. Reading it as a modified UASL licence, Misra wrote to DoT Secretary saying, "If the DoT makes any attempt to amend the UASL or even proposes a new 3G licence, it is obliged by law to seek our recommendations."

In its reply, the telecom ministry had earlier last month said, "The UAS licensees are authorized to provide triple play services. 3G service providers are not new category of licensees and they shall be offering 3G services under terms and conditions of UASL. This will include 3G spectrum allocation.

After the exchange of series of letters and responses between DoT and TRAI over 3G, Misra said, "Licenses can be issued to new players. There is a new license only if government says that they have to issue new licences. Today there is only one licence Unified Access Service and if an UASL is issued to an auction winner for 3G with the same terms and conditions as has been issued to mobile voice operators in circles, then it is not a new licence."

"Government is competent to decide what will be the fee for licence or entry fee. That is not license per se. It is a revenue aspect. Auction of spectrum is not term and condition. It is implicit that certain bands are already mentioned in the UASL licence... and the 3G bands are new for which auction will take place has already been agreed between DoT and TRAI. DoT is competent to take a decision on the matter and it does not have to depend on TRAI. As long these two conditions (auction and issuance of UASL to a 3G winner with same terms and conditions) are there there is no new licence," he said.

New telecom players like Datacom, Unitech, Shyam-Sistema, Loop Telecom and Swan Telecom have been alloted 4.4 MHz of spectrum in six circles so far and the companies are in the process to roll out network.

One of the new operators said that sharing of spectrum, if allowed, will help the player to compete with existing service providers to some extent and asked the government to rationalise termination charges which have not been revised for last many years.

Operators charge up to 30 paise for each call terminated on their network, the new operator said, adding the telecom regulator TRAI should have reviewed it long ago to arrive at cost-based termination charge. According to some of the exiting operators also, the termination charge should be less than 10 paise a minute but the existing players have been charging 30 paise, three times the cost based tariff.

This would be a major issue for the new telecom players to survive in the market, one of the new telco said, adding along with sharing of spectrum, government must ask TRAI to immediately review termination charge regime and recommend cost based charges.

[Honest 836]

DoT may allow spectrum sharing

7 Sep, 2008, 1432 hrs IST, PTI

NEW DELHI: In a major development, the government is considering allowing spectrum sharing between two mobile operators, a move that could prove to be a win-win situation for both existing as well as new telecom players.

New telecom players may find it difficult to roll out services with only 4.4 MHz of spectrum and compete with existing players who have been allocated 10-12 MHz of scarce spectrum.

Spectrum is radio frequency required by cellular operators to offer wireless mobile services. If allowed, two new players may join hands to combine the initial spectrum taking it to 8.8 MHz and this would not only help in reducing the infrastructure costs but also result in better quality of services with less number of subscribers and more spectrum.

Minister of State for Communication and IT, Jyotiraditya Scindia, has convened a crucial meeting tomorrow of senior officials in the Department of Telecom (DoT) to consider the proposal of sharing of spectrum among other things.

According to sources, the proposal would also help the existing mobile operators who have been seeking additional spectrum with the increase in number of subscribers but are unable to get due to its scarcity.

Asked whether DoT may also consider trading in spectrum as allowed in some of the developed countries, sources close to development said since the initial 4.4 MHz of spectrum is given free of cost with the licence, it may not be possible immediately to go for trading.

New telecom players like Datacom, Unitech, Shyam-Sistema, Loop Telecom and Swan Telecom have been alloted 4.4 MHz of spectrum in six circles so far and the companies are in the process to roll out network. One of the new operators said that sharing of spectrum, if allowed, will help the player to compete with existing service providers to some extent and asked the government to rationalise termination charges which have not been revised for last many years.

Operators charge up to 30 paise for each call terminated on their network, the new operator said, adding the telecom regulator TRAI should have reviewed it long ago to arrive at cost-based termination charge. According to some of the exiting operators also, the termination charge should be less than 10 paise a minute but the existing players have been charging 30 paise, three times the cost based tariff.

This would be a major issue for the new telecom players to survive in the market, one of the new telco said, adding along with sharing of spectrum, government must ask TRAI to immediately review termination charge regime and recommend cost based charges.

[Honest 836]

3G auction to begin on Monday

7 Sep, 2008, 1434 hrs IST, ET

NEW DELHI: The government is set to begin here on Monday the process to e-auction radio frequencies for telecom operators to start third-generation (3G) mobile services across the country and fetch the exchequer over Rs.400 billion ($10 billion).

The Department of Telecommunications (DoT) will hold a pre-bid conference here with all the potential consultants - one of whom would oversee the process to e-auction spectrum for next generation mobile applications, officials said.

"The process for selecting the agency to manage the e-auction process will be taken up in the pre-bid conference," a senior DoT official said.

The 3G mobile services allow not only much faster communications but also a wide range of applications such as high-speed Internet access, video calls, fast music and video downloads, interactive gaming and global positioning over the Web.

As per schedule, potential service providers will have to submit their technical and financial bids by Sep 22. Those who qualify will need to make a presentation before the DoT Sep 24 - the date when the technical bids will also open, officials said.

The financial bids of qualified bidders will open Sep 26, and the government hopes to finalise the successful players by Sep 30, the officials added.

The state-run Mahanagar Telephone Nigam Ltd (MTNL), which offers its services in Delhi and Mumbai, and Bharat Sanchar Nigam Ltd (BSNL) that operates in the rest of the country, have already been allotted frequency spectrum for 3G telephony.

The two companies, however, will have to pay the government amounts equal to the highest qualified bidder among the private players. In accordance with the recent decision, an auction will also be held for 3G mobile phone providers who use the CDMA technology platform. The earlier plan was to allocate the scarce frequency spectrum on the basis of higher subscriber base.

"The same auctioneer will oversee the e-auction of 3G spectrum for both the CDMA and GSM players," the DoT official said.

[Honest 836]

Final RFP on e-auction agency for 3G auction on Sept 12

8 Sep, 2008, 1946 hrs IST, PTI

NEW DELHI: Government on Monday kick started the process for appointment of an e-auction agency to oversee the bidding process of spectrum allocation, which is scheduled to be held in December.

The Department of Telecom, which today started the pre-bid conference to select an online auction agency, discussed the Request For Proposal (RFP) document with prospective bidders and clarified their queries. This exercise will continue tomorrow also.

Explaining the roadmap for appointment of an e-auction agency, a spokesperson of the telecom ministry told PTI, "DoT will announce the final RFP on September 12 for appointment of e-auction agency ... After the agency is selected, design and contours of the auction process will be finalised in October by the agency in consultation with DoT. The auction will be conducted in December."

Their roadmap is in line with what the Government has decided so far on roll out of the 3G services. According to soucres, N M Rothschild and Sons, Inge V Hansen DotEcon Ltd, Spiderboom Internet Services Pvt Ltd, Metaljunctions are believed to have sought clarifications from DoT.

[Honest 836]

3G auction: Global majors to bid just before opening

9 Sep, 2008, 0213 hrs IST, ET

NEW DELHI: With state-owned BSNL all set to open bids for 93 million GSM lines on Wednesday, all network majors have decided to play it safe. Global majors who are in the running, including Nokia Siemens, Motorola, Huawei, Ericsson, ZTE and Alcatel Lucent, are learnt to have told BSNL that they would submit their bids just minutes before the opening time on Wednesday.

This is because all vendors want to avoid the possibility of their bids details being leaked out. The last time around, the information about the disqualified bidders, which included Motorola and ZTE, was leaked prior to the opening of the bids.

The BSNL deal, which is estimated to be valued at $9-10 billion, is the largest GSM contract globally.

“The difference between the rates quoted by the different vendors will be very small. The stakes are so high that nobody wants to take a chance by submitting an early bid. All of them (network majors) have told us that they will submit their bids at the last minute,” a senior BSNL executive told ET. He also added that legally, the companies are allowed to submit their bids up to 30 minutes prior to the opening time.

BSNL executives also explained that it would not be possible to determine the winners of the tender on Wednesday (September 10). This is because, for the first time ever, the telco has divided the tender into four components — 2G lines, 3G lines, infrastructure and operating and business support systems (OSS & BSS) with a provision that companies can bid individually for any of the four components, or a single company can also bid for all the components.

“We will evaluate the technical feasibility of the bids on Wednesday. The financial component can be evaluated only after the rates are calculated against several parameters. For instance, companies can bid only for the IT part of the tender. Standalone tower companies can also bid. We will therefore have to compute if the cost-benefit ratio of awarding standalone components to smaller players and giving the entire components to established global network vendors,” said a BSNL source.

The BSNL contract is split into three parts of 25 million each for the North, South and West Zones and 18 million for the East Zone. The tender conditions also stipulate that one company cannot be awarded more than two zones — this implies that the maximum order than an equipment major can bag is for 50 million lines. This is different from the earlier BSNL tenders where the total contract was divided amongst the two lowest bidders, L1 and L2, in the 60:40 ratio. Besides, here L2 was required to match the price quoted by L1.