High 3g Price Spoils Isps' Wimax Dream

[KumaarShah 143]

NEW DELHI: The government’s decision to double the reserve price for the 3G spectrum auctions spells bad news for many of the country’s stand-alone Internet Service Providers (ISPs).

This is because, the reserve price for the WiMAX (Worldwide Interoperability for Microwave Access) spectrum auction is likely to be set to be a fourth of that for 3G spectrum.

Put simply, this implies that reserve price for an ISP who applies for pan-India WiMAX spectrum will be over Rs 550 crore.

The final price could be several multiples of this depending on the outcome of the auction. ISPs say that a higher reserve price would create a scenario where they would not be able to enter a bidding war with telcos, who too are keen to launch WiMAX services.

Besides, this also implies that the reserve price for a telco, who wants to bid for both WiMAX and 3G radio frequencies will be about Rs 2,800 crore.

Confronted with this grin reality, the Internet Service Providers Association of India (ISPAI), the body representing all stand alone ISPs in the country, will soon approach sector regulator TRAI demanding that their members be charged only 25% of the highest bid that a telco makes for WiMAX spectrum in that particular circle during the auction.

“We will tell TRAI that in order to have a competitive market, standalone ISPs must be charged a maximum of 25% of the highest bid that a telco makes for WiMAX spectrum. We will also seek that a few spectrum slots be reserved for ISPs during the WiMAX auction. This is perhaps the only way that government can address the dismal broadband penetration in the country. We (ISPs) will offer a much needed competition to telcos in the WiMAX space, without which they will not roll-out these services,” ISPAI president Rajahs Charier told ET.

Sources say that the DoT wants the WiMax launch be initially restricted to only three players who will operate this service in the 2.5 GHz frequency band where one of the slots is reserved for state-owned BSNL/MTNL.

This contradicts the recommendations of telecom regulator TRAI which had suggested that wireless broadband be rolled out in 3.3-3.4 GHz and 3.4-3.6 Ghz frequencies and up to 13 players be allocated spectrum to offer WiMax services.

At the same time, the DoT also wants to allot WiMAX spectrum to other service providers in the frequencies recommended by TRAI at a later stage after compatibility is established.

While WiMAX is still an evolving technology, it is still considered a threat to third generation mobile services. As per global industry experience, WiMax offers data speeds that are 10-30 times faster than 3G.

To put this in perspective, the data speeds of 3G networks are over five times faster than those offered by 2G cellular networks that telcos in India currently use.