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New Delhi, Aug 1: The second round of telecom reforms is finally here. India will soon join the US and several European countries, where mobile operators offer third-generation (3G) telecom services. Streaming video and megabyte-level data downloads will be possible on mobile phones, opening up a whole new world of business, entertainment and new frontiers like tele-medicine and e-education.
The telecom package announced by communications & IT minister A Raja on Friday includes number portability, which enables subscribers to retain their phone numbers even after changing service providers. Shares of telecom companies leapt, with MTNL logging the highest rise of 6% on the BSE.
The state-run telco, which services the country’s most lucrative markets—Delhi and Mumbai—has been allotted the high-speed 3G spectrum right away, along with BSNL. Neither PSU will, therefore, participate in the bidding for spectrum.For both 3G spectrum and number portability, the first steps will be taken by December. Raja said five operators in each circle would initially be allotted spectrum after inviting global bids. The number would go up to ten as the government has identified up to 60 MHz spectrum in the 2.1 GHz band. However, circles like Delhi and Mumbai would initially have only two operators each.
The 3G policy also offers global companies like AT&T, France Telecom, Dutsche Telekom and Japan’s NTT DoCoMo, who do not have a presence in India, another opportunity to enter the world’s fastest growing telecom market. If they bid successfully for 3G spectrum, the fee of Rs 1,651 crore for a pan-India licence allows them to offer all telecom services such as 2G, landline, broadband and Internet, besides 3G.
For existing private and public sector service providers, 3G opens up a whole new revenue stream. In the 2G space—mostly voice—rock bottom tariffs have ensured one of the world’s lowest average realisations per user. With 3G services, they will be able to offer much pricier data-rich services.
Indeed, 3G services are likely to initially be offered mostly to high-end users. Further, they can enter into lucrative partnerships for a host of services like gaming, entertainment, tele-medicine and e-education. The government expects to earn Rs 40,000 crore in revenues by auctioning 3G spectrum.
The reserve price for a 5-MHz block of spectrum for Mumbai, Delhi and category A circles has been kept at Rs 160 crore; for Kolkata and category B circles at Rs 80 crore; and for category C circles at Rs 30 crore. The reserve price for a pan-India licence will be at least Rs 2,020 crore.
An external agency will be appointed within 15 days to oversee the e-auction process. The guidelines state that spectrum would be auctioned in the 450 MHz and 800 MHz band for EVDO (for CDMA players) and in the 1900 MHz band when it is made
available. Strict rollout obligations for 3G operators have been put in place to discourage hoarding of spectrum. A licensee that does not meet the rollout obligations after a year is liable to be fines 2.5% of its successful auction bid every quarter and could subsequently lost its allotted spectrum.
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