BSNL cries foul over Airtel, Idea & Vodafone 3G deals

Written by Anandita Singh Mankotia | New Delhi | Updated: Oct 28 2011, 10:29am hrs
State-run telecom operator BSNL has cried foul over intra-circle roaming pacts among Airtel, Vodafone and Idea Cellular. In a letter to the department of telecommunications (DoT), it has complained that not only is any such pact between operators illegal but harmful for BSNL, which seems to have agreed to purchase 3G spectrum in all the circles since the Notice Inviting Applications explicitly mentioned that there would be only three 3G spectrum slots in each of the 22 circles and hence three operators to compete against each other. Such intra-circle roaming pacts, BSNL says, beat the rationale for paying so heavily for what it considered exclusive rights.

All this will in turn reflect in higher BSNL tariffs compared to these private operators making 3G services highly unprofitable for the company.

The letter dated October 17, comes at a time when the DoT is considering whether any 3G roaming pacts be it inter-circle or intra-circle, are legal or not.

While private telecom operators have quoted the NIA to bolster their claims that in case an operator has purchased 3G spectrum in any circle, it may then enter into roaming pacts with operators in other circles to provide its existing 2G customers the 3G services.

The BSNL letter on the other hand rubbishes these claims. It further specifies that using the 3G network of another operator where one doesnt have the 3G licence and the spectrum amounts to resale of spectrum, which is strictly prohibited.

Citing excerpts from the UASL the company has said, While it becomes amply clear that any roaming arrangements are only for facilitating the coverage of those operators who are eligible for providing the service and who have all the necessary infrastructure, network and spectrum in place in that circle. Hence the company has maintained that roaming arrangement in itself doesnt authorize any operator who doesnt have requisite network to provide the service.

The letter written by the director general marketing, BSNL has then computed that allowing more than the envisioned three operators per circle, throws the companys entire business model into a tizzy. While BSNL has had to pay R10,187 crore for 3G spectrum, the three private operators have together paid a total of R16,554 crore, which individually comes to about R5,518 crore per operator. Only about half of what the public sector company has paid, but each will have access to all the circles BSNL operates in for half the price it paid.

Secondly, while BSNL will have to make large investments in the capex for all its 20 circles, these companies will once again benefit as they all will combine and divide the equivalent investment among themselves thus reducing their capex to one third of BSNLs. Meanwhile they will have access to all the circles at one third the capex of BSNL.