Faced with legal & technological hurdles, the department of telecommunications (DoT) has decided not to allow foreign as well as new players to bid for 3G services. However, as a token gesture, DoT might add in the new guidelines, to be framed shortly, that these players can enter the fray if they hold equity stakes in existing service providers.
Put simply, while existing service providers can bid for 3G spectrum to provide high-data bandwidth mobile services, foreign players like NTT DoCoMo, Deutsche Telekom or AT&T can do so only if they manage to buy a stake in any of the existing player.
The change in the DoT stance came after an expert team pointed out the legal & technical hurdles in letting in foreign players. However, since the finance ministry has expressed the view that foreign players should be allowed in 3G, communications & IT minister A Raja would meet Prime Minister Manmohan Singh to apprise him of the complications.
The Telecom Regulatory Authority of India (Trai) has all along maintained that only existing service providers should be allowed to bid for 3G spectrum.
The legal hurdles pointed out by the expert team are that foreign players would have to be given unified access service licence (UASL) to provide 3G services. Once provided, it would be difficult for the government to stop them from giving 2G services unless some amendment is made, which could then be legally challenged.
Further, even if the government changes the licensing conditions to prohibit new players from providing 2G services, a technical hurdle would arise; they would not be able to set up 3G networks as 5 Mhz spectrum, earmarked for players, is not sufficient to roll out new networks. It will be enough only for laying an overlay network?over the 2G network?which the existing players alone can do.
In such a scenario, the only possible way the global players can participate in the 3G bidding process is by picking up stakes in Indian telecom service providers.
?The move is sure to lead to even more heightened activity in the telecom sector, which is bound to see more M&As in the near future?, an analyst said.
The current service providers have all along opposed any proposal to allow newer players to enter the 3G fray, saying there was enough competition in the sector with up to 10 players in a circle.
