News From Telecom World

3G in India- an update

Posted on: February 2, 2009

This week it was pointed out to me that it’s now 10 years since the world’s first 3G licences were issued.

10 years! Time really must fly when you’re having fun…

But while Finland managed to get its ducks in a row a whole decade ago – it made history by issuing four 3G mobile licences in March 1999 – some countries are still dragging their heels.

Most notably, the world’s fastest-growing mobile market has yet to issue 3G licences and, despite at one stage aiming to begin auctioning licences today, actually ended the week further away from achieving its goal than it started.

India already postponed its 3G auction earlier in the month, but on Wednesday it seemed that things would soon be back on track after local sources predicted that a Cabinet meeting that day would set a new agenda.

However, the Cabinet passed the buck. Decisions on the reserve price of spectrum and the number of available bandwidth slots in each circle are now in the hands of a panel of ministers.

It seems that India is beginning to worry about the amount of money the licensing process will generate.

It has been widely reported that the state aims to raise 400 billion rupees ($8 billion), but analysts’ predictions are somewhat lower and interest from potential market newcomers, foreign players in particular, has allegedly been weaker than expected.

The finance ministry is keen to increase the reserve price for a pan-Indian licence to 40.2 billion rupees ($820 million), double the sum initially set by the Department of Telecom (DoT).However, various other government departments have come out in support of the DoT and registered their opposition to the price hike.

In the latest development, at the time of writing, the panel of ministers has pledged to establish a 3G roadmap by the second week in February, India’s IT Examiner reported Friday. The paper added that if the ministers meet this deadline, licences could be awarded between March and May, although with general elections looming, many believe the process will be further delayed. Elections are due to be held between 8 April and 15 May.

But India may not have to wait that long for 3G services.

State-owned Mahanagar Telephone Nigam Ltd (MTNL) has announced plans to launch commercial 3G services in Delhi on 5 February.

MTNL and sister company Bharat Sanchar Nigam Ltd (BSNL) are unaffected by the licensing delay, since they have already been allocated 3G spectrum.

MTNL’s 3G launch will be welcome news to many.

The Economic Times reported this week that a quarter of India’s mobile subscribers already use 3G handsets. That’s as many as 90 million 3G phones already in circulation.

However, according to Ernst & Young, which this week launched a new report on the Indian market, 3G is unlikely to see immediate rapid uptake in India.

“It will take time for 3G to gain traction in the market… The immediate focus of the 3G winners will be providing data services in the top 20 cities,” the company said.

“As services become further customised and network coverage becomes wider, we anticipate nearly 25 to 30 million subscribers adopting 3G by 2012. 3G revenues will touch $4 billion to $5 billion.”

Elsewhere in the world, Chile has been dealing with 3G issues of its own, but has now taken a significant step forward in the licensing process.

A Supreme Court ruling this week cleared the way for the licence auction to go ahead in April, prior to the introduction of number portability, which is expected to be implemented in 2010-2011.

Most notably, the court also effectively guaranteed the entrance of a new player into the market by placing a 60 MHz cap on the amount of spectrum any one operator is permitted to hold. The country’s three incumbents have already either reached, or are close to reaching that limit.

The existing players are not excluded from the licensing contest, but will be required to return any excess spectrum to the government should they exceed the limit.

Source: Total Telecom

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