Special: 3G in India: Slow off the blocks, but sure to catch up

If DoT get its act together and clears the spectrum from ministry of defence, the 3G rollout in the country wont be a distant possibility and Indian consumers may finally be exposed to the value 3G services offers

Idhries Ahmad

NEW DELHI, INDIA: Excruciating wait. A wait that seems to linger on for ever.Caught in the politics of procrastination for too long now, the telecom industry in India surely heaved a welcome sigh of relief when A. Raja, Union Minister for Communications and IT, paved the way for 3G rollout in country policy by unveiling the much awaited and hyped 3G policy in the country.

3G in India...Slow but steady

3G in India...Slow but steady

However, with Department of Telecom professing its inability to vacate the spectrum from Defense Ministry in nine circles including Delhi, the much-awaited auction of 3G spectrum may hit yet another roadblock.

A paper by DoT to be presented to the Defence ministry points out 30 Mhz spectrum required for nine service areas is not available.Couple it with the recession factor that has forced major telecom player like Vodafone to request DoT to defer auctioning for few months, the roll out of 3G services in the country may still have to wait few more months if not another few quarters.

Fortunately, other major telecom players are ironing their strategies to outbid each other in spectrum auctioning (to completed by January end) and chalk out plans with vendors to roll out the 3g rollout in the country.

The recession bug, analysts, feel wont hit the telecom industry very hard and it is expected most of them will be participating in the auctioning exercise.

If DoT get its act together and clears the spectrum from ministry of defense, the 3G rollout in the country won’t be a distant possibility and Indian consumers may finally be exposed to the value 3G services offer to them by middle of 2009..

History of Delays and More Delays

The latest hiccup isn’t entirely surprising if one takes into take into account the chequered history of 3G saga in the country, Right from the start of decade 2000, the ministry of telecom found it tough to frame the 3G policy for the country.

In November 2005, the then Minister of Communications and Information Technology Dayanidhi Maran had after years of deliberation promised to rollout 3G policy in the first quarter if 2006.

“The decision on 3G spectrum is expected to be taken by first quarter of 2006,” Maran had said.

However following his ouster from the UPA government, the process again hit a road block and it was only when the present minister took charge, the process was again started. The Ministry of Communications and IT had been punctually missing the deadlines one after another, for announcing the 3G policy for the country’s telecom sector. By August 2007, the government had missed out more than four commitments made on the announcement of the 3G policy.

This procrastinated approach stood completely in contrast to the steps taken by other countries who were quick to appreciate the benefits 3G accrued to the country’s economy.Small countries like Sri Lanka and Nepal had introduced the 3G policy as early as 2007 while other European countries like UK has completed the spectrum allocation by 2001 only.

TRAI vs Dot Vs Ministry vs Another Ministry


Primarily, it has been the row over the available spectrum between the ministry of defense and the Ministry of communication that has stalled the progress of 3 G roll out in the country.

The Ministry of Communications and IT has been seeking spectrum from the defence forces to be allocated to the telecom service providers. However, the ministry of defense has been refusing to vacate the 25 MHz of spectrum for a long time now arguing it very important for country security.The telecom minister had been pointing out the 3G spectrum policy would be announced only after the defence ministry vacates the spectrum.

The Department of Telecom (DoT) state claims on the spectrum citing that the 1885 Indian Telegraph Act empowers Ministry of Communication as the sole owner of the spectrum. The department has estimated about 60 MHz of spectrum is lying unutilized by the defence forces. The Spectrum crunch telecom industry has been hoping of the release of 42.5 MHz of spectrum by the defence forces to the Communications Ministry.

“The key challenge in India is still the spectrum. Compared to 30-40 MHz per operator in Europe, India is still able to give only 10-20 MHz per operator. This makes roll out of the high speed data networks a major challenge”, says Bharat Bhatia, Regional Director, India, SAARC and South East Asia, Motorola Global Govt Affairs &Public Policy.

As if the row between ministries wasn’t enough, the fractious relationship between Department of telecommunication and TRAI who never saw eye to eye with each other on spectrum allocation caused the inordinate delay.

Right from issue of base pricing of the 3G spectrum auction to the more contentious issue of allowing foreign operators to join the telecom fray, the constant discord between these ministry of telcom and TRAI led to delay in framing the much needed 3G policy for the county.

TRAI had been keen to keep foreign players away from to bidding for 3G spectrum in the country. TRAI had rejected DoT recommendations to include other prospective operators with foreign partners who fulfill the conditions for getting Unified Access Service (UAS) licenses.

TRAI contended that existing licensees had already made huge investments in the infrastructure and their systems were in place, therefore, they were in a better position to deliver 3G services efficiently at low incremental cost. In contrast, DoT had also been recommending foreign players to bid for 3G spectrum but TRAI had been feeble to the recommendations.

The DoT and Government have finally arrived at a reserve price of about Rs 2,020 core for telecom companies that want to be part of a pan-India auction for third generation (3G) spectrum in the upcoming policy. This was double the reserve price recommended by the Telecom Regulatory Authority of India (TRAI) in its recommendations in 2006.

As India marches on its quest to become a global telecom power analysts, feel government needs to expedite the auctioning process so as to increase the broadband penetration in India

“Since there is very little copper and coaxial cable network, the only way to increase the broadband penetration in India is through wireless technologies. 3G and 4G wireless technologies such as WiMAX can help improve broadband penetration” adds Bharat Bhatia, Regional Director, India, SAARC and South East Asia, Motorola Global Govt Affairs & Public Policy.

“These technologies can support Internet Connectivity for applications such as Web browsing, dynamic web access, web-casts, E-Mail, IM, E-Governance applications, Telemedicine and Distance education and E-Commerce” adds Bhatia.

Adds Anil Arora, Business Group Head, GSM, “3G technology would definitely be a big revolution in India telecom space. 3G will be bigger, better and faster than 2G and because of that, will enable the delivery of many more applications than are presently possible on 2G”.

“The advantage of 3G technologies over the existing 2G technology is the speed of data transfer, and user today is focusing more on data. 3G has a future in India and that it is relevant and important”, adds Arora.

Earning tons for government coffers


Apart from benefits the rollout accrues to the consumers and changing the telecom landscape of the country , the Telecom ministry is expected to raise Rs 30,000-40, 000 crores following the auction of 3G spectrum.

At the unveiling of the 3G policy some time back, Minister of telecom and IT, Thiru A. Raja had sounded confident that government would able to achieve the 30k figure, “We expect to touch Rs. 30,000 crores in revenues following the 3G spectrum auction,” the telecom minister said.

The auction, which is open to all telecom players is being handled by a specialized agency and will be completed by January end.

How will the Indian 3G Landscape shape up post January 2009

Both global as well as Indian telecom player will be eligible to offer 3G services in the country provided they bid successfully for the auction. The telecom ministry will be allowing five operators initially and if spectrum availability permits, another ten operators to roll out 3G services in the country.

Three slots for 3G spectrum have been awarded to CDMA players. However, in Delhi and Mumbai, given the scarcity of spectrum, only three players can bid for auction of spectrum. State PSUs, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) have reserved slot in each of 22 telecom zones and they will not be required to participate in the bid.

The ministry had also made it clear that foreign players with 3G experience will only be allowed to roll out 3G services in the country. Indian players however have so such criteria to follow. However the ministry later amended some clause for the operating vying to bid for 3G rollout in the cournty. The amendment said that besides the existing licence holders only those telcos with experience in providing 3G services can bid for the spectrum has been retained.

The DoT amended the norms regarding the annual spectrum charges as well. Now the companies would have to pay it at the rate of one per cent on the “incremental revenue due to 3G services” after a period of one year. The method for calculating this, DOT said, would be notified separately.

BSNL, MTNL get headstart; others operators feel cheated

As stated PSUs, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) have reserved slot in each of 22 telecom zones and they will not be required to participate in the bid.

Chairman-cum-managing director (CMD), BSNL, Kuldeep Goya says, l “decks for 3G roll out have been cleared and BSNL will be offering services in the another six months. We will be inviting tenders for our 8-9 million lines soon and final roll out by March 2009,”

“We have already started importing 3G equipment and expect to roll out services within six months of receiving the equipment.”

Although the incumbent operator will continue to focus on the rural front, 3G services will take some time to become cost effective for rural customers. However, both the state PSUs have to pay the highest bidding price following the auction of the 3G spectrum.

RSP Sinha, CMD of MTNL or Mahanagar Telephone Nigam Ltd , also envisages to start 3G services in Delhi, and a little later in Mumbai soon..

Interestingly, many fingers have turned toward BSNL-the state-run incumbent had already started 3G services in the country on a commercial basis, much before the guidelines of 3G services were issued.
The head start over the other rivals, rival telecom companies, feel gives BSNL and MTNL undue advantage. The Department of Telecom(DoT) Secretary and Chairman of the Telecom Commission Siddhartha Behura however said that the PSUs need to have to some concession from the government for they are incumbents and need some support to take on the big players.

However, the DOT Secretary added that rolling out the 3G policy is very tough process and will take considerable time, and a little head start won’t be undue advantage for these players.

The Minister of State for Communication & IT, Jyotiraditya M. Scindia also didn’t agree that the state PSUs were getting a head start. “BSNL has to pay the same amount as the other bidders, and hence, doesn’t entail undue advantage,” said the minister.

BSNL playing foul

BSNL and MTNL have got a head start over its rivals as they need not participate in the 3G spectrum bid and can roll out its services any time they are ready to roll out. However, they would have a five to six months advantage over private operators who can only initiate their plans

Notably, the operator has been providing 2.4 Mbps evolution data optimized or EVDO services in various locations in the country for more than a year. According to various industry experts, this is pure foul play and the incumbent is not following the guidelines.

Read full story here

While DoT confirms that the said service falls under 3G services, Kuldeep Goyal, CMD BSNL, simply rejected the claim saying: “The service comes under the 2.5 category and we are following all the guidelines.”

Vendors getting ready

The 3G go ahead has also excited the vendors who have are closely chalking up their strategies with service providers to roll out 3G services quickly into the market.

Leading equipment vendors such as Qualcomm, Nokia Siemens, Ericsson, etc, are working with service providers to develop their market entry strategy, positioning of 3G, product portfolio, and roll-out plans.

Says Devinder Kishore, Director, Marketing, Nokia India, “Nokia has a range of 25 plus 3G enabled handsets that caters to all segments of the market. As a matter of fact 10 of these handsets are in the entry to mid range starting from Rs. 8000 onwards.

“Most of our devices not only support 3G but other platforms like WCDMA, HSPA and Wi-fi as well. Strategically our investment into new technologies is aimed at being future ready to cater to the needs of the market and we believe that this gives us an edge over our competitors,” adds Kishore.

Vishwanath Alluri, founder and CEO of IMImobile, VAS company In India adds, ” Though 3G services are still in infancy and will take two years before they get popular. IMI is seriously looking at 3G market in India and has a strong technology road map with strong emphasis on 3G services”.

“IMI Mobile is e now setting up a 3G lab in its Hyderabad centre”, adds Alluri.

P. Balaji, Vice President – Marketing & Strategy, Ericsson India Pvt. Ltd adds, ” As and when the 3G services are rolled out, we as responsible stake holders will facilitate service providers to roll out their services”.

Ericson has recently completed a successful pilot of 3G powered Gramjyoti Rural Broadband Project, which is India’s first 3G-powered rural broadband demo network delivered the benefits of 3G across 18 villages and 15 towns in Tamil Nadu

Erickson provided high-speed internet and mobile connectivity over a 3G backbone, helping rural communities access range of new services – telemedicine, e-education, e-governance, online local information, voice and video call services and live television.

The article first appeared on Cyber Media Online Limited on Thursday, October 30, 2008

2 thoughts on “Special: 3G in India: Slow off the blocks, but sure to catch up

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