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More confusion and delay in the Indian mobile licenses market, though this time focused on further 2G auctions rather than 3G - whose auction dates remain uncertain, as disputes over reserve prices and license conditions rumble on. Despite that, state-owned BSNL and MTNL are pushing ahead with their deployment plans for 3G and WiMAX, having gained early access to their spectrum allowances.

Indian regulator TRAI has asked the federal government not to issue any further telecoms licenses until the Department of Telecom finalizes new rules on bandwidth allocation and terms. There was a wave of GSM licenses issued last year and operators are rushing to build out networks, to respond to the booming demand for mobile access in India, which is outrunning capacity. However, the DoT is concerned that the country does not have sufficient spectrum to support all the operators that still want to join the market, and that if there are too many cellcos with too little bandwidth apiece, many will fail - which would worsen the shortage of services for consumers.

There are no fewer than 343 applications for operating licenses, mainly regional and for 2G services, still pending with the government. TRAI's secretary RK Arnold said in a statement: "Since the authority is undertaking a comprehensive exercise on these issues, DoT may keep in abeyance the grant of any new access service licenses until the finalization of these recommendations and decisions thereupon by the government."

This would reverse, at least temporarily, a TRAI ruling of 2007, which removed the ceiling on the number of companies that could provide services in each of India's 22 'circles'. After that, licenses were issued in January 2008 to 122 of the 232 companies that had applied by September 25 2007, while the rest were kept on hold. Further application have been received since, making 343 to be processed, including some from big names such as AT&T Global Network Services India and Videocon Industries. Some have ongoing legal actions insisting on the award of their licenses.

Meanwhile, BSNL and MTNL are pushing ahead. The former has started WiMAX roll-out, working on a franchise model with equipment partners, and is now moving on to 3G. The first phase of its deployment will cover 760 cities, said a communications minister, Gurudas Kamat, speaking to the upper house of parliament last week. BSNL will spend INR27bn ($567m) on this first stage, covering "all district headquarters, commercially important towns and tourist places". This will be completed in 2010-2011. The operator has already gone live with 3G services in 111 cities and now has a modest 10,733 users, as of the end of June.

BSNL's licenses do not cover the top two cities, Delhi and Mumbai, which are reserved for MTNL, which now has 902 users on its first phase 3G networks and will add another 750,000 lines this year. "The estimated expenditure of 3G in MTNL Delhi and Mumbai is around INR1.59bn and INR1.4bn respectively," Kamat said.

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