Indian 3G auction delayed again, as 2G operators get cut-throat

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Indian 3G auction delayed again, as 2G operators get cut-throat

By CAROLINE GABRIEL

Published: 7 October, 2009

READ MORE: India | Regulation | GSM | UMTS | WiMAX

Predictably, there was strong focus on India at this week's ITU Telecom World event in Geneva, given the potential of that market to become one of the world's largest in terms of mobile growth and emerging technologies like WiMAX. But grand plans to revolutionize the creaking Indian infrastructure via wireless build-out are persistently delayed by regulatory delays, and now it seems the sale of 3G licenses will not hit its (already much postponed) date of December 7 after all.

There have already been hitches for the WiMAX auction, which is scheduled to run immediately after the 3G sale, with the Department of Space forcing the government to take 2.5GHz licenses off the table for now and offer only 2.3GHz. Now it seems neither auction may take place this year, with the Department of Telecom falling behind on its schedule, according to local press reports.

According to a revised timeline published in September, the DoT was due to provide revised Information Memorandum (IM), detailing full rules and payment methods, to potential bidders by September 29, but this has yet to materialize, according to the Economic Times. And this is only the first of a full 10 steps, including a mock auction, that must be completed before the 3G sale can kick off - suggesting this will not happen until 2010. Telcos would likely be given at least 10 days to study and respond to the IM, and so, even if the memorandum were issued today, they would not have time to be ready for the pre-bid conference, originally planned for October 12. The delay seems to be down to a slower than expected process of mapping available 3G spectrum in the different telecom circles. The DoT is blaming the Department of Defense, which will have to release two 10MHz blocks of 3G frequencies and one GSM block immediately to give the government sufficient spectrum for its plan of licensing five 3G carriers per circle.

Although state-owned telcos BSNL and MTNL are already deploying 3G and WiMAX, having gained early access to their spectrum, privately held rivals may have to put their plans back again. Mobile market leader Bharti Airtel had said it would launch 3G in October 2010 provided the auction took place by early December.

This leaves the focus plainly on GSM services, where competition is rising with the entry of new licensees, and where spectrum availability is rapidly outrunning booming demand. However, Bharti's CEO Manoj Kohli told a press conference this week that he had no intention of entering a price war with its new 2G rivals, many of which are cutting call charges aggressively in an already price sensitive market (making it even more crucial for existing cellcos to be able to move to higher value 3G and 4G services and new offerings such as web apps for business).

"Bharti does not react to competitive initiatives," he said. "We will pursue our own strategy" - which will include exploring opportunities abroad. He argued that the new license holders had "nothing but tariff to offer", and that operators supporting both GSM and CDMA networks, like close rival Reliance, did not have "a viable business model". The day before, Reliance had slashed call charges, hinting at a new tariff war. It will now charge just INR0.50 (one US cent) per minute for local and national long distance calls, following similar moves by Vodafone Essar (and even Bharti has some INR0.50 deals). Average Indian tariffs are under two US cents per minute for local calls and three cents for long distance.

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