Indian 3G auction now set for January 14

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Indian 3G auction now set for January 14

By CAROLINE GABRIEL

Published: 26 October, 2009

The latest date set for India's much delayed 3G spectrum auction is January 14, and though this is about as definite as snow at Christmas, the growing urgency of the need for more spectrum and new services may push warring government departments to come to a truce and actually hit this deadline.

The Department of Telecom (DoT) has set a revised schedule for the auction, but doubt remains, because its dispute with the Department of Defense, which still controls part of the spectrum on offer, is unresolved - and it was this battle that caused the last postponement, from December 7, announced last month.

In its latest Information Memorandum, the DoT says the 3G auction will start on January 14 2010 and the 2.3GHz WiMAX sale will begin two days after 3G bids close. There are hints of a breakthrough with the Defense Department, which has not yet vacated certain frequencies - analysts think the DoT must be close to a settlement, to have announced such a definite date for the postponed auction. Only last week, Communications Minister A Raja warned the sale could be delayed well into 2010 if the dispute were not settled quickly.

The government had planned to issue a total of five licenses for each of India's 22 telecom circles, of which one will be reserved for one of the state-owned operators, BSNL and MTNL, which have already been given access to their frequencies, but will have to pay the price that emerges from the auction.

If the stalemate with the Defense Department is not settled in time, some key circles will only have two licenses auctioned in January, with others to come at a later date. Regions affected would include capital Delhi and Gujurat. Where the DoT has 20MHz available in the 2.1GHz 3G band, it will sell four blocks of 2 x 5MHz spectrum in addition to the bands reserved for MTNL or BSNL. Where less is available, the spectrum will be "allocated" in blocks of 2 x 5MHz as it is freed up.

The DoT confirmed that the reserve price for a national 3G license has been set at INR35bn ($751.2m). The base price for individual circles has been set at INR3.2bn for each of the seven category A circles, INR1.2bn for the eight category B circles, and INR300m for the category C circles. Foreign firms will be entitled to bid for 3G licenses through an Indian subsidiary, but only if that subsidiary is at least 26% owned by an Indian firm, and such deals will need a license and government clearance.

Meanwhile, as the private telcos chafe at the bit, the two state operators are pushing ahead with their 3G and WiMAX deployments, and looking to maximize the efficiency of their spectrum holdings (still considered far too small to support truly advanced mobile broadband services) with new techniques. Both are very interested in using femtocells to enhance capacity and efficiency in dense urban areas, especially business centers, and to improve indoor coverage and offload traffic from macro networks that, if the 2G experience is anything to go by, will become overstretched rapidly. BSNL has been experimenting with the tiny base stations for 3G and WiMAX, and now MTNL, which owns the franchises for the Delhi and Mumbai metro areas, is seeking bids for W-CDMA femtos.