Updated : DoT Might Reconsider Directives to allow Auctions for the 800MHz band for 3G CDMA
Updated (August 18, 2008) :
Department of Telecommunications has finally decided to review its guidelines if it feels that the current guidelines lead to monopoly in the current CDMA sector in India. A senior official was quoted,
“If there is adequate representation and if the contention is that an operator would have a monopoly then we will make sure that there is a level playing field and will revise the guidelines,”
The official justified that the guidelines were prepared with the help of the recommendations given by TRAI when there were only two operators int eh market.
The guidelines also state that the price of the 1.25 MHz block available in the 800MHz band shall be one-fourth of the price of auction of the 3G spectrum in the 1800MHz band.
Original Post :
WATBlog had earlier reported of the CDMA operators being unhappy because of DoT postponing the rollout of 3G services for the CDMA technology. Well, despite DoT finally coming up with policies regarding 3G for CDMA, the operators hardly look impressed.
Last Friday, the government had announced its plans to auction 3G licenses, including the 2.1 GHz band spectrum, in the coming months. However, according to the policy, although the GSM operators need to bid for the 3G spectrum, CDMA operators can seek only one spot in the 800MHz, which is the most efficient and cost-effective frequency band for 3G services.
Why only one band in the 800MHx spectrum?
Well, CDMA players always have the option of bidding for 3G frequencies in the 450 MHz and 1900 MHz bands. However, since CDMA operators already offer 2G in the 800MHz frequency, the migration to 3G would be easy. The 450MHz band is largely for rural India and there is no idea when 1900MHz band would be made available.
Moreover, Economic Times also suspects that it might take over an year for the defense forces to free additional frequencies in the 800MHz band.
What is the latest DoT directive, on 3G allocation?
The government has allowed allotment of 1.25 MHz each to CDMA players based on subscriber base of respective players.
What it means is that only one CDMA player can get the most coveted 800MHz spectrum and that will be decided on the basis of their subscriber base.
What’s TRAI’s problem in this?
Telecom Regulator TRAI feels that such a criteria for allotment is against the principle of equity. TRAI Chairman Nripendra Misra said, in a letter to Telecom Secretary Siddhartha Behura,
“As various service providers have been given licences in different areas at different periods of time, the Authority feels that keeping the subscriber base as the criteria for deciding the priority of allotment shall be against the level playing field and the principle of equity.
Therefore, the Authority suggests that in order to ensure equity, level playing field and optimum pricing in allotment in 800 MHz band, the DoT may consider the auction route“
DoT’s decision was also opposed by the GSM operators saying the move would give undue advantage to CDMA operators since the GSM operators themselves have been asked to go through a global auction to be able to purchase spectrums.
Such a directive also, indirectly, gives away the spectrum to Anil Ambani’s Reliance Communications, which commends the highest subscriber base in all circles, except Delhi and Maharshtra. This gives them quite a lot of advantage over competitors like TATA Indicom, BSNL and MTNL, including the latest entrant, Virgin Mobiles.
The Solution?
As already suggested by TRAI, the best way out should be to allow every CDMA player to bid for the spectrums, just the way it’s been decided for the GSM operators.
“Spectrum in the 800 MHz should be auctioned among applicants with the highest bid price received for the auction of 2.1 GHz spectrum as the reserve price. The subscriber base of the CDMA network of a service provider in any service area is a result of different environments, and cannot muster the test of fairness if it was to become the basis of priority.”
How is Reliance Infocom reacting to this?
RComm has been enthusiastic about it’s GSM arm for quite a few months now. According to TelecomTV, Reliance Communications is planning to issue a tender worth US $500 million for the supply of 3G infrastructure. Although RCom currently occupies only 8 GSM circles, it does plan to extend its reach pan-India, in very near future.
What does WATBlog think about the whole massacre?
It might be very politically incorrect to suggest that Reliance might have a hand behind such a decision but I am inclined to think so. After all, there’s hardly been any directive from either TRAI or DoT, in the past, that had favored any single operator so heavily! Moreover, Reliance has the reputation of hard-nose marketing as well as a few not-so-trustworthy cases like routing international calls as domestic ones, CDMA users running up huge bills for no justifiable reason and then getting the bills waivered overnight!
Coming to the directive in itself, it makes perfect sense to ask`every CDMA operator to actually bid for the spectrums, same as their GSM counter parts. It helps to create a level playground and also encourages healthy innovation in the industry and technology alike.
With the launch of 3G iPhone on August 22, it is going to be a very interesting war to watch!
Sources consulted :
- TRAI wants DoT to review 3G policy – The Hindu Business Line
- CDMA cos too must bid for 3G – Economic Times
- Reliance plans $500 million 3G tender – TelecomTV
- DoT open to auctioning 3G spectrum for CDMA too – Economic Times
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