India Edges Closer to 3G

India, after years of waiting, looks mighty close to the award of 3G licenses and spectrum, a move that will catapult the mobile-mad nation towards a broadband economy. (See India's Going Mobile! 52M New Subs in H1.)

The country's Department of Telecommunications (DoT) today issued its guidelines for the "auction and allotment of spectrum for 3G services," a process that had been anticipated, and expects to see 3G services available to the public in 2009. (See India Plans 3G Auction.)

The auction is expected to start in about two months' time and be completed by the end of this year.

[The news comes only days before Light Reading hosts a Webinar, Preparing for Broadband 2.0, looking at the challenges facing the Indian telecom sector as it evolves toward a high-speed, data-services-rich market. The Webinar is free and is being held during the Indian working day.]

India's operators, which provide multiple services in multiple telecom "circles" around the country, have been preparing for this move for some time. (See India Prepares for 3G Rollout and India on Edge Over 3G.)

The nation's two incumbent, state-owned carriers, Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) , don't have to enter the auction process, because they are both guaranteed 3G spectrum -- but at a price.

The DoT has allow any holder of a UAS (Unified Access Service) license, or any company that "fulfills the eligibility criteria for obtaining" a UAS license and which has "previous experience of running 3G telecom services," to bid for 3G spectrum. That opens the door for overseas service providers that can find a local partner (overseas companies can own a maximum 74 percent stake in an Indian operator) to bid in the auction.

For the country's GSM operators looking to deploy WCDMA 3G networks -- Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Vodafone India , Idea Cellular Ltd. , Aircel Ltd. , Reliance Communications Ltd. (RCom) , Spice Telecom , and BPL Mobile -- spectrum is being auctioned in blocks of 2x5MHz in the 2.1GHz band, with between five and 10 blocks being awarded in each service area (though fewer than five blocks may be awarded if available spectrum is scarce). Each bidder may hold only one block of 3G spectrum per service area, and the licenses will run for 20 years.

The auction of spectrum in each service area will be halted when the number of bidders equals the number of spectrum blocks available.

The DoT says MTNL will be allocated one block of spectrum in each of its two current service areas, New Delhi and Mumbai, while BSNL will be allocated blocks in the other service areas around the country. However, they will be required to pay the same amount for their spectrum as the highest bidder in each of the service areas, as will all companies awarded 3G spectrum.

However, the companies with the highest bids when each auction process is halted get to choose their spectrum blocks first, followed by each remaining bidder in decreasing order of the size of their bids.

The reserve price for each block of spectrum depends on the service area. For Mumbai, New Delhi, and the Category A service areas (see our map of India's service circles as a guide) the reserve price is 1.6 billion Indian rupees (US$37.7 million). For Kolkata and the Category B circles it is INR800 million ($18.9 million), and for Category C circles (mainly rural areas) it is INR300 million ($7 million).

For India's CDMA operators -- Reliance Communications, Tata Teleservices Ltd. , Sistema Shyam TeleServices Ltd. , and HFCL Infotel Ltd. -- spectrum is being auctioned in the 450MHz, 800MHz, and 1900MHz bands.

— Ray Le Maistre, International News Editor, Light Reading

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For more on this topic, check out the coming Light Reading Webinar: Preparing for Broadband 2.0.

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Interested in learning more on this topic? Then come to Broadband 2.0: Making the Business Case, a 2-day roadshow that will provide attendees from among India's fixed and wireless carrier communities with an exclusive and intensive overview of how broadband wireline and wireless services can be enhanced to improve ARPU, ROI, and churn. The event will be staged in New Delhi on September 10 and Mumbai on September 12.

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