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3G/HSPA

India Prepares for 3G Rollout

India's telecom industry is gearing up for the rollout of 3G networks, with the government aiming to have operators launch services by the second half of 2007.

The Telecom Regulatory Authority of India (TRAI) has issued recommendations to the Department of Telecom for the allocation and pricing of spectrum, suggesting it should be issued in three bands: 450 MHz, 800 MHz, and 2.1 Ghz, with the first blocks of spectrum becoming available for auction in six to nine months.

It says five GSM operators should receive spectrum in the 2.1 GHz band; the country’s two CDMA operators, Reliance and Tata, should receive spectrum in the 800 Mhz band; and one additional operator should get spectrum in the 450 Mhz for CDMA.

TRAI recommended a three-tiered pricing structure -- 150 million rupees (US$3.27 million) in smaller towns and cities, 400 million in secondary cities, and 800 million rupees for major metros including New Delhi and Mumbai.

The regulator says that 3G should be viewed as a standalone service, to avoid the piecemeal allocation of spectrum that has plagued the rollout of 2G networks. It also suggested that operators be required to roll out at least 10 percent of their networks in rural areas within three years.

The recommendations have stoked the flames between GSM and CDMA operators, since at auction CDMA operators would be asked to match the second highest bid of the GSM operators.

"This is grossly unfair and incorrect," T.V. Ramchandran, director general at the Cellular Operators Association of India , said in a statement. "It should be noted that 800 MHz spectrum is far more valuable than 2.1 GHz because of its far higher propagation characteristics.

"On the whole, the TRAI recommendations are rather slanted in favour of CDMA and disadvantageous to GSM."

Bharti Airtel Ltd. (Mumbai: BHARTIARTL), a GSM operator, issued a statement to the effect that, although "we are delighted that the regulator has recommended a comprehensive approach" to 3G spectrum allocation, "the reserved price... seems very high, even if we were to consider the limited available spectrum... We appeal to the DoT to review and lower the threshold recommended."

On the other hand, Tata Teleservices Ltd. , the country's second largest CDMA carrier, claimed "TRAI’s recommendations are fair to all participants in the sector and are progressive in nature." CEO Darryl Green said in a statement: "We are happy that the regulator has maintained an evidently technology-neutral approach. The recommendation on pricing and auction of spectrum clearly establishes that spectrum is recognised as a scarce resource and must be utilised efficiently."

Last month, the Department of Telecom allocated a limited amount of 3G spectrum to the country's top four GSM operators -- Bharat Sanchar Nigam Ltd. (BSNL) , Mahanagar Telephone Nigam Ltd. (MTNL) , Hutchison Essar , and Bharti -- to run indoor technical trials to evaluate equipment. The trials are set to last no longer than a month.

Reliance Communications Ltd. (RCom) , which is planning to roll out a GSM network alongside its national CDMA infrastructure, has asked the government if it too can be included in the trial. (See Reliance Squeezed by Spectrum Crunch.)

Equipment vendors are already preparing for the boost in business that will come from carriers building out their networks for 3G. Last Monday, Qualcomm announced it has granted a 3G patent license to HFCL to develop, manufacture, and sell CDMA2000 subscriber units and modem cards. (See Q'comm Grants HFCL 3G License.)

And around 25 percent of BSNL's highly anticipated network expansion contracts, scheduled to be awarded in the coming weeks, will be set aside for 3G in the first year. (See BSNL Sizes Up Five Bidders.)

If India's rollout goes as planned, it could even reach widespread 3G adoption before China, where the prospect of a large-scale 3G rollout has had vendors salivating for several years. (See China's 3G Gets Green Light.)

— Nicole Willing, Reporter, Light Reading

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