India Watch: The Road to 3G

At last, India's mobile operators can submit their applications to be involved in the country's auction of 3G and BWA (broadband wireless access) spectrum, though according to reports no papers were filed on the first possible day, March 15.

Instead, according to The Business Standard, the country's major mobile players, including Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Reliance Communications Ltd. , Tata Teleservices Ltd. , and Vodafone India , are waiting until the last possible day, Friday, March 19, to submit their applications.

Of course, other operators might also apply. Aircel Ltd. might be a surprise bidder for a pan-India license, using the 84 billion Indian Rupees (US$1.84 billion) it gained from the sale of its mobile tower business to GTL Infrastructure Ltd.

Uninor has already made it clear it's not going to bid for pan-India license, though it, and other new entrants, are likely to bid for specific circles. Fierce bidding is expected in the metro service areas, known as "circles," which have more high-end customers with greater spending potential. (See A Guide to India's Telecom Market for a map of India's 22 telecom circles.)

The identities of the potential auction participants will be revealed when the ownership details of the initial applicants are published on March 23. Bidder ownership compliance certificates are due to be issued on March 26, and the pre-qualification of bidders will take place on March 30.

For those that qualify, a mock auction will take place on April 5 and 6, followed on April 9 by the start of the 3G spectrum auction. The separate auction for BWA spectrum, which is likely to be used for WiMax services, will start two days after the 3G auction has ended.

The successful bidders need to pay for their licenses within 10 days of the auction's end.

For those following the auction process, here's a reminder of the key details.

  • Spectrum will be auctioned in the 2.1GHz band (pairs of 5MHz blocks) for 3G/WCDMA, and in the 2.3GHz band (unpaired in 20MHz blocks) for BWA/Wimax.

  • The following can apply to bid for 3G spectrum: existing holders of a Universal Access Service (UAS) or Cellular Mobile Telephone Service (CMTS) license; any company with previous experience of running 3G telecom services either directly or through a majority-owned subsidiary; or any company that undertakes to obtain a UAS license through a New Entrant Nominee UAS Licensee, as set out in the Department of Telecommunications guidelines. This means new entrants and foreign operators are eligible to participate in the 3G auction, though any successful foreign operator must acquire a relevant license after the auction through an Indian company in which they hold an equity stake of at least 26 percent.

  • The following can apply to bid for BWA spectrum: existing holders of a Universal Access Service (UAS) or Cellular Mobile Telephone Service (CMTS) license; any holder of an ISP license; any company that undertakes to obtain a UAS license through a New Entrant Nominee UAS Licensee, as set out in the DoT guidelines; any company that undertakes to obtain an ISP license through a New Entrant Nominee ISP Licensee, as set out in the DoT guidelines.

  • There will be three slots of 2x5 MHz of 2.1GHz spectrum across 17 of 22 telecom circles made available in the 3G auction. One additional slot in each circle has already been allocated to state-owned operators Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) . In the remaining five circles -- Himachal Pradesh, Bihar, Jammu & Kashmir, West Bengal and Punjab -- there are four slots available in the auction (in addition to the spectrum already handed to BSNL/MTNL).

  • Two blocks of 20MHz spectrum will be awarded in each of India's 22 circles in the BWA auction. An additional block in each circle will be awarded to MTNL (in Delhi and Mumbai) and BSNL (in the remaining 20 circles).

  • Each participant can only bid for one slot of spectrum in each circle in each of the auctions, so that no one company can monopolize the new spectrum in any circle.

  • Successful bidders in the 3G auction will be allotted spectrum from September 1, 2010, while successful BWA bidders will get their spectrum immediately. All licenses will be valid for 20 years.

    For more details on the exact spectrum to be allocated, the minutiae of the auction rules, the reserve prices, and so on, check out the DoT's Notice Inviting Applications.

    — Gagandeep Kaur, India Editor, Light Reading

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