New Delhi: India’s department of telecommunications (DoT) plans to allow firms including foreign ones that do not have operations here to bid for so-called third generation, or 3G, wireless services, overruling a recommendation by the country’s telecom regulator that only those firms already in the business be allowed to participate in 3G auctions.
“We want more players to compete in the Indian 3G services market,” said a senior DoT official, who did not wish to be named. “We are currently examining Trai’s inputs, but our rationale for including foreign companies (that do not operate here currently) was to provide more options to the users, and better competition in the market.” Trai is short for the Telecom Regulatory Authority of India.
3G services enable high-speed data access on mobile phones allowing users to surf the Internet or download content, including music and video, at speeds faster than those supported by current cellular technologies. If operators subsidize 3G phones, research firm BDA China Ltd has predicted that there could be around 30 million customers for the service by 2010.
Analysts tracking the sector say they never saw a convincing reason as to why Trai did not want new companies to bid for 3G spectrum. “The incumbents will anyway have an edge since any new, or foreign company will need few months to set up a network,” said Romal Shetty, who heads telecom practice at KPMG.
Trai believes allowing new operators to bid could lead to high and unsustainable 3G auction bids.
“The authority is also apprehensive that in case an outsider entity is allowed to bid for the 3G spectrum then in order to get into the Indian market, some of these companies waiting to get the (universal access service) licence may bid very high for the 3G spectrum,” Trai wrote on 25 April to DoT.
As first reported by Mint on 7 February, the Indian exchequer could earn some Rs20,000 crore, or just more than $5 billion, when the government auctions radio spectrum to five phone firms offering 3G phone services in the country.
Meanwhile, “foreign telecom firms such as AT&T Inc. and Deutsche Telekom AG are keen to have a share of the Indian 3G market,” said an analyst at a research firm who is advising several foreign operators on their entry strategies and cannot be identified as he is not authorized to give any media interviews. “Some of these companies are also simultaneously working on gaining an entry by acquiring an existing operator, or a new telecom licensee.”
In November, Union information technology and communications minister A. Raja said the Indian government would auction up to 25MHz of frequency required for delivering 3G phone services, allowing up to five companies to offer such services.