As India, the world’s fastest growing mobile phone market, prepares to add another 270 million mobile users by 2010, shoppers will have at least two new service providers to choose from to add to market leaders such as Bharti Airtel Ltd and Reliance Communications Ltd.
The government formally issued approvals to some nine applicants for offering phone services. Reliance Communisations, late Friday, said it has been granted spectrum rights to start GSM networks all across the country.
New applicants including Unitech Ltd, S Tel Ltd and Datacom Ltd, a subsidiary of consumer electronics firm Videocon Industries Ltd, were among those who got the nod to start offering phone services. Others who were already offering phone services using the CDMA, or code division multiple access, technical standard, including Tata Teleservices Ltd and Shyam Telelink Ltd, also got the approval to offer services based on the more popular GSM platform.
With almost 230 million mobile phone users, India has been adding about eight million subscribers every month who have among the lowest calling rates in the world at around 78 paise a minute.
Bharti Airtel, the country’s biggest operator by subscribers, is adding almost two million new customers every month and has said rates could go as low as 40 paise a minute in coming months.
Indeed, it is likely to be a phone user’s market for a while, in terms of choices and offers.
Arvind Subramanian of consultant Boston Consulting Group says new phone companies will have to explore niche customer segments and “they may find it really hard to cross 10-15 million subscriber base over the first few years of becoming operational.”
And existing players, such as Reliance and Tata Teleservices, who have been offering phone services using CDMA technology, “will now look to acquire high-end mobile users with their GSM-based offerings,” Subramanian added.
Networks that run on global system of mobile communications, or GSM, account for three among four wireless customers in India and this subscriber base is expanding at nearly 4% every month.
All the new applicants and existing operators will now have to line up for radio spectrum at the wireless planning and coordination (WPC) wing of the department of telecommunications, or DoT, which allocates spectrum on a first-come-first-serve basis, determined by the date on which the companies applied for new telecom licences, subject to other approvals.
Going by the current rules, existing operators such as Bharti Airtel, which are seeking additional spectrum, will be given the priority, however, “most of the companies do not qualify for additional spectrum after DoT enhanced (the) subscriber base required to be eligible for more spectrum,” said a regulatory officer at one of the telecom firms, who did not wish to be identified.
Next on DoT’s priority will be phone firms, such as Idea Cellular Ltd and Maxis Aircel Ltd, who want spectrum to expand their services to new areas such as Delhi and Mumbai.
“After we meet the requirements of these existing operators, we will look at phone companies who have applied for offering services using a different technology platform,” added a senior DoT official, who did not wish to be identified. Reliance, Tata Teleservices and Shyam Telelink, the operators using CDMA technology currently, qualify for this slot. “We presently have around 20MHz of spectrum, apart from what we expect to get vacated by the defence (sector),” the official added.
“The wireless planning and coordination wing will be allocating the spectrum to RCom, Vodafone Essar Ltd, Idea Cellular and Maxis Aircel by late tonight or tomorrow,” said a senior WPC official who didn’t want to be identified.
After this, the DoT will consider new aspirants, such as Unitech and S Tel, provided they finish the formalities of obtaining a ‘no-dues’ certificate from the government, and also furnish required bank guarantee to back their business plans.
Almost 46 companies had applied for new telecom licences after the government accepted regulator Trai’s recommendation of having no limit on the number of companies to be allowed for offering phone services in the country.
Of these, only 20 or so applicants could make it to the department’s shortlist, based on 25 September deadline it had set.
For instance, S Tel, which had applied for offering phone services across 21 states, was given approval for offering services in the six Indian states, as it had applied for licences in 15 states after 25 September deadline.
Meanwhile, the Cellular Operators Association of India, which had already filed petitions in the telecom tribunal and the Delhi high court, approached the high court again on Friday, challenging allocation of radio spectrum to CDMA companies such as Reliance. The court declined to stay any allotment of spectrum and set 14 January for its next hearing on the issue.