Delhi, Mumbai, unlikely to see new cellphone cos

Delhi, Mumbai, unlikely to see new cellphone cos
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First Published: Thu, Jan 17 2008. 12 16 AM IST

Updated: Thu, Jan 17 2008. 12 16 AM IST
Real estate company Unitech Ltd and consumer goods maker Videocon Industries Ltd will have to wait for the government to free additional radio spectrum currently with the defence forces before they can roll out services in India’s most lucrative telecom markets.
Barring that allocation of spectrum, which looks unlikely any time soon, all new phone services aspirants will not have access to radio frequency in Delhi, Mumbai, Chennai and in Maharashtra though they are likely to get space in other markets including Kolkata, Karnataka, Tamil Nadu, Bihar and West Bengal.
Radio spectrum, an increasingly scarce resource, is the carrier of voice signals between wireless devices such as mobile phones. One of the reasons for falling quality of service in India is the lack of adequate spectrum, complain phone firms.
India has set aside up to 35MHz of spectrum for GSM phone services, which has been already used in Mumbai and Delhi, India’s two largest phone markets, by operators such as Bharti Airtel Ltd and Vodafone Essar Ltd, who began services over a dozen years ago.
India’s defence forces are expected to vacate around 20MHz of airwaves by March, most of which will go to telecom service providers such as Idea Cellular Ltd, Maxis Aircel Ltd, Reliance Communications Ltd, Tata Teleservices Ltd and Vodafone Essar, which are ahead in the queue for spectrum by virtue of applications put in as early December 2006.
The released spectrum will just about be enough for spectrum requirements of these firms.
Indian telecom rules also mandate the release of 4.4 MHz start-up spectrum for new operators. If this amount of spectrum is allotted to operators in each licensed area, it will be enough for just four operators which, together, will use up 17.6 MHz, leaving 2.4 MHz, which is inadequate for a new operator.
Since Vodafone and Maxis do not have licences in common circles, they will together use up just 4.4 MHz across the country.
Reliance and Tata Teleservices, who plan pan-India operations, will each use up another 4.4 MHz, as will Idea Cellular.
For aspirant telecom firms in licensed areas, such as Jammu and Kashmir, the northeast region, Punjab and Haryana, there is enough spectrum available, but they also have to contend with restrictions on the use of frequency since these are states bordering other countries.
Senior officials at India’s Department of Telecommunications concede there was a spectrum crunch. “It would be very difficult to accommodate new applicants during this round of allocation,” said a senior department official who didn’t want to be named. “While we do not know when 20MHz would come from the defence, there’s hardly any spectrum to be allocated in border states of Gujarat, Jammu and Kashmir and Rajasthan because defense use in such areas is very high.”
While Reliance and Tata are existing phone firms that offer services on code division multiple access, or CDMA technology, Maxis Aircel and Vodafone are looking to expand their GSM-based services.
Networks that run on GSM, account for three among four wireless customers in India and this subscriber base is expanding at nearly six million new users every month.
Still, some analysts say there could be some areas where new entrants, such as Unitech and Videocon, could receive spectrum rights. “However, they may have to wait longer to receive nationwide spectrum,” said a 11 January Citigroup report.
If and when the defence authorities vacate radio spectrum in excess of the proposed 20MHz, “as many as eight new entrants can be accommodated, depending upon how much additional spectrum is allocated to existing operators,” said Varadharajan Sridhar, professor of Information Management at the Management Development Institute in Gurgaon, adding the 1800MHz band technically has up to 75MHz of spectrum for GSM services.
As of now, some 20 applicants, such as STel Ltd, Shyam Telelink Ltd, Swan Telecom Ltd, have made it to a department list of phone firm aspirants, nine of which have been invited to procure licences with no promise of spectrum.
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First Published: Thu, Jan 17 2008. 12 16 AM IST