New Delhi: The department of telecommunications, or DoT, has decided to auction licences for third generation, or 3G, phone services running on the so-called code division multiple access standard, a change in policy that means firms such as Reliance Communications Ltd, or RCom, and Tata Teleservices Ltd will have to bid for spectrum they were previously guaranteed of getting.
RCom, the second-ranked mobile phone firm by customers, and Tata Teleservices, placed sixth in the industry, are the only operators with major CDMA operations in India, where the rival GSM platform dominates.
Early this month, the government announced plans for a global auction of 3G licences. At that time, only two CDMA licences were thought to be available, so the plan was that RCom and Tata would pay a pro-rata price based on the outcome of the auction, communications minister A. Raja said on Thursday, adding spectrum was available earlier than thought. “Now one more operator has been permitted. So again, we consulted Trai (Telecom Regulatory Authority of India) and took a decision that it can also be auctioned.”
Making waves: Union telecommunications minister A. Raja. Photograph: Subhav Shukla / PTI
CDMA and GSM mobile services are provided on different bandwidths. The government has said the global auction for GSM 3G spectrum would end by December. Current domestic operators and foreign firms with prior experience services are eligible to bid.
RCom has some GSM subscribers, and is expanding its network, but at present more than 80% of its customers are on the CDMA platform. Chairman Anil Ambani has said Reliance would consider providing 3G both on GSM and CDMA.
Tata Teleservices has acquired licences for second-generation GSM mobile, but is yet to start services.
A telecom expert said that the government’s decision to auction 3G spectrum for CDMA players was aimed at resolving a problem in the guidelines.
“You might see the prices (in auction) going up, but it all depends on how the auction process goes and how tough the competition is,” said Sourabh Kaushal, a telecom analyst with research firm, Frost and Sullivan.
State-run phone firms Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd have already been guaranteed a 3G licence provided they match the winning GSM bid.
(Mint’s R. Jai Krishna contributed to this story.)