New Delhi: India’s efforts to run third generation (3G) telecom networks have run into a first generation problem—of people trying to sell what they don’t as yet own—and the result could be yet another delay in the process of issuing licences for these data-rich services.

On 24 October, the department of telecommunications (DoT) had issued a so-called revised information memorandum (IM), a sort of all-you-wanted-to-know-about-3G document for potential bidders. The problem? It turns out the document promises spectrum that is not DoT’s to hand out.

Graphics: Sandeep Bhatnagar / Mint

The ministry of defence (MoD) has pointed out this and other discrepancies in a letter to DoT that has been reviewed by Mint. India’s Armed Forces occupy a significant amount of spectrum, or airwaves, needed to offer telecom services and DoT and MoD had in May worked out a way by which the latter would vacate some of this. This made spectrum available for 3G telecom services and broadband wireless access.

The letter from MoD claims DoT has included in IM the spectrum that has not been released and was not discussed between the two. It adds that the memorandum also doesn’t include spectrum already vacated by the Armed Forces.

When asked of the discrepancies, a senior official in DoT admitted that MoD had sent it a letter, but declined comment on the contents. “These issues are being looked into," he added, speaking on condition of anonymity.

The 3G networks will have higher capacity for voice calls as well as provide services such as faster data and video streaming on mobile phones. BWA (broadband wireless access) spectrum is necessary for rolling out WiMax services to significantly increase broadband penetration, especially in far-flung areas where cables cannot reach. WiMax, short for Worldwide Interoperability for Microwave Access, is a telecommunications technology similar to Wi-Fi, or wireless fidelity, a standard that helps handheld devices and laptops access the Internet. WiMax is faster and offers longer range.

The government hopes to garner as much as Rs35,000 crore from the auction of 3G and BWA spectrum, a move that could help it bridge the fiscal deficit, which is estimated to be 6.8% of GDP for 2009-10. Auctions for both are scheduled for 14 January.

A delay in the process, which now seems likely, will require telcos to replan their strategies for roll-out of 3G services.

“Most of the operators have already got their roll-out plans in place, given that they would have to start deploying the valuable spectrum almost immediately," said a Mumbai-based analyst working with an international brokerage firm, who did not want to be identified because he is not authorized to speak to the media.

Going by MoD’s letter, the additional spectrum vacated by the Armed Forces would mean four 3G slots for GSM players in Delhi, Uttar Pradesh (West) and Himachal Pradesh in line with all other circles; two GSM-based slots in Rajasthan and the North-East; and three in West Bengal.

The government had earlier decided to auction four slots (to accommodate a total of four operators) of 5MHz 3G spectrum for GSM players in all circles in the country. India is divided into 22 mobile operating areas called circles.

In the October IM, DoT said there would only be two 3G GSM slots in Delhi and Gujarat, and none in Rajasthan and the North-East states (except Assam).

It also said only three operators could be accommodated in Himachal Pradesh and Uttar Pradesh (West), and one operator in West Bengal.

For CDMA operators, the memorandum said there was no 3G spectrum in Delhi, Mumbai, Maharashtra, Andhra Pradesh, Punjab and Rajasthan.

This also changes in the context of MoD’s letter, given that in each of these circles, the Armed Forces have vacated two slots of spectrum (10MHz). GSM and CDMA are rival technology platforms for mobile telephony.

The defence forces presently occupy huge amounts of both 2G (second generation) and 3G spectrum, but are expected to vacate the airwaves within the next three years on being given alternative optical fibre network.

The alternative network is being built by state-owned telcos Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd at a cost of almost Rs10,000 crore.

Earlier this year, in May, both the defence and telecom ministries signed an MoU, where the Armed Forces had agreed to release up to 45MHz of spectrum over a three-year period, of which 25MHz is for 3G services.