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New Delhi: The slower-than-expected evolution of the 4G ecosytem in India could lead to a sticky situation for telecom companies that won 2300MHz band spectrum in the 2010 auction.

The Cellular Operators Association of India (COAI), the industry lobby group that represents telcos that use the GSM technology platform, has written to the department of telecommunications (DoT) asking for an extension in the deadline for roll-out of 4G networks.

In 2010, six private operators and the two state-run telcos collectively paid almost 40,000 crore for spectrum in the 2300MHz band to start 4G networks using the so-called TDD LTE (time-division duplex long-term evolution) technology standard.

“Considering the difficulties in rolling out the LTE TDD networks, DoT is requested to review and relax the roll out obligations and extend the time lines for meeting the roll out by additional five years to enable the operators to meet the roll out obligations as per the NIA/licence amendments," Rajan Mathews, director general of COAI, wrote in a letter to DoT last month. Mint has reviewed a copy.

Ahead of the 2010 auction, the notice inviting applications, a document setting out the rules and regulations governing the spectrum and its sale, said successful bidders had five years to cover 90% of metro circles and 50% of rural SDCAs (short distance charging area) in the rest of the country, effectively by August 2015. SDCA is defined as an area where 50% of the population lives in rural areas.

Earlier this year, in the February spectrum auction, a number of telcos bought airwaves in the 1800MHz band to start 4G services using the FDD LTE (frequency division duplex-LTE) standard, which has ostensibly developed much faster than the rival TDD LTE standard. As a standard rule, all spectrum bought in the auction is valid for 20 years.

COAI said the main reason for the delay by operators in launching 4G services is the delay in the development in the device and network ecosystem. So far, only Bharti Airtel Ltd has been able to launch TDD LTE-based 4G services in four telecom circles, and able to build a subscriber base equal to 0.5% of its mobile subscriber base in the area covered; around 150,000 subscribers have got LTE connections.

COAI went on to list the challenges of rolling out networks in the 2300MHz band, including the high propagation loss (referring to the need for more towers and in building boosters compared with other bands); stringent radiation norms and right-of-way issues that are leading to a shortage of sites for towers.

Mathews also listed a number of procedural and process-related delays by the government as a challenge to the faster roll-out of 4G networks using the 2300MHz spectrum.

According to COAI, globally only 79 networks, out of 536 deploying 4G, are using the TDD LTE platform, and are still in the trial or testing stage. On the device side, COAI said that globally, there are only 361 devices supporting TDD LTE in the 2300MHz band, out of 1,889 LTE devices; in comparison, there are 3,900 3G devices and more than 5,000 2G devices. In India, there are only four TDD LTE handsets for the 2300MHz band.

“It is clear that the ecosystem is not yet developed for 4G and hence the operators may not be able to meet the roll-out obligations," said Hemant Joshi, a partner at consulting firm Deloitte Haskins and Sells Llp. “It would be prudent to give extension and allow the optimal ecosystem to develop so that relevant regional applications and content can be provided to the end-users. This could strain the cash flows and profitability as the debt or equity, taken to fund the spectrum and the roll-out, would need to be serviced without revenues from such services."

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