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3G spectrum may be limited

business Updated: Nov 02, 2008 20:42 IST
Manoj Gairola
Manoj Gairola
Hindustan Times
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The government is likely to allot 3G spectrum to only three private telecom operators in Delhi and Mumbai. The rest of the country may have five private players in 3G services. Bidding for spectrum is scheduled for January next year.

“Even though the availability of spectrum in 3G band is such that more players can be accommodated, we will have to keep some spectrum available for future growth of services,” union communications and IT minister A Raja told HT.

This means that competition for 3G spectrum will be tough in Delhi and Mumbai, which have the highest number of telecom players.

Delhi has six players — Bharti Airtel, Vodafone, Idea, Tata Teleservcies, Reliance Communications and Mahanagar Telephone Nigam Ltd (MTNL). Two more players Aircel and Swan have already been allotted spectrum for 2G services.

Therefore, by mid next year there will be eight players in Delhi offering cellular mobile services. Three more new players Datacom, Unitech and Loop Telecom are entitled for 2G spectrum in Delhi and Mumbai.

Similar is the story in Mumbai, where existing cellular service providers are registering saturation in subscriber growth.

Providing 3G services is a natural growth path for 2G service providers. Given a chance, all existing players will like to
provide 3G services. 3G services include high speed data services such as games, mobile TV and high speed Internet on mobile devices.

Two government-owned companies Bharat Sanchar Nigam Ltd (BSNL) and MTNL have already been allotted 3G spectrum without
auctioning. They are slated to launch services within this financial year.

Earlier, there were indications that the government may accommodate more players so that it may earn higher revenues.

The reserve price of spectrum for providing services throughout the country is Rs 2,200 crore. Auction of spectrum is scheduled to be held in January, 2009.

The existing economic slowdown is likely to have an impact on the biddings. Telecom operators may not bid aggressively for the 3G spectrum.

"Now there will not be any speculative bidding for spectrum,” said Akhil Gupta, deputy group CEO of Bharti Airtel. “Companies will bid rationally on the basis of business plans.”