The Delhi High Court on Monday refused to put a stay on the allocation of spectrum to CDMA telecom players seeking to diversify into GSM lines in the latest snub to incumbents such as Bharti Airtel and Vodafone, who are trying regulatory lobbying to stall what could be mighty competition.
GSM operators had challenged telecom tribunal TDSAT’s decision to lift the stay on spectrum allocation to those applicants who have the licence but did not have the startup spectrum to roll out services. The applicants includes CDMA leader Reliance Communications which is waiting to get spectrum for dual technology use under the Universal Access Service Licence policy.
Ram Jethmalani, the lawyer for GSM operators Bharti Airtel, Vodafone Essar, Idea and Spice, told the court that decision to allocate GSM spectrum to CDMA operators was a big scam and needed a police enquiry and called for an urgent hearing.
The appearance only opened up a new front in the battle in which GSM players have played hard ball in a Department of Telecomunications (DoT) panel, in addition to approaching TDSAT and lobbying the government for a group of ministers.
While they made no headway, they could be gaining as networks and subscribers roll out on the ground until such time as competitors such as Reliance and Tata arrive to take them head-on.
The GSM players did not agree on the spectrum allocations criteria of two panels, one under Telecom Engineering Centre and another under DoT official R Bandhopadhya. Now they want the Department of Telecommunications to refer the subscriber linked criteria back to the telecom regulator TRAI.
India’s target is to achieve 500 million subscribers by 2010.
As the growth rate is expected to peter down after that, telecom players are jostling to maximize market share before that, industry analysts say.
“Looking at the Indian market which has a population with large disparities in the spread of income, rate of growth may slow down after the penetration of 40 to 59 per cent of the market which would be about 50 million subscribers,” says Prashant Singhal of Ernst&Young.
GSM operators like Airtel, Vodafone Essar would be the most vulnerable with the entry of new players. Even one player with deep pockets will impact the profits of the players. With 7 to 8 million mobile subscribers being added every month, these operators are making huge profits. But with more competitors being added, their return on investment may not come down, but their rate of growth may definitely come down.