India was set on Friday to join a handful elite of nations offering third-generation (3G) mobile telephony services – as the government announced the auction of slices of spectrum to offer the high-value services which give the industry a chance to earn higher revenue per user.
<b1>State-owned Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL) will get a headstart in offering the services expected next year to bring high-speed Internet to your palmtop. Analysts say the services are likely to be affordable in a price-conscious market.
The policy guidelines signal big business for global players and a revenue opportunity for the government, which is expected to net Rs. 30,000 crore to 40,000 crore from the 20-year licences.
“Users can expect more contract based subsidised, and hence cheaper, 3G handsets from service providers and we estimate that by 2012 every fifth handset in India will be 3G enabled,” said Madhusudan Gupta, analyst at industry research firm Gartner.
All players that have or are eligible for a Unified Access Service (UAS) licence can bid for spectrum. The government has set a reserve price of Rs. 2,020 crore for a pan-India licence. Categories have been created for regional licences.
The reserve price for a block of spectrum for Mumbai and Delhi and Category-A zones will be Rs.160 crore and for Kolkata and Category-B Rs 80 crore and for Category-C Rs 30 crore.
"We have about 60 MHz (megahertz) of spectrum available with us. Except for Delhi and Mumbai, at least 2 to 5 operators can be accommodated right now in many circles while in others it will depend upon the availability of radio waves in the near future," Telecom Minister A. Raja said.
MTNL and BSNL have been allotted the spectrum right away, but they must eventually pay the same amount as the highest private bidder.
“This will give the state owned players a marginal advantage over private players and they should be able to roll out the services before private players,” said telecom analyst Mahesh Uppal.
“The government’s plans to allocate additional spectrum should ensure the fullest possible breadth of competition in 3G services,” said T.V. Ramachandran, Director General, Cellular Operators Association of India (COAI).