No 3G auction for CDMA players

Thomas K Thomas

New Delhi, Aug. 2 CDMA-based mobile operators can get third generation spectrum without having to participate in any auction.

The policy announced on Friday stipulates that CDMA operators including Reliance Communications and Tata Teleservices can seek one slot in the 800 Mhz, which is the most efficient and cost effective frequency band for 3G services as far as CDMA is concerned.

The catch, however, is that Communications Ministry has decided that spectrum in this band will be allocated to the operator with most number of subscribers in a circle.

4 players

There are 4 pan-India CDMA players at present – Reliance Communications, Tata Teleservices, State-owned BSNL and the new entrant Sistema-backed Shyam Telecom.

However, there are only two slots available in the 800 Mhz frequency band. Of these, state-owned PSUs MTNL and BSNL will get one slot, leaving space for only one more operator in this band.

According to the subscriber-related data (for June 2008) put up on the Web site of the Association of Unified Telecom Service Providers of India (AUSPI), which is the industry body for CDMA operators, Reliance Communications has the most number of subscribers in almost all the circles across the country except Delhi and Maharashtra, where Tata Teleservices is the number one player.

This means that Reliance Communication will probably be the only private operator to get bandwidth in the lucrative band in most circles unless the Department of Telecom manages to convince the Defence to release more.

First mover advantage

Even if the Defence does agree to release additional spectrum, it will take at least a year more to set up an alternative medium of communication for the armed forces. By that time, Reliance Communications would have launched its services.

While the DoT has made additional provision for allocating spectrum in the 450 Mhz and the 1900 Mhz bands for CDMA operators, technical experts confirmed that these bands are inferior compared to the 800 Mhz band.

Rolling out 3G services in bands other than the 800 MHz band could be more expensive and also less efficient.

DoT is yet to get clearances from the Defence forces for allocating 450 Mhz and 1900 Mhz bands. The CDMA player will have to pay a fee proportionate to the amount quoted by the highest bidder during the auction for GSM-based 3G services. For example if a GSM player bids Rs 5,000 crore for 5 Mhz spectrum, the CDMA player will have to pay Rs 1,250 crore for 1.25 MHz in the 800 MHz band.

Rival operators said that they would be taking up the issue with the Communications Ministry. One option being suggested is to permit all CDMA operators to use their existing spectrum for rolling out 3G service.