3G only for 4 telcos: DoT

Recommendations override Trai suggestions.

The Department of Telecommunications (DoT) is recommending allocation of third generation or 3G spectrum through controlled e-auctioning for only four mobile operators on the 2.1 GHz band, which will compulsorily include state-owned Bharat Sanchar Nigam Ltd (BSNL) or Mahanagar Telephone Nigam Ltd (MTNL).

Third generation or 3G technology services allow simultaneous transfer of both, voice data (a telephone call) and non-voice data (such as downloading information).

The move by DoT is a clear departure from the Telecom Regulatory Authority of India's (Trai's) recommendations last year, which had suggested that at least five operators can be given 3G spectrum and there would be no reservation of spectrum for state-owned telecom companies.

It has also reduced the availability of spectrum for Code Divison Multiple Access (CDMA) operators by scrapping Trai's recommendation that at least one operator can be given spectrum on the 450 MHz band.

In a move to prevent misuse, DoT has also recommended that 3G operators cannot go in for mergers for the first five years after the allotment of spectrum. Even after this period, spectrum will be limited to a maximum of 15 MHz for the merged entity.

Rejecting the plea by many cellular operators that the unified licence allows them to undertake 3G services as well, DoT has clearly stated that "allotment of 3G spectrum in the 2.1 GHz band be treated as a standalone allotment, separate from the present 2G services".

With over eight GSM operators and three CDMA players (not taking into consideration BSNL and MTNL, which also have CDMA services), the move means many players will have to wait to launch 3G services.

A committee set up by DoT to consider Trai's recommendations is hiking the amount of spectrum for each operator on 2.1 GHz to 10 MHz (from the 5 MHz recommended by Trai).

The committee has also spelt out the method of e-auctioning, to be undertaken by a specialised agency, in which six operators will be short-listed, based on various criteria like coverage, proposed revenue share and rural coverage, among others. BSNL or MTNL will be one of the six service providers.

The reserve price will be set taking into account Trai's recommendations (for a pan-Indian licence it had suggested Rs 1,050 crore) and international practices.

The shortlisted companies will bid and the top four will be allotted spectrum in the 2.1 GHz band. If BSNL and MTNL do not come in the first four, they will be alloted spectrum, provided they pay an amount equal to the second short-listed bidder.