 "DoT-defence spectrum deal may prove a 3G bonanza")
The Department of Telecommunications (DoT) is close to working out a deal with the defence ministry to swap the latter’s 15 MHz of 2,100-MHz 3G spectrum with a similar quantity of 1,900-MHz spectrum currently earmarked for the future growth of evolution video and data only (EVDO) services.
In a DoT note — prepared earlier this month by the secretary for discussions with his defence ministry counterpart — it has been said the defence ministry, in consultation with DoT’s wireless planning & coordination (WPC) wing, is examining the proposal for a swap of spectrum.
A senior DoT official said: “The ministry has had several discussions with the Planning Commission and the defence ministry on the swap proposal. We expect a consensus to be reached with the defence ministry soon.” (Click for chart)
Besides, millions of mobile customers who had been keeping away from 3G services due to lack of competition in the space — there are only three-four private operators in each circle at present — and poor data speeds might consider shifting to these services. Currently, the country’s 28 million 3G subscribers account for only 3.2 per cent of the total mobile user base of 816.9 million. This is in spite of 3G services being available in India for nearly 19 months now.
According to conservative industry estimates, the swap will help bring to the government exchequer much more than Rs 25,000 crore, even if the 3G spectrum price is half the price operators had paid (Rs 16,759 crore per 5 MHz pan-Indian spectrum) in 2010, when 15-20 MHz of 3G spectrum was auctioned to private players. These estimates are without taking inflation into account.
For the government, the proceeds from the 3G spectrum sale might be more or nearly the same as that from auction of 900-MHz spectrum in the Delhi, Mumbai and Kolkata circles (around Rs 9,500 crore) and about 10 MHz of 1,800-MHz spectrum in each circle, based on Trai’s base price recommendations.
However, since the defence ministry has been insisting that DoT meet its 2008 commitment — made in its memorandum of understanding — of building a dedicated fibre-optic network before more spectrum could be vacated, there is a question mark on the availability of 1800-MHz spectrum for auction in January 2014.
But the swap deal is outside the scope of the 2008 MoU, under which another 5 MHz of 3G spectrum is to be vacated by the defence ministry.
The move will also ensure that three more 3G slots are available for auction. That will help accommodate three new players in each circle, taking the total number of private operators per circle to six or seven. At least some of these slots could be offered to the existing service provider that want to augment their limited 5 MHz spectrum, which is too little to provide high-speed broadband services. Globally, operators use up to 10 MHz of spectrum for 3G services.
In 2010, seven mobile operators had won 5 MHz spectrum but none had enough quantity to start pan-Indian operations. This was seen as a major impediment for growth of 3G services in the country. For instance, Bharti had won spectrum in 13 circles, Vodafone in only nine and Idea Cellular in 11, while dual-technology operators RCom and Tata Tele in 13 and nine circles, respectively.
On the possible swap deal, Cellular Operators Association of India Director-General Rajan Mathew says: “It’s a win-win proposition for everyone. And, it will give mobile operators a scope to become pan-Indian 3G players and grow the currently-limited market.”
For mobile customers, the move could be beneficial, as more competition would bring down 3G rates. Also, with more spectrum available, as telcos make more investments rather than running patchy 3G networks, more efficient and high-speed data services might be on offer.
In a DoT note — prepared earlier this month by the secretary for discussions with his defence ministry counterpart — it has been said the defence ministry, in consultation with DoT’s wireless planning & coordination (WPC) wing, is examining the proposal for a swap of spectrum.
A senior DoT official said: “The ministry has had several discussions with the Planning Commission and the defence ministry on the swap proposal. We expect a consensus to be reached with the defence ministry soon.” (Click for chart)
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The likely swap deal is seen as a bonanza for the mobile operators whose plans to offer pan-Indian 3G services was upset as the government barred them from getting into intra-circle roaming pacts with other companies. It is also likely to help the government earn more in revenues from spectrum auction and tide over its fiscal deficit problem.
Besides, millions of mobile customers who had been keeping away from 3G services due to lack of competition in the space — there are only three-four private operators in each circle at present — and poor data speeds might consider shifting to these services. Currently, the country’s 28 million 3G subscribers account for only 3.2 per cent of the total mobile user base of 816.9 million. This is in spite of 3G services being available in India for nearly 19 months now.
According to conservative industry estimates, the swap will help bring to the government exchequer much more than Rs 25,000 crore, even if the 3G spectrum price is half the price operators had paid (Rs 16,759 crore per 5 MHz pan-Indian spectrum) in 2010, when 15-20 MHz of 3G spectrum was auctioned to private players. These estimates are without taking inflation into account.
For the government, the proceeds from the 3G spectrum sale might be more or nearly the same as that from auction of 900-MHz spectrum in the Delhi, Mumbai and Kolkata circles (around Rs 9,500 crore) and about 10 MHz of 1,800-MHz spectrum in each circle, based on Trai’s base price recommendations.
However, since the defence ministry has been insisting that DoT meet its 2008 commitment — made in its memorandum of understanding — of building a dedicated fibre-optic network before more spectrum could be vacated, there is a question mark on the availability of 1800-MHz spectrum for auction in January 2014.
But the swap deal is outside the scope of the 2008 MoU, under which another 5 MHz of 3G spectrum is to be vacated by the defence ministry.
The move will also ensure that three more 3G slots are available for auction. That will help accommodate three new players in each circle, taking the total number of private operators per circle to six or seven. At least some of these slots could be offered to the existing service provider that want to augment their limited 5 MHz spectrum, which is too little to provide high-speed broadband services. Globally, operators use up to 10 MHz of spectrum for 3G services.
In 2010, seven mobile operators had won 5 MHz spectrum but none had enough quantity to start pan-Indian operations. This was seen as a major impediment for growth of 3G services in the country. For instance, Bharti had won spectrum in 13 circles, Vodafone in only nine and Idea Cellular in 11, while dual-technology operators RCom and Tata Tele in 13 and nine circles, respectively.
On the possible swap deal, Cellular Operators Association of India Director-General Rajan Mathew says: “It’s a win-win proposition for everyone. And, it will give mobile operators a scope to become pan-Indian 3G players and grow the currently-limited market.”
For mobile customers, the move could be beneficial, as more competition would bring down 3G rates. Also, with more spectrum available, as telcos make more investments rather than running patchy 3G networks, more efficient and high-speed data services might be on offer.