Foreign telecom firms may not get 3G licence

In a development that could act as a damper on the plans of foreign companies waiting to offer third generation (3G) mobile services in India, the Department of Telecom (DoT) is unlikely to invite overseas companies to bid for 3G licence.

Official sources said the DoT would not be calling foreign players to bid for 3G services and the upcoming policy would be in line with the Telecom Regulatory Authority of India's (Trai) recommendations.

The DoT says there are enough complications in allowing foreign players in value-added services like 3G. They would not have any network infrastructure in the first place and by the time it is developed, the services will be delayed, the sources said.

Even if the foreign operator enters into joint venture with local companies and allotted the spectrum, the partners could part ways following a rift between them, the sources added.

Moreover, they said, the most important issue for DoT is making the 3G services affordable for everyone.

As foreign players have deep pockets, they can bid very high for the 3G spectrum. But these companies would then offer the services at higher tariff, making it difficult for a non-metro or rural user to access the same, the sources said.

DoT has plans to use 3G services for tele-medicine, health and education in remote areas, which is possible only if rural users can access the service, they said. 3G handset prices are already very high and if services become costlier, the very purpose of introducing them would fail, they added.

Official sources said another problem was the interconnection arrangement between 2G and 3G networks in case foreign players were allowed.

Since they would be offering 3G services at a high cost, 2G operators would also demand higher interconnection charges to connect to a 3G network. This, in turn, would raise tariffs for 2G services, which operators offer at present, as well.

Trai has proposed Rs 1,400 crore as base price for bidding for a pan-India presence.