DoT seeks details on Anil's GSM foray

The department of telecom has sought more details from Reliance Communication Ventures Ltd on its plans to expand its GSM network to various locations across the country, including the crucial markets of Mumbai and Delhi.

"They have sought spectrum wherever it is available in the country. We have asked them to indicate their plans, so that we can take a decision," a DoT official said here today.

The official added that the company might have to vacate its current CDMA spectrum allocation to get GSM spectrum.

This is because the rules do not allow overlap of spectrum in the same circle. "Our understanding is they may completely switch over to GSM-based mobile services and exit CDMA," the official added.

Commenting on the proposed enhanced focus on GSM, a Reliance Communications' spokesperson said, "We are committed to pursue the mobile world's leading technologies, whether CDMA or GSM, to provide the best and most competitive services to our around 20 million customers". Reliance has over 7 per cent of the estimated 270 million CDMA subscribers spread across the globe.

However, sources said what this really meant was that the company might make a higher proportion of its new investments in GSM (projected outlay of Rs 1,500 crore for expanding services using this technology), while continuing to service its existing CDMA user base.

Another reason for the possible shift is the hefty royalty that Reliance Communications (and Tata Teleservices) pay to Qualcomm, the pioneer in the CDMA space which holds key patents for this technology. The official said that the royalty in India was as high as 7 per cent on equipment as well as the handset.

While Reliance Communications declined to comment, sources claimed that this was part of the company's ongoing battle with US telecom technology major Qualcomm.

The company charged royalty per chipset to a handset manufacturer, who in turn passed it on to the operator who bought the handset, sources added.

"The royalty on the chipset charged from Indian operators like Reliance is 7 per cent, in China 2 per cent, Korea 2 per cent and for US operators it is zero", sources said.

They added that the burden of royalty of a handest on an operator worked out to around $10-15 per device in India and only $3 in China.

When contacted, Qualcomm India did not immediately offered a response and said the key officials were travelling.

Sources added that if the royalty is reduced, Indian operators like Reliance could pass on the benefit of cheaper handsets to subscribers.