Policy gives Reliance 3G edge

Other players cannot offer services till 2007.

The Telecom Regulatory Authority of India's (Trai's) draft spectrum policy has proposed that the country's largest code division multiple access (CDMA) operator, Reliance Infocomm, be given additional spectrum to offer 3G-equivalent services.

On the other hand, the second largest CDMA player, Tata Teleservices, and global system for mobiles (GSM) operators like Bharti, Hutch and Idea are proposed to be allotted frequencies that cannot initially be used for offering third-generation (3G) mobile services.

It comes with another rider that the 2x15MHz 900 and 1800 bands will be made available once the defence services vacate the frequencies.

While refusing to comment on the draft, Trai officials said the existing paper was being reworked and changes were likely to be made before the policy was released on Friday.

The draft in its present form will benefit Reliance Infocomm, which can offer Evolution Data Only (EVDO) services, the equivalent of 3G for GSM operators, once it is allotted 2.5 units of additional spectrum.

Tata Teleservices, Bharti, Hutch and Idea will have to wait until December 2006 when the IMT 2000 band is made available for offering 3G services like streaming video and interactive radio on cellular handsets. Each operator is proposed to be given 2x10 MHz of IMT 2000.

The draft also proposes that players like Bharat Sanchar Nigam Ltd, Mahanagar Telephone Nigam Ltd, Reliance and Bharti, which are in both the CDMA and GSM business, be treated as a single entity for IMT 2000 allocation.

The announcement of the policy has been delayed because Trai officials are divided over the issue as well as by the pressure from the GSM and the CDMA lobbies.

"CDMA operators already have plenty of spectrum to spare. As separate dedicated carriers are needed to roll out EVDO, the two additional carriers will provide the largest CDMA operator plenty of additional space to roll out next generation services, while we will be forced to wait for the same until December 2006," said an executive with a leading GSM player.

When asked to comment on the draft recommendations, TV Ramachandran, director-general, Cellular Operators' Association of India (COAI), the body representing all GSM players said: "The regulator's move has helped secure a backdoor entry into 3G for the largest CDMA player. This will further benefit the first backdoor entrant into 3G through the EVDO route and it will have a tremendous first mover advantage. The WLL history is going to repeat itself."

In an internal communication to its members, the COAI said, "The recommendations are against the government policy guidelines which state that additional spectrum should be allotted on the basis of subscriber numbers alone. CDMA operators do not have any justification for even 5 MHz of spectrum in any service area except Delhi, where Reliance has just become entitled to 5MHz and is eligible for another carrier only after one year or more."

Freeing the frequencies

The regulator has recommended that existing mobile operators get 3G spectrum at no additional cost

Ceiling on annual spectrum charges to be reduced from 6% of the adjusted gross revenue to 4%

Before spectrum is assigned to new service providers, existing players must have adequate spectrum

Spectrum should be provided as and when available, no reserves to be kept

CDMA players to be provided extra spectrum in 450 MHz and 1800 MHz on demand