With a pan-India licence going for a massive Rs 12,847 crore in a recent auction of broadband wireless access (BWA) spectrum, analysts are wondering if telecommunication companies are looking to use the spectrum for services other than broadband services.
As BWA spectrum ensures higher speeds, it can support even voice calls. The high bids indicate broadband is not the only objective. “The bidding is being done for the spectrum as a whole, with just a BWA business plan now,” said Mrityunjay Kapoor, country head, Protiviti India. Experts also believe that using BWA spectrum for voice can lead to more efficient use of the spectrum.
More, 20 MHz spectrum is being offered in the BWA auction, while only five MHz was offered in the 3G auction. This offers opportunity to use the spectrum for other purposes.
However, the broadband subscriber base in the country is as low as 8.75 million, while mobile phone users are 600 million, and growing at a much faster rate. Companies will have to struggle to market broadband services to potential consumers and the uptake might be slow. Broadband penetration in the country is as low as one per cent.
“The higher cost of laying a fixed-line network, coupled with absence of unbundling of the local loop, has resulted in lower competition in the broadband space from private players, restricting the growth of broadband,” said a report by Ambit Research.
At present, regulations do not allow a company which holds a broadband licence to offer voice-based services, that is, mobile telephony. Before the 3G spectrum auction process commenced and there was a huge spectrum crunch across the telecom industry, use of WiMax spectrum for voice was under consideration. The Telecom Regulatory Authority of India even released a consultation paper on this.
Hurdles
Companies which look forward to use the spectrum for voice have to work their way through government hurdles. “One year down the line, there could be regulatory changes and it can be allowed. This is a possibility which is open for the company,” says Gaurav Dikshit, analyst, CARE Research.
The practical problem with offering WiMax spectrum-based mobile calls is the handset. “There are not enough handsets in the market which can offer voice for WiMax spectrum. There are just a few prototype handsets across the world,” says Nareshchandra Singh, analyst, Gartner. WiMax, which is a 4G service, allows faster data downloads at speeds of 40 Mbps, which is much higher than the speed available on 3G spectrum. It will increase and aid use of IP telephony and offer more such voice services through Google Talk and Skype, which are voice services in effect.
Some experts say that offering voice services may be yet another utility of BWA, but might not add to the fortunes of companies considering the low voice rates in the market. “Even if it is used for voice services, the real break-even will not come from it. Data services and value-added services will be the ones which will add to the overall average revenues per user,” said Kapoor.
Some others feel low voice rates are a temporary phenomenon. “The spectrum is for 20 years; we do not know what the state of tariffs will be in the future,” says Alok Shende, principal analyst, Ascentius Consulting.
