India 3G plans grind to halt

Rajesh Prothi
10 Feb 2009

India's slow crawl to 3G has become even longer. On the eve of its planned spectrum auction on January 30 it was hit by delays which could postpone the sell-off until after the general election, due in the next two months.

The latest hitch is that the Defense Ministry wants a piece of spectrum meant for the 3G service. A senior government official said this was one of a number of reasons why the spectrum issue was dropped from the agenda of Cabinet Committee of Economic Affairs (CCEA) meeting.

But the biggers obstacle was the Ministry of Finance's demand that DoT double the floor price to 40.4 billion rupees ($820 million) - apparently a result of factional wrangling in the ministry ahead of the national election.

By mid-January DoT had offered a compromise, setting the new higher fee for licenses in big cities such as Delhi, Mumbai, Kolkata and Bangalore, and A category telecom circles. It suggested increasing the license fees by 15% for category B circles but leaving C category license fees unchanged at 10.10 billion rupees ($205 million).

Delhi-based telecom consultant Mangesh Naik said the process would take its own time, more so when the country is heading toward an election in two months.

'Issues such as reserve price, participation of foreign players and regulatory issues need to be addressed in detail. Hence the decisions will take their own time,' he said.

It is bad news for mobile operators that have been long lobbying the government to proceed to 3G.

'All the operators - especially those with pan-India services - are geared up for 3G services. The issue of the base price between the DoT and the Finance Ministry to my mind has delayed the process by over three to four months,' rued a senior mobile service provider official.

The delay has given an opportunity for lobbyists to press for further changes to the rules. BV Raman, country head in India of the CDMA Development Group, complained that there was no spectrum in the auction for those operators using the CDMA technology to deploy EV-DO in the 800-, 450- and 1900-MHz ranges.

When the auction does go ahead, 2G heavyweights Reliance, Bharti and Vodafone are expected to lead the race, but second-rung players such as Tata, BPL, Spice and Aircell are also expected to bid.

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