India's largest telecom player, BSNL's move to implement wireless broadband services across India will take longer than anticipated, now that it has "kept in abeyance" the opening of tenders which it had invited from potential franchisees to provide mobile WiMAX (e version) to its customers in 16 circles across India. The bids were slated to be opened on December 4.
WiMAX or Worldwide Interoperability for Microwave Access provides for wireless transmission of data and up to 75 Mb/sec speed. The 802.16d -- also frequently referred to as "fixed WiMAX" has no support for mobility. On the other hand, 802.16e has support for mobility and is hence also known as 'mobile WiMAX'.
In an email to all bidders, it cited no official reason. Sources close to the development, however, note that BSNL has paid heed to the fears of major players who have been raising concerns that valuable spectrum could be cornered by smaller ones who did not meet either the financial or techno-commercial eligibility criteria. The entire exercise, allege the sources, is being done to cash in on the telecom game with higher valuations.
The entire exercise can get them higher valuations
Around 28 companies, including majors like Alacatel-Lucent India, Motorola India, Moser Baer Industrial Infrastrucutre, Huawei, HCL Infosystems, Intel Technology India, Larsen & Toubro Infotech and TCIL figure among those who bought the tender documents priced at Rs 10,400 for each circle. However, there are also smaller- and medium-sized players like Soma Networks Software Engineering, Adino Telecom, Cals Refineries, Raasi Callnet and Vishal Telecommunications who have bid for the same.
This January, San-Francisco headquartered, privately-held broadband wireless access company, Soma Networks was alloted spectrum by BSNL -- almost a year prior to the bidding -- for three major circles (Andhra Pradesh, Gujarat and Maharashtra & Goa). BSNL has set a target of around 3.2 million WiMAX subscribers in these circles over the next five years. BSNL and Soma Networks did not respond to email queries by Business Standard.
A source close to the development alleged that many small players who do not meet the turnover criteria are offering to partner with the bigger players to form a consortium since the BSNL criteria does allow for this. In return, says the source, "two, three small players have been asking for a substantial sum of money, especially from original equipment manufacturers (OEMs) and IT services players to form such consortiums".
Further, many smaller players do not have the required number of base stations and wireless broadband subscribers to bid for mobile WiMAX, and hence the chase for a consortium partner. Some companies have already set up special purpose vehicles (SPVs) with foreign telecom operators (since Indian telcos cannot participate) or their subsidiaries. Regardless of whether this ploy succeeds or not, it's a back-door entry. Where will the smaller companies get the capex to build these networks?" said a source.
BSNL plans to provide the 20MHz spectrum it got from DOT earlier, to bidders in 16 circles to provide wireless broadband services to its customers, based on WiMAX e version (mobile) in the 2.5GHz frequency band. Towards this end, it had invited expressions of interest (EOIs) of bids from companies that have a minimum turnover of Rs 1,000 crore (for Metro and A circles) and Rs 750 crore and Rs 500 crore for the B and C circles respectively.
The bids were invited on a non-exclusive, revenue-sharing and license service area (LSA) basis. Bidders could bid for any number of LSAs. Subject to infrastructure costs of tower and space rent, power and bandwidth being on the same footing, the bidder offering the highest revenue share to BSNL will be made a franchisee.
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