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| Mobile operators differ on hike in 3G spectrum base price |
| BS Reporters / New Delhi/Mumbai Jun 20, 2009, 00:24 IST |
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Mobile operators are divided on the consensus reached in the government to increase the base price for 3G auctioning to Rs 4,040 crore. Earlier, the base price for auctioning ranged from as low as Rs 1,020 crore to Rs 2,040 crore.
The Cellular Operators Association of India (COAI), the body representing GSM players, has said the auction process for 3G is expected to fail if the government does not come out with a clear 2G spectrum allocation and pricing policy before it goes for 3G auctioning.
“The government needs to settle the 2G policy, before it goes for auctioning 3G spectrum, as it is very clear that these services cannot be offered independently but will be an overlay over 2G. If that does not happen, there will be few takers for 3G,” says T V Ramachandran, secretary-general of COAI.
Ramachandran also says the government, by looking at hiking the base price substantially, is making 3G more unattractive. “On the one hand, government says they want broadband expansion through wireless, but by fixing such a high price it will not be possible to increase its penetration at all,” he added.
The Department of Telecommunications, however, feels a final decision on 2G spectrum policy should be taken only after the 3G auction is completed. Their logic is based on the recommendation of a committee to look into allocation of spectrum, which suggested the pricing of 3G spectrum should be related to that of 2G spectrum.
The GSM operators’ view is echoed by the association of CDMA operators. Says S C Khanna of Association of United Telecom Services Providers of India: “We expect the right price should have been Rs 2,000 crore. Any hike in the base price will make it totally unaffordable to the masses and only a few cities can afford the service.”
However, many of the newer mobile players, who have just started their service or are about to roll out, say the price is not that unattractive. “It’s a reasonable price, about two and a half times more than a pan-Indian 2G spectrum, and surely no way like what happened in Europe, where it was many times higher. I think there is enough scope to offer services at attractive tariffs and build up volumes. After all, you have better margins in data than voice,” said a director in a leading telco which is about to start its service across the country.
Agrees Naresh Singh, Principal Research Analyst, Gartner: “I don’t see doubling of 3G spectrum auction prices as a deterrent, as most of the existing players and new operators would still aggressively bid for the 3G spectrum, as this would be the game changer for the industry. Most of the companies are close to launching advanced data services, with some already announcing aggressive tariffs, for which 3G is a necessity. More important, the prices are still on the lower side, when compared to international markets like Malaysia, South Korea or Italy, where the base prices were much higher.”
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