Delay in launch of 3G to help BSNL, MTNL

Any delay in the launch of 3G, or third generation wireless technology, services will have an adverse impact on incumbent GSM operators as well as the six new UASL (universal access service licence) holders, who see it as a key to future growth.

However, operators said the chief beneficiary would be the state-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), which have already been given the spectrum for 3G services, as well as Reliance Communications, which is still to roll out its 2G GSM network.

The finance ministry has asked the Department of Telecommunications (DoT) that the 3G policy should not be finalised without consultations with it.

It has pulled up DoT for announcing the guidelines for allotting the 3G spectrum without its concurrence saying this is against a Cabinet decision as well as the business rules, which state that any matter with financial implications for the government needs to be vetted by the finance ministry.

BSNL and MTNL will have a headstart over their private sector rivals. “BSNL and MTNL have said they will launch 3G services in six months, so they have a three-month headstart over private players. If the auctions are not completed by December, this gap will only increase,” says an executive of a leading GSM operator.

Some observers said the delay could help Reliance Communications, which has also been given a pan-Indian GSM licence. They pointed out that the company would take at least 6-12 months to roll out its 2G network.

The allocation of 3G spectrum would have helped incumbent GSM players grow their customer base, especially when there is limited 2G spectrum.

Said TV Ramachandran, director general, Cellular Operators’ Association of India: “For incumbent GSM players, any delay means stopping their future area of growth. Even for the new licensees, the auctioning of 3G spectrum will help them get better valuations for their licences.”