Delay in WiMax auction to cost country $2.2 bn

The delay in auctioning Broadband and Wireless Access (BWA) spectrum will cost the country around $2.2 billion (Rs 10,500 crore), excluding the estimated Rs 4,000-crore spectrum fee.

The Department of Telecommunications (DoT) had earlier announced simultaneous auctions of 3G and BWA spectrums, with the process starting in January this year. However, the auction seems to have been indefinitely postponed, with the industry maintaining that it “would be happy if the auctions happen this year”.

“We estimate the revenue potential from the WiMax sector to be at least $1.6 billion per year, including the various taxes like sales and service taxes. Moreover, the industry would have got around $600 million per year from the sales of WiMax equipment,” WiMax Forum Chairman (India Chapter) C S Rao told Business Standard.

WiMax Forum is a not-for-profit organisation, and its role includes facilitating faster rollout of services across the world.

Any delay would also result in a loss of opportunity to add at least 10 million broadband customers per year, which would have helped in increasing the country’s broadband penetration, he said.

India had a total of 5.65 million broadband connections as on January 31, 2009, way below the 9-million subscriber target set by the DoT for 2007. The meagre growth —country is adding around 1 million subscribers per annum — will make it difficult to meet the government’s target of 20 million users by 2010.

According to Tata Communications Internet Services CEO Prateek Pashine, “The cost of rolling out WiMax network is dramatically cheap, when compared with providing broadband over wireline networks which entail an investment of Rs 50,000-Rs 1 lakh (depending on the area) per subscriber. Moreover, wireless networks are faster to rollout, compared with wireline networks.”

Lower costs and faster rollout would help in faster proliferation of broadband services, which in turn would help improve internet and e-commerce applications in the country, he said.

Even though some operators like the Tatas, Bharti Airtel and Reliance Communications provide WiMax services, the industry is awaiting allocation of the BWA spectrum. At present, some of the companies are offering WiMax services on 3.3 GHz, while the government would offer a superior 2.3 and 2.5 GHz spectrum.

Pashine, who is also the chairman of the Wireless Broadband Alliance (WBA) — a global body for broadband roaming — said that would-be WiMax operators had not placed orders for equipment. This was due to non-clarity on the spectrum allocation issue.

Earlier, Telecom Minister A Raja had stated that the auction of spectrum would happen by March 31. Even though top Telecom Regulatory Authority of India (Trai) officials admitted there would be delay, they said the allocation would happen this year.

According to industry analysts, bodies like the WiMax Forum, WBA and operators are lobbying with the government for an early auction of the spectrum. However, releasing the spectrum during this year looks much “unlikely”.