Raja backtracks, limits 3G players to five per circle

Consumers waiting for third-generation, or 3G, services will have fewer choices with the Department of Telecommunications (DoT) restricting the number of players up to five per circle, including state-owned BSNL and MTNL.

The move is a clear departure from a decision announced by Communications Minister A Raja in August allowing for 5 to 10 operators per circle or service area for 3G services, which enable faster data downloads via mobile phones.

In another move, Raja had earlier said that up to 60 Mhz of spectrum, the radio frequencies that enable mobile services, was available and each operator would be given 5 Mhz.

DoT, however, has already given 3G licences and spectrum to BSNL, which is expected to roll out its services by the end of this year. So effectively private sector players will have up to four licences up for grabs.

Details of the 3G policy available so far show that Delhi and Gujarat will have three 3G operators each, Uttar Pradesh (west) and Himachal Pradesh four, and West Bengal two. Rajasthan and the north-east would not have 3G services because spectrum is not available in these regions. All other circles will have up to five operators.

The launch of 3G services is expected to be slightly delayed. Auctions, earlier slated for January 15, will now be held on February 9. The information memorandum that will detail the 3G auction process will come out on December 8 and the final date for operators to bid in the auction has been fixed as December 31.

The industry is unhappy with this restricted competition. “In many circles like Delhi, you will effectively have only two slots, which means the bidding price will hit the roof and make the service expensive,” said a senior official of the Cellular Operators Association of India.

New players who have just received licences to provide mobile services are also peeved, saying the limited competition is a result of pressures from incumbent operators on DoT.

“We have just paid for a licence and now have to bid at a high price. This would not have been the case if there were 10 blocks available,” said a director of one of the new players.

DoT officials also admit restricting spectrum to only 5 Mhz per player will affect new standalone 3G players. “A standalone 3G player needs at least 10 Mhz of spectrum to start a service. Therefore, he will have no alternative but to buy an existing operator.”

DoT, however, said it was following the recommendations of the Telecom Regulatory Authority of India, which had suggested that five 3G licences of 5 Mhz each be given though the auctioning route.