3G spectrum auction for CDMA players

NEW DELHI: The Telecom Commission has modified its policy on allocation of spectrum for third generation (3G) mobile communications using the CDMA technology platform. The Telecom Commission has decided to auction 3G radio frequencies for CDMA players in the 800 MHz band.

This would deny Reliance Communications (RCOM) automatic entry into CDMA 3G on the strength of its subscriber base, as envisaged in the policy earlier. The decision was taken during Telecom Commission’s meeting on August 21 and incorporates telecom regulator Telecom Regulatory Authority of India’s (TRAI) recommendation.

The government, in its 3G policy announced earlier this month, had decided to allot 3G spectrum in the 800 MHz to the CDMA player with the highest subscriber base, without taking resort to auction as mandated for GSM players, provided it was willing to pay the same price that the highest GSM operator was paying in that particular circle. This gave RCOM, which has the largest subscriber base in all circles, except Delhi and Maharashtra, the right of first refusal (RoFR) for offering 3G services in the 800 MHz band. This band is the most efficient and cost-effective frequency for CDMA players to offer high-end services.

However, Telecom Commission’s move to have an auction now implies that other CDMA players such as Tata Teleservices, Shyam, BSNL and MTNL as well as new players who want to enter India on the CDMA platform now stand a chance to get radio frequencies in the coveted 800 MHz band. Currently, only one operator can be accommodated in this band, as the rest of the band is occupied by the defence services, which will take at least one year to vacate it. As and when the defence forces vacate more spectrum in this band, more operators would be able to bid for and acquire spectrum to offer 3G services.

The Telecom Commission, which is the apex decision-making body of the Department of Telecom (DoT), has also said that the base price for 3G frequencies in the 800 MHz will be Rs 40 crore for metros and category A circles, Rs 20 crore for category B circles and Rs 7.5 crore for category C circles. The base price has been fixed at a fourth of what GSM operators will pay for 3G frequencies. This is because CDMA players can bid only for 1.25 MHz of radio frequencies in the 800 MHz band while GSM players will bid for 5 MHz of 3G spectrum in the 2.1 GHz band.

The DoT was forced to review the 3G policy after TRAI pointed out that the government’s decision to allot 3G spectrum to CDMA players without an auction is against the principles of equality.

TRAI chairman Nripendra Misra, in a communication to DoT secretary S Behura on August 8, 2008, had said: “Since various service providers have been given licences in different service areas at different time periods, TRAI believes that keeping the subscriber base as the criterion for deciding the priority of spectrum allotment will go against the level-playing field and the principle of equity.”

Mr Misra had also demanded that CDMA players too be subject to an auction. “Spectrum in the 800 MHz should be auctioned among applicants with the highest-bid price received for the auction of 2.1 GHz spectrum as the reserve price. The subscriber base of the CDMA network of a service provider in any service area is a result of different environments, and cannot muster the test of fairness if it was to become the basis of priority,” he had added.

Source : Economic Times