Foreign telcos can’t launch 3G services with 5 MHz: DoT

NEW DELHI: Amidst tall claims from both communication minister A Raja and the government that India’s 3G policy was friendly towards all players, the department of telecom (DoT) has officially admitted that it would not be possible for foreign telcos to launch 3G services with a mere 5 MHz of spectrum. DoT secretary Siddarth Behura and the department’s wireless advisor R P Agarwal have communicated this to junior telecoms minister Jyotiraditya Scindia in a letter dated September 9.

The 3G policy announced by Mr Raja in August states that a telco can bid for a maximum of 5 MHz of 3G radio frequencies.

“It may be mentioned that 15 MHz in 2.1 GHz band is ideally required for 3G services. However, for proper growth, planning of 3G networks 10 MHz shall be for practical purposes needed. As only 5 MHz is presently available and in order to have adequate competition in a service area with 4-5 players, it has been decided to allot 5 MHz,” the DoT’s wireless advisor Mr Agarwal said in his reply to Mr Scindia. The minister had sought clarity from the DoT on how foreign players could launch 3G services under the existing policy.

New players, which include international communication majors, need at least 10 MHz to launch 3G services as they also require additional start-up spectrum while existing telcos need only 5 MHz to migrate to 3G.

DoT secretary Siddarth Behura, while acknowledging that 5 MHz would not be enough has, however, told Mr Scindia that foreign telcos have three options: First, wait in line for 2G spectrum after acquiring a UASL licence. Second, foreign telcos can acquire up to 74% in any of the existing 2G licence holders and third, they could merge with an existing player. Mr Behura also said that that the merger norms were recently amended to enable this to happen.

Last week, the DoT had amended its 3G policy and said that the existing merger norms will apply only to existing licence holders. This implies foreign telcos, which are successful in their 3G bids, can now buy an existing licence holder without having to wait for three years, the lock-in period specified earlier. The larger implication is that foreign telcos who bag 3G licences can now buy out existing operators who hold 2G radio frequencies. However, industry experts say that despite relaxing the merger norms, foreign telcos will still find the going tough — this is because, existing 2G licence holders such as Datacom, Swan and Unitech amongst others are demanding astronomical valuations.

Source : Economic Times