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TMCNet:  4G airwave holders allowed to offer voice services

[February 18, 2013]

4G airwave holders allowed to offer voice services

NEW DELHI, Feb 18, 2013 (Mint - McClatchy-Tribune Information Services via COMTEX) -- Mukesh Ambani's Reliance Industries Ltd could be the main beneficiary of the Telecom Commission's decision on Monday to allow companies with broadband wireless access (BWA) spectrum and an Internet Service Provider (ISP) licence to pay a fee and offer voice services.

Such a move will not only see Ambani returning to the kind of basic phone services that were offered by Reliance Infocomm Ltd, which was set up by him in 2002, but also challenge the current pecking order in the industry led by Bharti Airtel Ltd. The Reliance phone business, now called Reliance Communications Ltd, went to Mukesh Ambani's younger brother, Anil Ambani, as part of a settlement between the two in 2005.

The Telecom Commission said on Monday that companies with BWA spectrum and an ISP licence can migrate to a new unified licence regime and offer voice services on payment of Rs.1,658 crore.

Reliance Industries is the only company with BWA spectrum across the country, having bought a 95% stake in the Nahata-family promoted Infotel Broadband Services for Rs.4,800 crore in 2010. It is expected to offer 4G, or fourth generation, communications services that theoretically enable high-speed wireless data transfer of around 100 megabits per second.

RIL has, however, not been able to launch services yet. It's reportedly planning to do so in 2013 in at least Delhi, Mumbai and Jamnagar.

Analysts had expected the 4G network to use some of Reliance Communications' network infrastructure through a partnership.

The Telecom Commission's decision could mean a redrawing of that strategy.

"The move does improve their capabilities as it would have been difficult to be a stand-alone data provider in India; but it does not mean they will launch overnight," said a Mumbai-based telecom analyst at a multinational investment bank, requesting anonymity as his organization doesn't authorize him to speak to the media.

As for high-speed services, he said, "There is still a lot of work to be done, including the introduction of 4G capable handsets in the India market. The ecosystem takes a lot of time." Meanwhile, the move to allow migration to a unified licence has been met with some criticism. The Association of Unified Service Providers of India (Auspi), a lobby group representing the dual telecom licence users, slammed the move.

"The Telecom Commission's reported action will allow BWA licencees to offer pan-India voice after paying a paltry incremental amount of Rs.83 crores per MHz. Given that the difference between the prices of 3G and BWA on a per MHz prices was Rs.1,033 crores per MHz, the above will amount to a huge bonanza for BWA licencees," Auspi said in a statement.

The reported move "is unfair to existing unified access services licencees," and "amounts to an administered pricing of spectrum, which goes against the government's own position that spectrum prices should be determined through transparent market mechanisms. Most seriously, it unfairly favours a few licencees, which we are sure the government would not want to do," the statement added.

A senior executive with one of RIL's vendors said, "There has been a lot of work done and they are still working on it, but there is still no clarity as to when they will start and what they will offer." He didn't want to be named, owing to the sensitivity of the issue.

The Telecom Commission also decided to hold a third spectrum auction in March for the 18 circles where some spectrum was successfully sold in the November 2012 auction.

According to senior department of telecommunications (DoT) officials, including telecom secretary R. Chandrashekhar, the price discovered for the spectrum in November will be the reserve price. A new notice Inviting applications for the auction will likely be issued this week.

The move comes after the Supreme Court on Friday clarified that the government had to auction all the spectrum that was made available due to the cancellation of licences on 2 February, 2012. That's when it scrapped 122 telecom licences and spectrum allocated to nine companies on the grounds that the procedure for the allocation of the resources was flawed.

The court had directed the government to auction the spectrum to be vacated by the cancelled licencees -- a sale that took place in November last year. However, the government did not auction all the spectrum and kept some in reserve to be allocated as additional spectrum to older telcos unaffected by the ruling.

The auction is expected to start on 11 March and will see the sale of 1,800Mhz spectrum in Delhi, Mumbai, Karnataka and Rajasthan, the four circles that did not receive a single bid in the November auction. DoT will also auction 900Mhz spectrum in Delhi, Mumbai and Kolkata, where the older operators will see their licences expire in November 2014.

The older operators have to win spectrum to be able to continue services in these circles. DoT will also auction 800Mhz band spectrum, commonly called CDMA spectrum, after the conclusion of the 1,800Mhz and 900Mhz spectrum auction. The CDMA spectrum auction was to be held in November but had to be postponed as there were no bidders. Tata Teleservices and Videocon withdrew their applications citing too high a reserve price.

Sistema Shyam Teleservices Ltd has already confirmed that it will participate in the March auction for 800Mhz spectrum.

The Telecom Commission also decided to allow the installation of 2,199 towers in Maoist violence-affected areas at a cost of Rs.3,000 crore.

The panel deferred its decision to include tower companies under the licensing regime as well as the sale of 10% equity in state-run Telecommunications Consultants India Ltd.

___ (c)2013 the Mint (New Delhi) Visit the Mint (New Delhi) at www.livemint.com Distributed by MCT Information Services

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