DoT proposes tax breaks for 3G winners

26 Aug 2009, 0044 hrs IST, Kalyan Parbat & Joji Thomas Philip, ET Bureau at http://economictimes.indiatimes.com/DoT-proposes-tax-breaks-for-3G-winners/articleshow/4934677.cms.

KOLKATA: The Department of Telecommunications (DoT) will ask the empowered group of ministers (EGoM) on 3G-spectrum auction, headed by Finance minister Pranab Mukherjee, to consider a proposal under which successful bidders of pan-India 3G spectrum can enjoy tax benefits applicable under section 80-1A of the Income Tax Act.

The DoT’s rationale is that the 3G mobile broadband should be treated as a distinct infrastructure service and not continuity of telecom operations, especially in case of 2G service providers pitching for a pan-India 3G licence. The DoT will place the proposal during the second meeting of the EGoM scheduled for Thursday.

The proposal for tax benefits applicable under section 80-1A of the Income Tax Act is part of an internal note prepared by DoT that will be circulated to EGoM members, a senior DoT official told ET.

Currently, only telecom companies that kicked off operations between April 1, 1995 and March 31, 2000 enjoy income tax breaks under section 80-1A. If the EGoM were to accept the DoT proposal, it would imply that 3G operations of telecom companies will enjoy income tax breaks on 100% of their profits for initial five years. In the next five years, these telcos will enjoy a 30% tax break on their profits.

The DoT note to the EGoM also adds that Indian Space Research Organisation (ISRO) is of the view that it cannot spare any further airwaves for WiMax services. As reported by ET earlier this month, ISRO chief G Madhavan Nair had said that the Department of Space (DoS) has already parted with 40 MHz of airwaves for WiMax services in the 2.5 GHz band.

He said any interference from the WiMax services offered in this band in the future could “severely affect the very sensitive satellite services in the adjacent band”. Mr Nair had also added the DoS is now left with only 150 MHz of airwaves in the 2.5 GHz band, the bare minimum requirement for satellite services.

The DoT note to the EGoM was prepared by its joint secretary (T) and consists of demands from the industry, especially those of CDMA-based operators, and includes the views of the DoS on WiMax spectrum.

The EGoM is slated to settle all outstanding issues associated with the auction of 3G airwaves, vital for high-end services such as high-speed internet and video conferencing on mobiles.

It will take a final call on the reserve price for 3G and WiMAX spectrums and decide on the number of players to be allowed to offer these high-end services in each circle.

It is also learnt that the EGoM may also debate whether the government at all has the right to urge successful bidders of 3G spectrum to shell out an extra Rs 1,600 crore-plus for a separate pan-India UAS licence, especially when DoT knows only too well that there is no extra 4.4 MHz 2G spectrum available to bundle with new licences.

“At a time when the DoT’s wireless planning cell is well aware that it won’t be able to meet future 2G spectrum obligation for new UASL licencees, why should they be asked to shell out an extra Rs 1,600 crore plus full complement of the licence fees. While nothing has been finalised yet, a successful bidder of 3G spectrum, alternately, may also be asked to shell out a lower sum for a pure vanilla UASL without the bundled spectrum,” said a government official familiar with the matter.

Indications are that a section of E-GoM members are loathe to the idea of fixing the number of slots for 3G services to a maximum five (including BSNL) per service area. “Considering that, there are as many 11 to 9 slots available in some circles like Orissa and Madhya Pradesh, the E-GoM is likely to debate the rationale of uniformly restricting the number of slots (per circle) for delivery of 3G services. There is a feeling in the finance ministry that such restriction can tantamount to a loss of potential revenue for the government,” said a DoT official close to the developments.

The Hindu Business Line : 3G auctions within 72 days of resolving pricing issue: DoT

via The Hindu Business Line : 3G auctions within 72 days of resolving pricing issue: DoT on June 18, 2009

Thomas K. Thomas

New Delhi, June 17

The Department of Telecom proposes to conduct auctions for third generation services spectrum within 72 days of resolving its differences with the Finance Ministry over pricing.

This was mentioned by the DoT in a recent presentation to high ranking government officials. However, the DoT will have to iron out the differences with the Finance Ministry first before it can set a date for the auctions.

Telecom Ministry officials said that expect the auctions to take place by September assuming that the policy issues are resolved.

Two issues

The DoT and the Finance Ministry differ primarily on two issues. One relates to the base price, with the Finance Ministry wanting it pegged at Rs 4,040 crore. The DoT wants it to be between Rs 2,020 crore and Rs 3,500 crore to keep the spectrum affordable.

The other difference is the number of slots to be auctioned. While the DoT wants eight operators to be given 3G spectrum, the Finance Ministry favours five.

The DoT officials said that the issues will be resolved since the Prime Minister has included the auction of 3G and broadband spectrum in his agenda for the first 100 days.

Sources said that another round of meeting between the Union Telecom Minister, Mr A. Raja, and the Finance Minister, Mr Pranab Mukherjee, will take place to arrive at a resolution.

The DoT officials said the issues will be sorted out before the Budget is presented.

Telcos’ wait for airwaves gets longer

17 Jun 2009, 0702 hrs IST, Joji Thomas Philip & Sandeep Gurumurthi, ET Now

The wait for additional airwaves, key for mobile operators to expand their customer base, has just got longer, with the telecom ministry deciding to make any decision on this only after the upcoming auction of third-generation spectrum, according to a top official in the department of telecom (DoT).

Communications minister A Raja and Finance Minister Pranab Mukherjee met twice on Tuesday, but were unable to reach a consensus on key issues related to 3G auctions such as the base price for these radio frequencies as well as the number of players to be allowed to offer these high-end services.

“No consensus as of now on the base price. We discussed various suggestions — whether we should go for uniform base price or opt for differential pricing, according to circle, depending upon commercial viability of that area,” Mr Raja told reporters after his second meeting with Mr Mukherjee.

As a fallout, the telecom ministry has decided that it will take a call on all issues related with second-generation spectrum, the airwaves on which all mobile services are offered at present, including the methodology for future allocations, the pricing for this scarce resource and the usage charges for utilising these airwaves only after the upcoming auctions of third generation spectrum, the official said on condition of anonymity.

The ministries are divided over the base price for the 3G auctions with DoT proposing a reserve price of Rs 2,020 crore for pan-India 3G spectrum and the finance ministry wanting it to be doubled. DoT has said it is open to hiking the reserve price to Rs 3,540 crore as a compromise.

The two ministers said for the first time that they were willing to look at a differential pricing formula to arrive at a base price for 3G auctions, vital for high-end services such as video conferencing and high-speed internet on the mobiles.

Industry analysts, however, say using a new formula to arrive at differential pricing for each circle will be a time-consuming process that will further delay the 3G auctions.

The development implies that existing telcos will not get 2G spectrum till the issue is settled. Now, they will have to invest heavily on infrastructure to ensure that the quality of services do not deteriorate.

At present, all telecom services are offered on 2G spectrum and these airwaves have been given to telcos based on their subscriber numbers. Put simply, additional radio frequencies are dished out as telcos as they add more subscribers. Currently, India follows a controversial practice of allocating spectrum based on companies’ subscriber base, and is the only country in the world that follows this method.

There are two key factors that have led to the communications ministry deciding to stop all 2G allocations until the completion of 3G auctions.

First, the spectrum panel in its report submitted last month had said the country should adopt the internationally-accepted auction system for issuing additional 2G airwaves to telcos. This committee, consisting of academicians, industry representatives, government officers and industry representatives, had suggested that the 2G pricing be market-linked and be related to the auction price of 3G spectrum.

Second, the committee had also suggested that all telcos who hold radio frequencies beyond the 6.2 MHz mark be charged a one-time fee for all the extra radio frequencies they hold, while adding that this one-time fee be calculated based on the 3G auction price.

The communications ministry can act on these recommendations only after the 3G auctions take place.

The larger implication is that all telcos will have to shell out huge amounts, both for the excess 2G radio frequencies they hold as well as for all additional allocations in the future.

Additionally, DoT’s move to freeze all 2G allocations is also set to impact all telcos. For instance, India’s largest telco, Bharti Airtel, is awaiting additional spectrum allotment of 1 MHz each in five circles.

Reliance Communications, which has start-up spectrum in all 22 circles in the country, is now eligible for the next tranche in six circles as it has reached the prescribed subscriber numbers in these areas. Other telcos such as Vodafone Essar and Idea Cellular too are awaiting additional spectrum in several circles.

With no airwaves allotments over the next couple of months, these operators will have to spend significant amounts in setting up new cellsites. Analysts say for most operators, it is, therefore, a tradeoff between increased capex and allowing the quality of services to deteriorate on account of the spectrum crunch.

This is because it is technically possible to have increased number of subscribers using the same amount of radio frequencies, provided operators spend significant amounts in building more base stations and subscribing to the latest technological innovations.

It is not just the large players that are impacted by the latest policy logjam. The government’s move to put all allocations on hold will also pinch small players and new entrants like Datacom, Unitech Wireless

and Swan Telecom, who are awaiting start-up spectrum in many regions.

Japanese operators eye Indian WiMax space

Interview with – Mr Tatsuo Sato

Thomas K. Thomas on The Hindu Business Line, June 17, 2009

New Delhi, June 16 With the Government all set to finalise its policy for auctioning broadband access spectrum, a number of Japanese companies, including KDDI-backed UQ Communications, are looking to invest in the Indian WiMax space.

Responding to an e-mailed query, Mr Tatsuo Sato, Senior Manager, UQ Communications, told Business Line, “India is fast growing country, and many Japanese enterprises are interested in investing in the Indian WiMAX market. We strongly hope the Indian Government will assign wider bandwidth for WiMAX in order to give Indian operators more flexibility and capability for service expansion. Also, we recommend India to use 2.5GHz because it makes PC manufacturers install WiMAX easily because 2.5GHz WiMAX can utilise Wi-Fi antenna which has already been built into most laptops.”

Tokyo-based UQ Communications is backed by a consortium comprising big names including Intel, KDDI, Kyocera, railway operator JR East, Tokyo Mitsubishi Bank and Daiwa Securities. The company has launched WiMax-based broadband services on a pilot basis with 8,000 subscribers in Japan and is hoping to go commercial starting next month.

Mr Sato said that Indian policy-makers should look at allocating at least 30 Mhz of broadband spectrum to each operator. “30MHz or more bandwidth should be assigned. The wider the spectrum, the better for coverage expansion and for future technology expansion toward new standard 802.16m that realises 100Mbps+ download speed,” he said. The Department of Telecom has proposed to allocate 20 Mhz per operator.

Explaining why UQ chose WiMax technology over other third generation technologies, he said, “UQ selected WiMAX because it has fast-mover advantage over other technologies. Both WiMAX and LTE use orthogonal frequency multiple access and multiple input multiple output, however, WiMAX is way ahead of LTE, and many WiMAX products have been introduced to the market. KDDI, which has 32.26 per cent of UQ’s share, provides EVDO (a 3G technology) but its service is based on cellular phones, and its required data speed is not so high. WiMAX, like Wi-Fi, is born through an Internet-based culture.

“With an open standard, many device manufacturers make a variety of devices, and numerous operators (includes mobile virtual network operators) create various value added services. As a result, WiMAX users can select from a variety of devices and services,” he said.

No consensus on 3G reserve price: Raja- Hindustan Times

From The Hindustan Times on June 16, 2009

No consensus has been reached between the Department of Telecommunications (DoT) and the finance ministry on the reserve price for third generation (3G) radio waves auction, Communications Minister A Raja said in New Delhi on Tuesday.

Raja, who met Finance Minister Pranab Mukherjee on Tuesday in New Delhi to discuss issues related to 3G spectrum auction, told reporters that the reserve price matter would be discussed with Prime Minister Manmohan Singh.

The final decision will be taken by the Group of Ministers (GoM) and the Cabinet Committee of Economic Affairs, he added.

The DoT plans to auction radio frequencies for the country’s 20 of 22 telecom service areas.

The process has been delayed a number of times after the finance ministry suggested that the starting auction price of Rs.2,020 crore be doubled.

via No consensus on 3G reserve price: Raja- Hindustan Times.

GSMA welcomes MoD decision on spectrum release

By Sharath Kumar on http://www.ciol.com on June 16, 2009

BANGALORE, INDIA: The GSM Association, a global trade group for mobile industry consisting of about 750 mobile operators,  has welcomed the Indian Defence Ministry’s move to release 45 MHz of wireless radio spectrum. The move will serve to accelerate the development of the Indian telecom market, and speed up India’s march towards mobile broadband for all its consumers, the trade group said.

The association has been demanding that the government must allocate the 2.1 GHz spectrum to drive the deployment of mobile broadband across India. The GSMA is of the view that the planning phase for the allocation of 2.6 GHz spectrum must also start now if HSPA is to evolve for the benefit of the Indian population.

In an email reply to CIOL, the association senior director Jaikishan Rajaraman stated that it is a well-known fact that congestion on 2G networks has been the bane of Indian operators for quite some time now, especially in the urban centres.

Quoting Bharti numbers, which serves 100 million customers with 11 MHz, Rajaraman said the availability of more 2G spectrum goes a long way towards addressing that critical need.

Also, it is significant that the majority of the newly available spectrum will be for 3G, especially in the immediate term.

“This creates a lot of investor confidence that the government is serious about its promise to allocate 3G spectrum via auction this year, and that 3G services will become the centerpiece of Indian telecoms in the coming years,” he opined.

“There is much to be optimistic about, and if the newly available spectrum bands are managed carefully according to international standards, it sets in place a system of continuity which will be welcome news to the Indian operators.”

Phased allocation

In Rajaraman’s view the phased approach is understandable given the complexities of the Indian military having to vacate a sizable chunk of spectrum. “However, we don’t believe this will slow down 3G service roll out to consumers in the short term.”

He added that this is because the simultaneous availability of 2G spectrum has allayed the concerns of operators and consumers alike that precious 3G spectrum will be used to offload congested 2G voice instead of being used for data services and mobile broadband.

As a long-term strategy, the government must keep in mind that with increased data usage and ever more subscribers using mobile broadband, there is a need to identify and set aside additional spectrum in advance for 3G services.

Delay losses

The GSM Association has recently demanded speeding up of the 3G auction. According to the recently published McKinsey report the delay has resulted in a $16 billion loss to the economy.

Quoting the recent McKinsey report the association has stated that once the licenses are issued and $20 billion invested over a period of five years, it can deliver $70 billion economic benefit in the same period.

See also: Indian defence loosens hold on spectrum at

http://telcobizpedia.wordpress.com/2009/06/08/india-defence-…ld-on-spectrum/

2G allocation: DoT to seek more time

Thomas K Thomas in The Hindu Business Line on June 13, 2009

New Delhi, June 12 The Department of Telecom will seek more time from the telecom tribunal to decide on the policy for allocating 2G spectrum for mobile operators.

The deadline to decide on the policy is today, according to a judgment given by the Telecom Dispute Settlement Appellate Tribunal in its order of March 31, 2008.

The tribunal had asked the DoT to finalise the policy one month after the spectrum committee submits its report. Since the spectrum panel submitted its proposals on May 13, the DoT would have to take its final decision by June 13, according to the directions of the TDSAT. The DoT had, therefore, put on hold fresh allocation of spectrum till the policy was finalised.

However, the DoT has taken a view that it needed more time to review the recommendations of the committee, which mooted sweeping changes in the way spectrum is allocated.

Differences over policy

There are differences between the spectrum panel and the Communications Ministry on the policy. While the panel suggested giving spectrum through an open auction, the Telecom Ministry is in favour of continuing with the existing subscriber-linked criteria. “Since it is not possible to take a final decision with one month in view of wide ranging implications and report being reformist in nature we may request TDSAT to grant more time for Government decision on the report,” said a top DoT source.

The DoT also plans to consult the telecom regulator before it takes a final view on the allocation procedure. Earlier, top Ministry sources had told Business Line that the panel’s report may not be acceptable since it will disturb the level playing field in the mobile segment between new and old players.

DoT sources said it will decide on spectrum allocation criteria within six weeks. This means that operators such as Bharti Airtel and Reliance Communications, which have sought additional spectrum in some of the circles, will have to wait till then.

DoT willing to hike 3G bid price

12 Jun 2009, 0126 hrs IST, Joji Thomas Philip & Sandeep Gurumurthi, ET Now

NEW DELHI: The communications ministry is set to tell the Union Cabinet that it is open to increasing the reserve price for the auctions of pan-India third generation (3G) spectrum to Rs 3,540 crore and auction up to eight slots of 3G spectrum. As per the existing 3G policy unveiled by the communications ministry late last year, the reserve price for pan-India 3G spectrum is Rs 2,020 crore and accommodating five players per circle.

The department of telecom is of the view that hiking the reserve price for these airwaves will ensure that the finance ministry does not put up any fresh roadblocks for the upcoming 3G auctions, which is vital for high-end services such as video conferencing and high speed internet on mobile handsets. Spectrum is the airwaves on which telecom signals travel and is the lifeline for all telcos.

This comes as the Union Cabinet is set to consider the proposal for the auction of radio bandwidth for third-generation (3G) mobile services within the next two weeks, rather than routing it through a group of ministers (GoM), fast-tracking the much-delayed process.

The DoT will also tell the Cabinet that the total number of players who will be allotted 3G spectrum can be raised from the current five to about seven to eight per circle. The move is aimed at addressing the concerns of the finance ministry which fears that a lower base price would result in the government failing to meet its targets of raising about Rs 40,000 crore for these auctions.

Increasing the number of slots will lead to higher revenues from the auctions as this will enable more Indian operators and also players from abroad to bag these airwaves. At the same time, the DoT in its note to the Cabinet will also state that even as it open to hiking the reserve price, it prefers to retain the base price at 2,020 crore as specified under the existing 3G policy.

The DoT’s logic behind the Rs 3,540 crore figure is that it is between the Rs 2,020 crore suggested by the DoT and the and the Rs 4,040 crore demanded by the finance Ministry. The DoT has arrived at this figure (Rs 3,540 crore) by doubling the reserve price for Delhi, Mumbai and category A circles and increasing it 1.5 times for Kolkata and category B circles retaining the current base price for category C circles, according to a top executive in the communications ministry.

As per the 3G policy, the base price for metros and category A circles such as Tamil Nadu and Maharashtra is Rs 160 crore, while that for category B circles is 80 crore and Rs 30 crore for Category C regions totalling up to Rs 2,020 crore. The cabinet may look into the proposal within two weeks, communications and IT minister A Raja had told ET on Wednesday after meeting Prime Minister Manmohan Singh. “The communications ministry has already prepared a Cabinet note detailing all issues associated with the 3G auctions. We plan to present this note to the Cabinet soon,” Mr Raja had added.

If the Cabinet approves the ministry’s proposal in its current format, the 3G auctions will be held within three months, opening the gates for high-end services such as video-conferencing and high speed internet on mobile handsets. On the other hand, routing the process through a GoM would involve a delay of several months since there will have to be a consensus between all ministers of the group before it can be sent to the Cabinet.

Earlier this year, the communications ministry had sought Cabinet approval for 3G auctions, but the latter could not clear the same as the finance ministry had objected to this proposal and demanded that the floor price be doubled. Further, differences between several ministries over the floor price for the auction of 3G airwaves and also over the number of players to be allowed to offer these high-end services in an area had forced the Cabinet to refer the matter to a group of ministers just prior to the general elections.

The auctions could not be held prior to the polls as GoM failed to meet to find a solution to these issues. In fact, the GoM did not even meet once to discuss the 3G auctions. The issue then got further complicated as the planning commission, the department of industrial policy and promotion and the IT ministry opposed doubling of the base price.

Related stories at:

• http://www.ciol.com/technology/networking/news-reports/dot-set-to-hike-3g-auction-price/12609120894/0/
• http://economictimes.indiatimes.com/DoT-willing-to-hike-3G-bid-price-/articleshow/4646736.cms

DoT, FinMin close to settle differences over 3G

The Financial Express on June 11, 2009

New Delhi: Differences over the 3G spectrum auction reserve price between the the Department of Telecom and the finance ministry is being sorted out to push the bidding in a faster pace.

“We are yet to arrive at the exact bid price but it could be between Rs 2,020 crore-Rs 4,040 crore, the two respective reserve prices quoted by DoT and the finance ministry respectively,” a senior DoT official said.

Market conditions are gradually improving. We will settle at a price which is acceptable to both the ministries, which could be about Rs 3,000 crore but the Cabinet has to give its approval for the rate, said the official.

The government plans to get Rs 30,000 crore upwards out of the 3G spectrum auction.

There is a good possibility, if everything woks out as per schedule drawn by the Department, that the auction could kick off in September-end or early October, said the official.

Since we had approached Cabinet once and it is a major policy decision, we will take it up to the Cabinet again, he said.

Telecom Minister A Raja had earlier said 3G services would start by the end of this year.

Related stories at

• http://economictimes.indiatimes.com/DoT-FinMin-close-to-settle-differences-over-3G-issues/articleshow/4646274.cms

BSNL to invest Rs 15,000 cr in FY10

Virendra Singh Rawat / Lucknow June 11, 2009, 0:56 IST on The Business Standard

Public sector telecom giant Bharat Sanchar Nigam Limited (BSNL) will invest Rs 15,000 crore this fiscal to upgrade its infrastructure and roll out new value-added services.

“Our capital expenditure in different verticals this year would be around Rs 15,000 crore,” BSNL CMD Kuldeep Goyal told Business Standard.

BSNL will use the investment for mobile expansion and for services like 3G, broadband, wireless broadband, IPTV, WiMAX, mobile commerce (m-commerce), value-added landline, Enterprise Resource Planning (ERP) and others.

“Our aim is to add 35 million telephone lines by the end of this fiscal across the country and to commission fresh 3G network,” he added.

BSNL had launched 3G services on February 2 and, at present, it is available in 70 towns. “We plan to provide 3G services in 700 cities by the end of calendar 2009,” Goyal said.

He added that, for achieving the targeted mobile growth, more spectrum was needed by operators.

“The availability of spectrum for mobile phone operators in general is less than other countries. However, this has not affected the quality of services being offered,” he claimed.

“We will offer wireless broadband through WiMAX technology in 1,000 blocks of the country out of the total 6,000 blocks. The state-run telecom operator will roll out franchisee-based WiMAX service in the country, starting with Gujarat, Maharashtra and Andhra Pradesh.

“We have floated tenders for offering similar a WiMAX service in other states as well,” he said. “We are also working on improving our quality of service and have engaged AC Nielson to test the quality of our mobile service,” Goyal added.

3G Rollout: Raja meets PM; discloses agenda for 3G roll out

Source PTI, From Hindustan Times on 11 June 2009

Setting the ball rolling for 3G mobile telephony, Telecom and IT Minister A Raja today met Prime Minister Manmohan Singh and discussed the agenda for launching the much-awaited services and auction of spectrum.

Official sources said that Raja met Singh in the morning and briefed him about the ongoing issues, including roll-out of 3G and wireless broadband (Wimax) services.

The Department of Telecom (DoT) has to decide on the reserve price for spectrum as it had differences with Finance Ministry. The matter may be taken directly to the Cabinet Committee on Economic Affairs (CCEA) or will be referred to a Group of Ministers (GoM).

DoT had proposed a reserve price of Rs 2,020 crore for an all-India spectrum of five MHz, while the Finance Ministry had pegged it at around Rs 4,040 crore.

Asked whether the reserve price of spectrum came up for discussion between Raja and Singh, sources said the minister mentioned about the number of players to be considered for 3G in the first round of auction of spectrum and its pricing.

Raja had earlier told PTI that he would like to start the process of auctioning of spectrum within three months and roll out the services by the end of this calendar year.

3G allows users access to high-speed data and voice services. State-run BSNL and MTNL are the only two operators to offer this next generation service in the country, while private players are awaiting spectrum to be apportioned.

Related stories at

• http://www.financialexpress.com/news/raja-meets-pm-discloses-agenda-for-3g-roll-out/474318/
• http://economictimes.indiatimes.com/Cabinet-to-take-a-call-on-3G-auctions-soon/articleshow/4642138.cms

DoT, FinMin close to settle differences over 3G issues

11 Jun 2009, 2256 hrs IST, PTI on www.economictimes.com

NEW DELHI: Differences over the 3G spectrum auction reserve price between the the Department of Telecom and the finance ministry is being sorted out to push the bidding in a faster pace.

“We are yet to arrive at the exact bid price but it could be between Rs 2,020 crore-Rs 4,040 crore, the two respective reserve prices quoted by DoT and the finance ministry respectively,” a senior DoT official said.

Market conditions are gradually improving. We will settle at a price which is acceptable to both the ministries, which could be about Rs 3,000 crore but the Cabinet has to give its approval for the rate, said the official.

The government plans to get Rs 30,000 crore upwards out of the 3G spectrum auction.

There is a good possibility, if everything woks out as per schedule drawn by the Department, that the auction could kick off in September-end or early October, said the official.

Since we had approached Cabinet once and it is a major policy decision, we will take it up to the Cabinet again, he said.

Telecom Minister A Raja had earlier said 3G services would start by the end of this year.

Ministry may dump spectrum panel’s proposal on 2G auction

Thomas K. Thomas on The Hindu Business Line on June 11, 2009

 New Delhi, June 10 The Communications Ministry is likely to reject the recommendations made by the Spectrum Committee to auction spectrum for GSM-based cellular services and favour maintaining status quo on the existing subscriber-based allocation criteria.

The Ministry is also not for capping start-up spectrum for new players at 4.4 Mhz, as proposed by the panel set up by the Department of Telecommunications (DoT). The panel, headed by the Additional Secretary, Mr Subodh Kumar, had suggested sweeping changes in the spectrum allocation policy including scrapping the existing subscriber base criteria.

Highly placed officials in the Ministry of Communications told Business Line, “While we are in favour of auctioning 3G and WiMax spectrum as soon as possible, radio frequency for 2G mobile service cannot be auctioned as it is illegal. It is unfair to ask new players to take part in an auction when some of the existing players have got spectrum based on the subscriber criteria,” the official said.

Pay for addition

However, the Ministry is likely to price additional spectrum beyond 6.2 Mhz derived from the fee paid by operators during the fourth cellular bidding process. “We are considering a formula whereby operators with more than 6.2 Mhz will have to pay a one-time fee derived from the amount paid by the fourth cellular operator for the 4.4 Mhz,” the official said.

If this formula is accepted then existing players such as Bharti Airtel and Vodafone will have to pay at least Rs 375 crore for each unit of spectrum beyond 6.2 Mhz.

The Ministry will take a final view on these proposals after consulting the telecom regulator. The spectrum panel had suggested freezing all allocation of spectrum at current levels. It had suggested that spectrum should be auctioned and existing players should pay a one-time fee based on the amount collected during the auction for third generation mobile services.

Related story at

• http://www.ciol.com/technology/networking/news-reports/dot-puts-2g-allocation-on-hold/11609120851/0/
• http://economictimes.indiatimes.com/DoT-puts-2G-allocation-on-hold/articleshow/4642382.cms

India defence loosens hold on spectrum

From www.ciol.com on June 8, 2009

NEW DELHI, INDIA: India’s defence ministry has agreed to release 45 MHz of wireless radio spectrum, the Business Standard reported, a move that will help fast-growing mobile telecoms firms reeling under shortage of radio waves.

The defence ministry had signed an accord with the telecoms ministry to immediately release 10 MHz spectrum for third-generation (3G) mobile services and 5 MHz for the dominant 2G services.

The remaining would come in a phased manner, taking the total to 25 MHz for 3G and remainder for 2G, according to timelines agreed by the two ministries, it said, without saying where it got the information from.

A spokesman for the telecom ministry could not be immediately reached.

Separately, the Mint newspaper, quoting an unnamed telecoms ministry official, said defence forces had agreed to free up spectrum over the next three years in a phased manner. It did not say how much spectrum they would vacate.

Related stories at

• http://economictimes.indiatimes.com/India-defence-agrees-to-release-spectrum-Report/articleshow/4630179.cms

Mobile players back proposal for spectrum sharing

The Hindu Business Line on June 8, 2009

Our Bureau

New Delhi, June 7 Cellular operators are backing a proposal suggested by the Department of Telecom’s spectrum committee to allow sharing of radio frequency. Spectrum sharing will allow operators to pack in more subscribers and mobile traffic in the given bandwidth.

According to the spectrum panel an operator with 4.4 Mhz of spectrum will be able to support around 12 erlang of traffic per base station (roughly equivalent to 300 users talking simultaneously).

But if two operators, with 4.4 Mhz each, share their spectrum then they will be able to support 77 erlang (equivalent to 1,900 users) on a single base station. By doubling the amount of spectrum the efficiency levels go up by more than six times.

The higher the better

The efficiency levels increase if the quantum of shared spectrum is higher. For example, if two operators with 6 Mhz share their spectrum they will be able to handle over 100 erlangs (close to 2,500 users) on each base station, compared to just 37 erlang if they offer services without sharing.

“Sharing of spectrum can be beneficial when there are pockets in a region where an operator does not have spectrum or has less spectrum. Sharing makes economic sense only when the full spectrum is shared between the operators in a service area. It should therefore be permitted only when two or three GSM or CDMA operators share their entire spectrum holding in a licence area,” the panel said.

GSM operators say that the panel’s recommendations bolster their longstanding view that dividing spectrum into small portions reduces efficiency levels drastically. “Spectrum sharing will enable operators to have enough bandwidth to accommodate the growing subscriber base,” said a GSM player.

Minimum spectrum

The CDMA players, however, want the DoT to ensure that everyone gets 6.2 Mhz of spectrum under the current subscriber linked criteria and then allow sharing of spectrum. “If DoT wants to permit spectrum sharing on radio frequency that has been acquired through an auction process, then we are fine with that. But they should first make sure that new players get at least 6.2 Mhz and then go for auction,” says Mr S.C. Khanna, Secretary, Association of Unified Telecom Services Providers of India.

‘India lost $16 bn due to 3G auction delay’

From www.ciol.com on June 5, 2009

 BANGALORE, INDIA: The GSM Association, a global trade group for mobile industry consisting of about 750 mobile operators, has urged the Department of  Telecom (DoT) to go ahead with the 3G auctions without any further delay and also make the HSPA  (High-speed Packet Access) a reality.

The delay in 3G auction in India had resulted in a $16 billion loss to the economy; the government should now carry out the auctions without any further delay, said Jaikishan Rajaraman, senior director, GSM Association, quoting a McKinsey report.
 
He demanded that the government must allocate the 2.1 GHz spectrum to drive the deployment of mobile broadband across India. The planning phase for the allocation of 2.6 GHz spectrum must also start now if HSPA is to evolve for the benefit of the Indian population.

According to Rajaraman India will need to make further spectrum available through the digital dividend to support the delivery of more widespread coverage in rural areas.

Quoting the recent McKinsey report he said that once the licenses are issued and 20 billion invested over a period of five years, it will deliver $70 billion economic benefit in the same period.
 
Further, a 10 per cent increase in broadband penetration can result in up to 1.5 per cent increase in GDP. Any further delay in allocation of 3G licenses will prove determinant to the economy, Rajaram claimed.

The GSMA senior director said the development of the GSM technology track (GSM/W-CADMA/HSPA) has been dramatic. In a mere ten years there has been a 1000-fold increase in the data bit rates of mobile networks, while maintaining full backwards compatibility with the very first mobile phones released in the market.

3GPP technologies will continue to evolve, with a clear road map of reaching 42 Mbps peak down link speeds with HSPA+ and exceeding 100 Mbps in the near future with LTE.

This technology road map has given GSM mobile operators the confidence to deploy HSPA with more than 217 networks across the  world, he dwelt.

India will get next 400 million mobile users five times faster

From The Hindu Business Line by Thomas K Thomas on 04 June 2009

Thomas K Thomas

New Delhi, June 3 It took 15 years for India to get 400 million mobile users, but under three years it will add the next 400 million.

According to the revised estimates by the Cellular Operators Association of India, the mobile subscriber base is expected to zoom to 893 million by 2012. That is 150 million more subscribers than what was projected earlier. The COAI’s earlier estimates had put the mobile user base at 743 million by 2012.

The reason for the new optimism is derived from the huge uptake of mobile services in rural areas.

Explains Mr T. V. Ramachandran, Director-General, COAI: “We have revised the projections because the rate at which infrastructure is growing is faster than what we had expected. Operators are moving into the hinterland and uncovered areas. Secondly, we are getting almost 50 per cent of our new additions from the rural areas. The third factor is that the level of competition has increased with new players in the sector which again leads to faster deployment of networks.”

According to Mr Atul Bindal, President, Mobility, Bharti Airtel, three out of five new subscribers are now coming from non-urban areas. “Indian growth story is here to stay. I will push back against any view that says to the contrary. There is still a huge untapped market in both rural and urban areas,” says Mr Bindal, who expects Airtel to get its next 100 million users in another two-three years.

India, with 400 million mobile users, is now the second largest market in the world after China which has over 650 million subscribers. According to COAI’s projection, there will be 1.24 billion mobile users in 2015 – which means one phone for every Indian.

GSM broadband users

Our Mumbai Bureau reports: India could have 100 million mobile broadband users on the GSM platform by 2014, if the 3G auctions happen during the current fiscal, according to the GSM Association. Overall broadband penetration in India is 4.7 per cent now.

3G investments would lead to economic benefit worth around $70 billion, Mr Jaikishan Rajaraman, senior director, GSMA, said at a press meet here on Wednesday.

The delay in the auction of 3G spectrum in the past two years has led to a huge loss of around $16 billion, according to a study by global consulting firm LECG Corp.

The losses include direct investments as well as those arising from missed opportunities.

“Cost of capital increases whenever you choose to defer investments,” said Mr Rajaraman.

No criminal cases against telcos: DoT; Foreign telcos get clean chit in licence fee, service tax case

3 Jun 2009, 0143 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: Department of telecom (DoT) will not file any criminal case against Indian and international long-distance operators including AT&T, British Telecom, France Telecom, Verizon, Bharti Airtel, Reliance Communications

and Tata Communications after investigations by both the CBI and an internal committee of the communications ministry proved that collaborations between these players did not result in revenue losses to the exchequer.

The DoT had earlier alleged that the international operators were providing long distance services to customers in India by tying up with Indian counterparts rather than taking separate licences leading to huge losses in levies to the exchequer.

The DoT had said that these foreign operators had not paid a one-time entry fee of Rs 25 crore (prior to January 1, 2006) plus 15% of their annual revenues as levies for offering long distance services in India. All these international long distance operators have now taken licences for their Indian operations.

After the CBI had completed preliminary investigation on behalf of DoT, the central agency had suggested that the government file a case against these companies for a thorough probe into probable financial loss.

But, following the CBI report, the DoT committee gave an opportunity to all these companies to explain their viewpoints on the alleged violations. On studying the presentation by these telcos, DoT committee concluded that there was no loss to the exchequer.

Story on The Hindu Business Line dated 03 June 2009

Foreign telcos get clean chit in licence fee, service tax case

Thomas K Thomasin

New Delhi, June 2 In a move that removes all hurdles to global telecom firms to bid for third generation mobile (3G) spectrum, an internal panel of the Department of Telecom has decided to close a six-year-old case against international majors including AT&T, BT (formerly British Telecom), Equant and MCI Worldcom for alleged evasion of licence fee and service tax.

While it is not clear on who will actually bid for 3G spectrum, a clean chit from the DoT panel on the issue has removed possibilities of any legal complications later on for these multinational majors.

The issue dates back to 2003 when it was alleged that the foreign telecom players including AT&T Communications Services India, Equant and MCI Worldcom India were selling managed data network services to corporates in India without taking any licence from DoT.

It was alleged that these companies had got into a partnership with Indian operators, including Videsh Sanchar Nigam Ltd (now Tata Communications), Reliance Communications and Bharti, to bypass paying local taxes and levies. The companies were hauled up by the Parliamentary Standing Committee on IT for allegedly violating foreign direct investment norms and also for depriving the national exchequer.

The matter was referred to the Central Bureau of Investigation which, in turn, put the ball back in DoT’s court on the ground that the telecom department should carry out its own assessment based on the licence conditions. The CBI had concluded that in case the DoT found irregularities then it could lodge an FIR for further investigation.

But now, in a relief to the multinational operators, a DoT committee has concluded that the alliance with Indian players was not illegal. For example, in the case of AT&T, the DoT panel stated, “there is no loss of revenue to the Government as the service tax have been properly accounted for and the licence fee has been paid by VSNL. Further, as per terms and conditions of the international long-distance licence, the licensee can always employ or appoint agents for provision of service.” The panel said that AT&T has produced invoices and tax details to prove that it had met with local laws in India.

“The committee feels that in the case of AT&T, being the service support organisation of VSNL and interfacing with customers in India on behalf of VSNL, there is no violation of Indian Telegraph Act 1885 and loss to exchequer. On the part of VSNL also there is no violation. Therefore, there is no merit in the complaint and the case can be closed,” it added.

In the case of BT, the DoT panel observed that the company had got into an arrangement with Bharti to service its global customers in India. BT, however, had also serviced clients directly through its subsidiary in Singapore.

The UK-based company claimed that the revenues earned by the Singapore unit relate to services provided by BT outside India and, therefore, it was not liable to pay service tax and licence fee to the DoT.

Similar story on http://www.ciol.com at http://www.ciol.com/technology/mobility/news-reports/dot-clears-3g-spectrum-hurdles/3609120497/0/

Telephone tariff will drastically come down: Raja

From Financial Express; ANI dated Jun 02, 2009 at 1539 hrs IST

New Delhi: Union Minister of Communications and Information Technology, A Raja has said that the prospects of the further lowering of telephone tariff in India are imminent in the future.

He said this while assuming his charge of the ministry here on Monday.

He also said that as a result of a drastic tariff cut, the telecommunication facility will be available to people living in the lowest edge of the social strata.

“In the telecom side already we brought healthy competition. More operators were permitted as per the TRAI recommendations. I do believe once the new operators start their operations the tariff will drastically come down and the telecommunication facility will be available to persons living in the lowest edge of the social strata,” he added.

He also said that India would auction third-generation wireless radio (3G) spectrum by the end of this year.

Raja declined to say how much the government expected to mobilise through the sale. India was to auction the 3G telecommunications spectrum in January, but the sale was delayed.

The telecommunication ministry had earlier expected the auction to raise 300 to 400 billion rupees but the Ministry of Finance in February estimated the sale could bring just half of that.

Third-generation services allow voice, data and video to be transmitted at high speeds to wireless devices, and are seen as the next growth driver for telecom firms in India.

India’s Mobile Market Is Growing Despite Economic Slowdown

From http://www.pcworld.com on 02 June 2009

By John Ribeiro, IDG News Service/Haarlem Bureau Tuesday, June 02, 2009 2:00 AM PDT

India’s mobile phone market continues to be unaffected by the economic slowdown, with 11.9 million new mobile subscribers in April. That’s a 45 percent greater increase than in the same month last year, according to data released Monday by India’s Telecom Regulatory Authority of India (TRAI).

The mobile market has not been affected so far by the economic slowdown, as Indian consumers see communications as a necessity, said Kapil Dev Singh, country manager at analyst IDC India.

The mobile subscriber additions in April were however lower than the 15.64 million new connections in March, something the telecom regulator regards as a seasonal drop. In India, the monthly data is closely watched for signs of an impact of the economic slowdown on India’s booming mobile market.

The slowdown between March and April is seasonal, and does not reflect an overall slowdown in the mobile business in the country, a TRAI official said Tuesday.

As the Indian fiscal year ends in March, mobile service operators offer deep discounts and are more aggressive in their marketing in March, the official said.

“There have been drops from month-to-month previously, so the drop in April is more likely to be seasonal,” IDC’s Singh said.

The new additions in April this year helped take the total number of mobile subscribers in India to 404 million.

India’s largest mobile operator Bharti Airtel added 2.8 million new mobile subscribers in April, taking its total subscribers to 96.74 million, while state-run Bharat Sanchar Nigam Limited (BSNL) added about 1 million new subscribers to have a subscriber base of 53.17 million at the end of the year.

Reliance Communications, India’s second largest mobile operator, added 2 million new customers in April, compared to 3 million additions in March. The company saw high additions in the first quarter as it rolled out its new GSM (Global System for Mobile Communications) network in addition to its existing service using CDMA (Code Division Multiple Access).

The number of mobile subscribers in the country is expected to increase as mobile operators target rural towns and villages. The auction of 3G licenses, now rescheduled for the end of this year after a number of postponements, is also expected to give this market a fillip.