DOT allows global companies in 3G

Surajeet Das Gupta Business Standard New Delhi, July 02, 2008 The
Department of Telecommunications (DoT) has finalised the long-awaited policy for 3G services that will permit new international telecom firms with experience in this arena to bid for a licence.The policy is in sharp variance with telecom regulator TRAI's suggestions that only incumbents should be allowed to bid for 3G licences.The move opens India's rapidly growing telecom market to global companies that do not have a presence here to offer consumers enhanced voice, data and video services, such as movie downloads and mobile TV, at speeds that are ten to 30 times faster than those currently available on GPRS mobile phones.DoT is also doubling the reserve price for auction recommended by TRAI in 2006 from around Rs 1,400 crore for an all-India licence. The adjusted gross revenue (AGR), the percentage of an operator's revenue that is paid after a one-year moratorium, is also being raised from 0.5 per cent to 1 per cent.The 3G policy, however, has to be cleared by Prime Minister Manmohan Singh, with whom Communications Minister A Raja has held several meetings in the last few months. Singh is said to have taken a personal interest in the policy.The 3G policy has gained importance because it is expected to earn the government revenues $10 billion to $12 billion (Rs 43,000 crore to Rs 52,000 crore), which would help balance expenditure on welfare programmes like the Rs 71,600 crore farm loan waiver scheme.The 3G policy has been delayed because many incumbents had lobbied against allowing new players on the grounds that there is sufficient scope for competition from the dozen-odd players. The lobby of service providers offering GSM technology had also initially objected to even auctioning 3G licences arguing that they should automatically be entitled to such licences.Experts also questioned whether there was a market for 3G services in a country that is dominated by voice calls. However, telecom operators said with data accounting for over 12 per cent of revenues, they expect at least 10 per cent of the market to shift to 3G services.