Aug 13, 2008

Business - 3G policy favours CDMA

NEW DELHI: After global telecom operators and potential new entrants, it is now the turn of existing GSM operators to express discomfort with the government’s recently announced 3G guidelines.

Several potential 3G entrants have already indicated that steep financial and regulatory barriers vis-a-vis existing operators may prevent them from participating in the auction. GSM operators now point out that they, too, face a steeper financial entry barrier compared to CDMA firms.

In effect, despite fixing a reserve price of Rs 2,020 crore, the 3G auctions are designed with a different financial entry point for all three categories of bidders - new entrants, existing GSM operators and existing CDMA operators.

A new entrant must begin the bid at Rs 3,671 crore (the reserve price plus Rs 1,651 crore for a unified access license) while an existing 2G GSM operator can enter the bid at just Rs 2,020 crore. In contrast, a CDMA operator can begin the 3G journey at a mere Rs 505 crore for 1.25 MHz of spectrum in the 800 MHz band without bidding.

Even though future blocks of CDMA spectrum will come at a pro rata price of the highest bid, the startup price for CDMA operators is a fraction of the others.

"The policy is partial to CDMA operators as they are entitled to spectrum in both 800 MHz and 450 MHz bands in addition to being eligible to bid in the 2.1 GHz band", T V Ramachandran, director general, Cellular Operators’ Association of India (COAI), told the TOI.

"This defies Trai’s recommendations, restricting a CDMA operator opting for the 450 MHz band from bidding in the 2.1 GHz band", he added.

Trai had also recommended that if the CDMA operator opted for one carrier of 1.25 MHz in the 800 MHz band, then it should receive proportionately less (3.7 MHz) spectrum in the 2.1 GHz band. Trai had also said both GSM and CDMA operators must get an equal amount or 5 MHz of 3G spectrum

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