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Monday, June 7, 2010

Edition22: Impact of 3G auctions in India

As the 3G/BWA auction process moves towards a closure, a backgrounder on its possible impact on the wider India Telecom industry is prepared by Naveen Mishra, Lead Analyst, Telecoms Research Practice, IDC India DC (India) Ltd. Set up in 1987, IDC (India) Ltd., ais regarded as comprehensive, dependable and respected source for market intelligence and consulting in the fields of IT, telecommunications and consumer technology.

Q: Can IDC throw light on the status of the India 3G spectrum bidding and the monies involved?

A: The formal bidding process, which started off on April 9 is an iterative process and is expected to be completed over the next few days. The base price for all-India licence has been pegged at INR 3,500 Crore (US$ 760 million) for 3G spectrum and INR 1,750 Crore (US$ 380 million) for BWA spectrum.

The successful launch of 3G / BWA networks and services would help to decongest mobile services networks especially in metros/urban areas and improve quality of service (QoS) for the Indian mobile services user. BWA spectrum is expected to help launch WiMax services in rural areas. This would help reach broadband connectivity to the rural masses. Government initiatives such as connecting Citizen Service Centres (CSCs) and e-Governance programs to provide telemedicine / e-health and other services is further expected to help in the development of the ecosystem.

Q2. Please describe the two parallel auctions that are going on here, 3G spectrum vs. broadband wireless access (BWA) spectrum?
A: The 3G spectrum auction involves identification of successful bidders for allocation of 3 or 4 blocks of 2 x 5 MHz in the 2.1 GHz band across 22 service areas or circles. The BWA auction, to be launched two days after the close of the 3G spectrum auction, involves identification of successful bidders for 2 blocks of 20 MHz in the 2.3 GHz band across 22 service areas or circles.

Q3. Can you comment on the rationale for Qualcomm, a vendor, bidding to become a broadband wireless access provider?

A: Qualcomm has a history of participating in spectrum auctions. In the India auction they have bid for BWA spectrum with the stated purpose of expediting deployment of TD-LTE, which is compatible with 3G WCDMA/HSPA and EV-DO.

Q4. Will it be worth the investment for the successful Telcos in the end?

A: India is a spectrum-starved market, especially in urban areas. Operators are looking to access spectrum to not only offer new generation data services base to consumers to boost their earnings, but also to improve the quality of service (QoS) offered under the current 2G regime.

Q5. What are the winning bidders going to do differently for 3G in India compared to the countries that have had it for some time?

A: India is a predominantly pre-paid mobile services market. Therefore, the business models of service providers who eventually win the spectrum bids and offer 3G services have to be tailored to this reality. India being a 'young nation' with an estimated fifty percent of the population under the age of 35 years, is expected to see greater demand for content centred around sports and entertainment. Indian consumers would be able to access new age services such as video-on-demand, live TV etc.

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