20 Comments

Summary:

[qi:___3g] After a long wait, the Indian government has decided that it will auction 3G spectrum, and will allow foreign players to participate in the bidding. The spectrum is going to be released in the 2100 MHz band, which would make it compatible with rest of […]

[qi:___3g] After a long wait, the Indian government has decided that it will auction 3G spectrum, and will allow foreign players to participate in the bidding. The spectrum is going to be released in the 2100 MHz band, which would make it compatible with rest of the world, barring a few countries such as the U.S.

Here are some specifics:

  • Winners will be required to pay 0.5 percent of total adjusted gross revenue to the state on an annual basis for the first three years of operation, rising to 1 percent thereafter.
  • Winners will not be allowed to trade or resell the spectrum and they will not be allowed to merge in the first five years after the grant.
  • About 30MHz of spectrum will be sold in total.
  • India will also auction licenses for broadband wireless (WiMAX) services, with the reserve price fixed at 25 percent of the amount for 3G spectrum.

The spectrum is going to be plentiful; our sources say that it will be enough to accommodate six carriers. The carriers we expect will make it to the finish line include the current leader, Bharti Airtel; Idea Telecom; Reliance and Vodafone (VOD). The two international cell phone companies likely to win the spectrum bid include AT&T (T) and Sistema.

If the rollout of voice services over past decade is any indication, this is a big opportunity for equipment makers. Ericsson (ERICY) and Nokia (NOK) have done well in India, and there is little reason why the situation would change, though one suspects the Chinese equipment vendors are going to act as deflationary counterweights to their Western counterparts.

The 3G services in India will eventually have to compete with WiMAX, which is being seen as the wireless broadband technology of choice by lawmakers. More importantly, this auction is a way for the Indian government to keep the telecom sector specifically and the economy overall growing at a healthy clip. India’s economy was catalyzed by telecom and call center businesses, then spread to other sectors.

  1. Wouldn’t Google be interested in getting a piece of this? In a country where you can’t swing a dead cat without hitting an incredibly talented engineer – I would think they would want to get Android on par with other Mobile OS’s in a hurry.

    Share
  2. Om,

    You are missing some key points when you say that WiMAX is in the mix.

    1. The Govt has admirably cleared the way for deployment of broadband wireless services in the 2.5 GHz band, but they haven’t specified WiMAX which means that any technology can be deployed in either FDD or TDD bands. Basically that is a technology neutral position which actually means that WiMAX is in the mix but so is LTE, UMB and other technologies.

    2. Considering that there are hardly any WiMAX networks with economies of scale, a mobile WiMAX standard that is still under development, no devices etc etc, I find it rather curious that you think 3G will have to compete with WiMAX. It is the other way around…

    Share
  3. Andrew

    it seems they are chasing a few handset deals with some carriers in india. Bharti Airtel is said to be close to a deal for Android. Clearly, 3G services in a country like India could be subsidized via advertising and it makes perfect sense for Google to get in there.

    Share
  4. Good points Shiv, but there seems to be a lot of movement in the WiMAX world and folks like Intel have been eager funders of WiMAX.

    On your first point, I think DoT order today indicates that they are backing wimax. sure other technologies can play a role.

    if there are links you can send me with more information, i would greatly appreciate.

    Share
  5. The spectrum is going to be released in the 2100 MHz band, which would make it compatible with rest of the world, barring a few countries such as the US.

    US, Canada, Brazil, and Australia. Oh, and the parts of Europe that use 900 MHz as well.

    The US did auction off some 2100 MHz spectrum last year. The 2100 MHz band was already being used for other purposes when UMTS was released. Of course, that’s the downlink frequency; the 1900 MHz that most of Europe and Asia use for uplink has been used by PCS 2G services for years.

    Multiband phones are inevitable anyway, just like with GSM.

    Share
  6. John,

    Correct me if I am wrong, but it seems like W-CDMA 2100 MHz is probably the most widespread 3G frequency. Is it not the case, or am I missing something?

    Share
  7. Oh, and of course Japan is problematic for roaming. If the phone specifically supports the right frequencies for NTT DoCoMo’s FOMA (and is unlocked), then the interface is compatible enough that using a different card will work. KDDI uses CDMA, but on a different frequency than the US/Canada/South Korea.

    Share
  8. With this auction there will be 6-9 operators in each market. Wonder when the consolidation will start

    Share
  9. Om, 3G and WiMax address different needs of the market. 3G is on the Go, while WiMax is for stationary use. WiMax bandwidth for higher speeds (~40 miles/hour) is lower than 3G at the same speed, though I dont have the figures at hand to quote.

    Share
  10. Om,

    Here is the link you requested…

    http://pib.nic.in/release/release.asp?relid=32573

    As for the momentum behind WiMAX, you have already written about Sprint’s troubles, the reversal with Clearwire…basically, the point I am making is that all the momentum today is for fixed WiMAX licenses or basically DSL replacement/backhaul and other such applications. This is certainly not competition for fully mobile, commercial and tested 3G that has thousands of devices and rapidly declining ASPs…

    To the other point by John, today 2.1 GHz is the frequency of choice for WCDMA, but you should read up on the momentum behind UMTS at 900 MHz. Elisa in Finland just launched and there is tremendous momentum from Europe in this regard. ATT has also launched at 850 MHz as has Telstra and some Brazilian operators (very new)…3G EV DO services over CDMA2000 networks are widely deployed at 800 MHz.

    Share

Comments have been disabled for this post