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Telecom success inspires Indian Policy Makers

Posted in Industry updates, Technology impact on economy and population by Manas Ganguly on October 6, 2011

Inspired by the success of Telecom sector and the advent of mobility, the Government of India is relentlessly pushing for better services, reach and depth of telecom services as a economy support, enabler and growth engine for India. The policy makers think of Telecom as a medium to reach out to the far and inaccessible corners of a rather large state.

A couple of new initiatives are worth mentioning in this regard.

1. The Ministry of Human Resource development (mHRD) along with a UK based device maker DataWind have produced the cheapest tablet/ computing device in the world. Called Aakash (meaning Sky In Hindi), the 7” tablet combines Android 2.2 Froyo, a 336 MHz processor, a 800*480 WVGA resistive screen, 256 MB RAM and 2GB flash memory along with 32GB expandable memory with a 2100 mAH battery in what could be best termed as Frugal Innovation targeting the bottom of the period. The product is priced at an unbelievable $38 and the government is subsiding a lot of it to make it available to colleges and universities.

Not only does this mark the entry of a computing devices to Sec C,D and below consumers, it also opens up a new avenue for internet penetration. It is also expected to spawn off a hundred apps and other value added services

2. To support services through wireless, the government has also at least five new frequency bands, including the 700 Mhz band, for telecom services (mobile broadband). The 700MHz digital dividend was earlier being used for analogue TV signals. The other major spectrum allocation is the use of S-band has been opened up for broadband services. This band, falling between 2.5 Ghz and 2.6 Ghz, is being currently used exclusively by INSAT systems for satellite based services including meteorological data dissemination. If the Plan is implemented then telecom companies could get access to about 200 Mhz spectrum more, which could boost broadband coverage. However, the NFAP is only a broad guideline outlining the future roadmap for spectrum usage in line with international standards. The actual implementation of this Plan depends upon inter-ministerial negotiations.

Indian Telecom Story (Part XXXI): Government rings in Rs.1 trillion from 3G and BWA auctions!

Posted in Industry updates by Manas Ganguly on June 18, 2010

The spectrum auction for broadband wireless access (BWA) services fetched the Government of India an unprecedented Rs.38.543.61 crores (USD 8.56 billion) after 16 days and 117 rounds of auction. 11 companies were a part of the auction. The pan India licence price stood at Rs. 12,847.77 crore ( USD 2.85 billion), which was 634% (6 times) the base price set by GoI at Rs.1,750 crore. Unlike the 3G event, Infotel Broadband won a pan India license, while Aircel bagged 7 slots, Tikona got 5 slots, Qualcomm and Bharti 4 each and Augere 1. The others failed to pick up any stakes in the BWA circles. The total revenue of the government from sale of spectrum for both 3G and BWA touched over Rs.1.06 lakh crore. Reliance Communication, Tata Communications, Vodafone Essar, Spice,and Idea missed picking up even a single circle.

BWA spectrum is essentially for rolling out WiMAX services enabling handheld devices and laptops to access Internet.
GoI has been pushing for more widespread access to broadband usage in the country which is at a paltry 9% of the population currently. McKinsey study projected that a country GDP improves by 0.6% for every 10% increase in penetration levels of Broadband.

1. The high prices (above expectations) paid in both auctions, which were too rich for several major cellular operators who dropped out of the second BWA auction, ease the strain on the country’s public sector deficit for this fiscal year.
2. At the same time they exacerbate the financial difficulties of the two state-owned operators BSNL and MTNL which although automatically awarded both 3G and BWA spectrum are obliged to pay the same amounts for their spectrum as the winning bidders.
3. Furthermore, the outcomes of these auctions introduce additional players into India’s mobile market, whose supply structure, absent consolidation, is already unsustainable with an uneconomically large number of competitors.
4. The real impact and value of allocating this new spectrum for mobile broadband will depend upon sensible consolidation between operators – which will require a change in M&A regulations – and the establishment of roaming arrangements between operators.
5. The combination of very high spectrum prices (e.g. $1.34 per MHz/pop for 20 MHz of BWA spectrum at 2.3GHz in Delhi) will intensify the pressure that winning bidders will exert on the prices offered by equipment vendors for network rollouts to minimize capex, while the need for intercircle roaming agreements will favor technologies that are widely supported.
6. Qualcomm which won BWA spectrum in 4 circles – including Delhi and Mumbai – will be looking for roaming agreements with operators in other circles that deploy either WCDMA 3G (Qualcomm is the pioneering supplier of 3G/LTE chipsets) and/or TD-LTE networks.
7. Infotel Broadband is being acquired by Reliance Industries Ltd. This thus enables Mukesh Ambani who was barred under a family non-compete agreement from entering the telecom sector to re-enter and establish himself in the telecom sector.
8. Qualcomm which won BWA spectrum in 4 circles – including Delhi and Mumbai – will be looking for roaming agreements with operators in other circles that deploy either WCDMA 3G (Qualcomm is the pioneering supplier of 3G/LTE chipsets) and/or TD-LTE networks.
9. Infotel’s (Reliance) choice of technology will be critical in terms of introduction of TD-LTE. It will be influenced by Infotel’s ability to offer roaming as long as its network does not have nationwide coverage, as well as by the pricing of alternative technologies, and even the availability of international roaming arrangements (since target customers for mobile broadband customers will include the most internationally active of Indian customers).

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