India - 3G spectrum for incumbent operators

Government approves release of 3G spectrum for BSNL and MTNL

The government Thursday approved the release of airwaves for two state-run companies for the launch of third generation (3G) mobile services in the country.

The airwaves, also referred to as radio frequency or spectrum, have been released for Mahanagar Telephone Nigam Ltd (MTNL) that offers telecom services in Mumbai and the national capital, and Bharat Sanchar Nigam Ltd (BSNL), which operates in all other parts of the country.

"We have approved the release of one block to MTNL and another block to BSNL," Communications Minister A. Raja told reporters here.

The spectrum block released for the two companies has the size of 2X5 MHz in 2.1 GHz, and in the bandwidth of 2.5 GHz at 2645.0 MHz.

Raja has also approved release of a block of 20 MHz broadband wireless access (BWA) spectrum each to the two public sector utilities.

Both the state-run companies will receive special consideration in allocation of 3G and BWA spectrum through an auction. However, the telecom companies will pay a price equal to the highest bid in the respective service areas.

Raja has also approved the proposal to waive the annual licence fees in terms of adjusted gross revenues on BSNL's rural wire lines.

The government also accepted a payment of up to Rs.20 billion per annum to compensate the loss BSNL is incurring from rural operations after the Telecom Regulatory Authority of India (TRAI) scrapped the Access Deficit Charge (ADC) paid by private telecom players to BSNL.

The fund will come from the Universal Service Obligation (USO) fund - a fee paid by private telecom companies for not providing their telecom services in rural areas.

Last week, Raja had said both the state-owned telecom companies would be awarded 3G spectrum with immediate effect and would not have to wait for the auctions of radio frequencies, which are scheduled to be held later this year.

This implies BSNL and MTNL will be able to launch 3G services by the year-end, while private telecom companies are likely to come out with similar offerings only by mid-2009.