DoT to open up to global telcos via 3G - 3G mobile paves the way for big players to enter Indian market.

By Subhankar Kundu @ Thursday, May 15, 2008 8:30 AM

Section - Telecoms/Mobile

The tussle between the Department of Telecom (DoT) and Telecom Regulatory Authority of India (TRAI) over the third generation (3G) players issue seems to be reaching its climax. The decision is likely to go in DoT’s way.

Earlier, TRAI made an appeal to the Finance Ministry not to allow the foreign players into the 3G market. This annoyed the DoT as it is in favour of permitting new players, including foreign companies.

TRAI, in a letter written to the Finance Ministry, expressed concerns on global telcos entering India via the 3G route fearing it could have serious implications for the Indian telecom sector. TRAI recommended that the 3G routes should be opened only for the existing players.

On the other hand, DoT believes that the open market can bring in healthy competition and higher revenues by auctioning the spectrum. The final decision-making authority lies with the DoT and sources said it is set to open ways for global telcos to get into the bidding for 3G mobile services in India. DoT is likely to announce the new rules after discussing the issue with the Prime Minister’s office before the end of this month. Prior to the official announcement of the global auctioning, DoT would scrutinize the procedures to avoid legal hassles from existing players opposing the global companies' involvement. Meanwhile, finance minister, Mr. Chidambaram, in a letter to communications minister A Raja, said he felt TRAI’s recommendations were not a ‘workable option’. He also believes the government can pull maximum revenues from the global auctioning of 3G spectrum, the Economic Times reported.

TRAI has a valid point in defending its stand of permitting only existing players. TRAI argued that the existing companies have made huge infrastructural investment and this can position them better to cater 3G services at a low cost. DoT sources defended through its draft policy that says the new market entrants need 10 MHz whereas existing ones need only 5 MHz to for the migration to 3G. The policy further says that before taking part in the 3G auctions, new players need to acquire a UASL license which costs a hefty Rs 1651 crore.

But, in summary, the interest stirred up can only reflect the booming state of the Indian telecom market. X