You are out at a mall shopping for a dress for your wife, butaren't sure if she'll really like the colour you've picked. Youdecide not to take any chances, and decide to call her to show herthe dress. Yes, show--over a video call. In the UK, Vodafone's 3Gcustomers can already do that, but since you are in India, you'llhave to wait for a while, although no one knows how long.
3G, as the name implies, is the next generation of wirelessservices, which will allow high-speed streaming video, gaming, videomessaging, and even mobile TV. As much as customers are eager for 3Gservices, operators are straining at the leash to offer them. So,what's holding up mobile's next big thing? A lack of appropriatespectrum. Currently, the GSM wireless service is offered on 900 mhzand 1800 mhz, while the CDMA service rides on 800 mhz. Since 3Gservices shove heavier data 'packets' over the airwaves, they needbroader spectrum bands for efficiency, which usually is available inthe higher range.
The problem with handling operators spectrum in the higher rangeis that India's armed forces currently use them. They have offered tovacate, but not before they have been given alternative frequency.There are multiple challenges in sorting out the spectrum issue. Tobegin with, the state-owned BSNL is supposed to be responsible forproviding an alternative communications network for the armed forces,and it did start work on it, when midway the defence headquartersdecided that it should upgrade its communications equipment and,therefore, needed a more hi-tech network. Originally, the Departmentof Telecommunications, which oversees BSNL, had allocated Rs 980crore for the defence network, but when the cost of building a state-of-the-art network jumped to Rs 4,000 crore or so, it refused tobankroll BSNL, citing funds crunch. A group of ministers (GoM) wasscheduled to meet on June 13 to sort out the issue, but the meetingwas cancelled without any fresh date being set for a future meet.
However, the stand-off between dot and the defence ministry shouldnot have been that big a hurdle, since the industry regulator, TRAI,has already suggested that 25 mhz of spectrum in 2.1 ghz band be usedfor kick-starting 3G services. Says Nripendra Misra, Chairman, TRAI:"This portion of the spectrum is already available, so there is noquestion of any dispute." What's holding up movement on this front isthe fact that TRAI had recommended that this part of the spectrum beauctioned to the top five operators, with others getting additionalspectrum as and when it becomes available. In fact, before DayanidhiMaran, the immediate past telecom minister, stepped down, he hadpromised to bring the 22.5 mhz spectrum into the market by June thisyear.
Hurdles Galore
Then, there are two other issues that are yet to be sorted out.One is of a spectrum policy itself, and the other is of how toallocate this precious electromagnetic resource. According to Misra,the ball on both the counts is in dot's court. "Firstly, it has toframe a policy and take a decision as to which existing spectrumbands need to be allocated for 3G, and then it must decide how theallocation of spectrum must be executed," says Misra.
For about six months now, dot has been threatening to come outwith a 3G policy, but it hasn't yet delivered on the promise. When btspoke to dot officials, they again said the policy would be out in amonth's time. This time around, there's another problem. The newTelecom Minister, A. Raja, who took charge on May 16, 2007, hasn'tyet got up to speed on the issues, and may need time to make adecision. As far as allocating the spectrum is concerned, it isalmost certain now that the government will conduct an auction. TRAIhas recommended a minimum price of Rs 1,500 crore per licence, butamong the operators, only Ratan Tata of Tata Teleservices seemsamenable to the idea. Others believe that the allocation of spectrumshould be need-based--that is, dependent on the number of subscribersan operator has.
There's also the issue of whether the auction will be open to newplayers. Not surprisingly, the incumbent operators think they shouldget precedence. "We believe that existing operators must get priorityin terms of allocation of this spectrum," says Manoj Kohli, Presidentand ceo, Bharti Airtel. Adds Sanjeev Aga, Managing Director, IdeaCellular: "The licence conditions and surrounding documentation makeit amply clear that existing licencees are entitled to 3G spectrum asand when it is available. As per the policy, any new entrant seekinga fresh licence will be eligible for 3G spectrum only afterentitlements of existing licencees are met."
Smaller players such as Spice Communications worry that selectiveauction will be to their disadvantage. "Tendering or bidding is notthe answer to the spectrum process. It is important to protect theinterests of all the existing operators," says Umang Das, JointManaging Director, Spice. Airtel's Kohli is optimistic of fair play."We are confident that the government and industry will find the bestsolution that is in the interest of the consumer," he says.
To make matters worse for the wireless operators, there's a newcontender that has arrived on the scene. It's wimax, a wide areawireless service that provides download speed of up to 75 mbps.Although, it is primarily a data service, it has staked claim for 3Gspectrum. gsm operators are lobbying with dot to keep wimax away from3G spectrum. They also contend that if wimax players are allowed tooperate in the imt-2000 band, which the world over is reserved for 3Gservices, then its signals will interfere with those of GSM operatorsand affect service quality.
Despite such skirmishes, everyone wants the uncertainty over 3Gspectrum allocation to be over as soon as possible. After all,customers are waiting.
-additional reporting by Krishna Gopalan
SPECTRUM SAGA
Over the last four years, spectrum allocation has made littleprogress.
November 17, 2003: The NDA government seeks TRAI recommendation onspectrum-related issues
May 31, 2004: TRAI presents the first consultation paper onspectrum-related issues
May 13, 2005: TRAI makes its first recommendations on spectrum
May 22, 2006: DoT asks TRAI to give recommendation on allocationand pricing of spectrum for 3G and broadband
June 12, 2006: Consultation paper on allocation and pricing ofspectrum and for 3G and broadband services is put out
September 27, 2006: TRAI submits its recommendations, saying 3Gcan be initiated immediately on available 2.1GHz band
October, 2006: A DoT committee is appointed to look into spectrumrecommendations
May 13, 2007: Maran quits Union Cabinet and a cloud hangs overfuture of several of his initiatives
May 16, 2007: The Defence Ministry says it cannot vacate spectrumfor two years due to delay in setting up of an alternativecommunications network by BSNL
June 13: The first meeting of the Group of Ministers on availingadditional spectrum for telecom services gets cancelled
GSM vs CDMA
The quest for dominance.
If you are a consumer, the battle between GSM and CDMA shouldn'tmake a difference as long as you get good service. But given that theindustry is waiting to make the next technological leap into 3G, thesparring between the two rival technologies will end up affecting youdirectly. So far, GSM is the more popular technology in India, but asoperators go rural and 3G arrives, CDMA may gain an upper hand. "Itmust be understood that GSM has been around since 1995, while CDMAwas launched on a commercial basis only in 2003," says B.V. Raman,the CDMA Development Group's (CDG) Country Head for India.
GSM has eight operators out of which four large players--Vodafone-Essar, Bharti Airtel, Idea Cellular and the state-owned BSNL--account for over 85 per cent of the total GSM subscriber base of130.6 million. As for the CDMA operators, there are six of them, butReliance Communications and Tata Teleservices have more than 48.65million subscribers between themselves, which translates to a marketshare in excess of 94 per cent.
Elsewhere in the world, the story is even more interesting."Globally, GSM increased its market share by more than 3 per cent to83.9 per cent by adding 511 million subscribers in 2006," says AlanHadden, President, Global Mobile Suppliers Association (GSA). "Thiswas 81 million more than the total of other mobile technologies,including TDMA, PDC, and CDMA." He adds that there have been at least34 CDMA operators who have migrated to GSM. "These are leadingoperators in Australia and Brazil," says Hadden. In India, AnilAmbani-owned Reliance Communications has decided to do somethingsimilar, although currently CDMA accounts for the lion's share of itssubscribers.
Without doubt, the battle ahead will be around 3G and the issuesconcerning spectrum. There is also the part about rural connectivitywhere penetration levels are less than 3 per cent. According toRaman, CDMA is better positioned to offer connectivity in ruralareas. "The technology uses fewer cell sites and is, therefore, moreefficient," he says.
