After many months of delay, India's 3G spectrum auction began today (April 9th) with major telecom operators, including Bharti, Vodafone, RCom and Tata competing to acquire the radio waves that could fetch the government up to Rs 35,000 crore.
[Definition: A crore (often abbreviated cr) is a unit in the Indian numbering system equal to ten million (10,000,000; 107). Large money amounts in India are often written in the form "Rs 23 cr", that is, 23,00,00,000 rupees (230,000,000 in Western notation).]
Nine mobile operators are bidding for the 3G spectrum. For offering 3G services, the government is auctioning three slots in 17 telecom service areas and four in the remaining five areas. Incredibly, there is no time limit or deadline for the closing of the auction.
The Indian government has set base prices for all the 22 zones at Rs 3,500 crore and Rs 1,750 crore for BWA. Romal Shetty, head of telecom at KPMG India, said "the 3G bidding will be intense because of fewer slots and probably it will be 1.5 to 1.8 times the reserve price." The auction is happening in a virtual world and is a software-based auction. A small team from the auctioneers and the Department of Telecommunications (DoT) will monitor the auction in a room in DoT.
The auction for the BWA spectrum would be conducted two days after close of the 3G auction. The winners will be awarded spectrum in September, which means commercial operations of 3G services should be possible only by the end of 2010 or early 2011. Together, the 3G and BWA licensed spectrum auctions could be one of the world's biggest over the past few years. The government hopes to raise a combined $9 billion from the 3G and BWA auctions
For more information, see: FACTBOX-Quick facts about India's 3G, BWA auctions
For many years, this author has stated that India holds the key to the future of WiMAX as a mass market (vs a niche network technology). India is the world's fastest growing mobile market (but so far that is just for mobile phones).
The Indian government has slotted the sale of two 2.3 GHz blocks of spectrum on April 11, providing 20 MHz spectrum in each of the country's 22 telecom circles. The base price for this BWA auction has been set at $386 million. There are 11 annoounced bidders for the BWA auction.
We are eagerly awaiting the results of that BWA auction, as one of the bidders, notably Qualcomm (with verbal support from Ericcson), have indicated they would opt for TD-LTE for deployment in the BWA band. Previously, India market watchers believed that WiMAX was synonymous with BWA in India and the 2.3GHz spectrum winners would deploy WiMAX – as state-owned telcos BSNL and MTNL are already doing in the band. This was because WiMAX had equipment and devices available at once, and Indian operators and research institutes have carried out years of testing and development. But that assumption may not be valid anymore.
TD-LTE, or TDD-LTE (Time Division Duplexing- Long Term Evolution), is said to offer peak download speeds of 100 Mbps on mobile devices. LTE has been chosen over mobile WiMAX by the world's tier one mobile operators. But the LTE version favored by those operators uses Frequency Division Duplexing. To date, only China has committed to TD- LTE. If Qualcomm wins its bid in the BWA auction, India could become the second country (after China) to roll out TD-LTE.
Sources have indicated that Qualcomm would bid aggressively to obtain one of the two BWA frequency slots up for sale. However, Qualcomm will need an Indian partner for its TD-LTE foray in the country since foreign direct investment is limited to 74%. Qualcomm has stated that it would enter into a joint venture with an Indian partner to launch its services and later exit from the joint venture after the network becomes operable. But the Indian partner(s) have not been confirmed at this time. The frontrunner, according to local newspaper The Economic Times, is GTL Infrastructure.
At a recent presentation, Kanwalinder Singh, president of Qualcomm India, said that 59 networks across 28 countries have committed to LTE. The Indian market, with its vast population and low penetration, could well drive economies of scale.
Ericsson is making a case for TD-LTE being more practical for the 2.3GHz band than WiMAX, despite the latter's headstart in terms of commercial availability. The Swedish telecom equipment maker says WiMAX works best with more spectrum than India is making available – though in many deployments, operators are running profitable WiMAX systems with 20MHz or even less. "It is commonly known in the industry that WiMAX requires minimum 30MHz of spectrum, whereas India is offering only 20MHz and this may result in severe interference problems," said CTO Haken Eriksson said.
Sandeep Ladda, executive director, PricewaterhouseCoopers (PWC), said: "Though the Indian market is huge, it won't be smooth sailing post auction. We are adding 1 crore customers a month and in January, we added 1.9 crore customers, but the implementation of the new technology has its own cost. And India is a very cost conscious market."
For more information. see: