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GSM operators challenge the govt's new telecom policy; matter to come up for hearing today

Wednesday, October 24, 2007

GSM operators have dragged the Govt back to the TD-SAT for giving CDMA operators a back door entry into their turf. The matter will come up for hearing today. GSM players allege this move did not have the backing of the Telecom Commission.

It was in 2003 when former Telecom Minister Arun Shourie brokered a peace agreement between GSM and CDMA players putting an end to a 3 year old battle. 4 years on nothing much seems to have changed.the GSM lobby has once again dragged DoT to court accusing it of acting with undue and unseemly haste in a bid to favour one set of operators.

The petition filed by GSM body CoAI accuses the DoT of not even bothering to amend the license conditions before issuing in-principle approvals.

The petition goes on to suggest that dual technology use and the revised spectrum allocation criteria were approved by the government without the backing of the Telecom Commission, which is the apex decision making body.

GSM players also accuse the government of not following procedures. They say the govt should have sought cabinet approval before making such a significant change in the licensing framework.

GSM players allege that the DoT's move to increase the subscriber thresholds for allocating spectrum has in one stroke demolished the long queue of GSM operators waiting for spectrum. GSM players say they are legally entitled to 15 MHz of spectrum and only post that award can the government look at tinkering with the allocation criteria.

Telecom Secretary D. S. Mathur and other top DoT officials could not be reached for comment.

DoT recommends that GSM spectrum should be first given out to existing players like Reliance Communication that already has a CDMA based mobile service and wish to start GSM services as well. This could put brakes on the plans of some potential players. New entrants like Parsvnath, Unitech and Sterlite may have to wait for several months before they can get spectrum. This could discourage players to enter the sector.

The first tranche of 20 MHz of spectrum is expected to be released by the end of the year. This will take care of the needs of existing operators. The govt has not defined any timeline for the next tranche. For even 2-3 new players, the govt will have to release another 20-25 MHz. If new operators are not able to start service by the end of next year, the business may become unviable.

Experts say new operators will need about 2 lakh subscribers a month - each giving over Rs 200 in revenues to be able to break even over 5 years. This could be a tuff one since currently India adds about 5 million subscriber a month between 7 operators. So from the outside the sector seems to be glittering with profit, raking revenues and maintaining margins could be more challenging than setting up the network.

Posted by FR at 9:18 AM  

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