New Delhi, May 19: A lobbying war has broken out over whether or not to allow foreign telecom firms take part in the auction for 3G services. Third generation, or 3G, mobile technology enables faster download and data transmission and allows movies and other high-end services on cellphones.
Multinational telecom giants supported by their embassies want India to open up 3G services for global bidding. Telecom minister A. Raja and the finance ministry also want global bidding as they believe this will bring in more money to the government and promote greater competition in the industry.
However, the Telecom Regulatory Authority of India (Trai) as well as bureaucrats in the department of telecom want competition to be limited to the existing players, who can tie up with foreign players for technology and funds. This is the view which domestic players wish to see as the final government policy.
Telecom department officials say 3G services will initially be auctioned only for the metro circles. Operators buying the rights will have to tie up with local players controlling other circles to provide roaming services.
However, telecom analysts say the issue of foreign players entry can be sorted out if the government allows the opening up of the MVNO (mobile virtual network operator) segment. MVNOs buy talk time at wholesale rates from existing firms and then offer their services under their own brand.
The MVNO model enables new players to enter the telecom business, without the government having to give fresh spectrum, or radiowaves, over which mobile calls travel.
Global players may buy spectrum from existing players to offer 3G services even in circles where they failed to bid.
Raja had earlier said that the government could auction up to 25MHz of frequency for 3G services, which would allow the entry of five players.
The 3G guidelines, which are being finalised by the telecom commission, proposes to auction spectrum in the 2.1 Ghz band for GSM players and the 800 Mhz band for CDMA operators.
Officials said, The guidelines may suggest that in the event of a merger or an acquisition, the new entity will have to pay the government 25 per cent of its new valuation. Earlier, the department of telecom had proposed that 3G operators would not be allowed mergers and acquisitions for an initial five years to discourage trading in spectrum.