New Delhi, Sept. 14: Frequent changes in policy are making it difficult for foreign telecom players to finalise their entry strategy.

The Indian government has now demanded that new entrants bidding for 3G (third generation) licences must pay Rs 1,651 crore over and above the money spent on bidding for spectrum.

A 3G service combines features of a mobile phone, personal computer and TV. It allows faster data downloads and video streaming.

Analysts feel sudden changes in rules can force foreign telecom firms to do a rethink of their entry plans.

“With no defined roadmap based on which new policy changes are being undertaken, new as well as existing players face the challenge of unpredictability in telecom policy and regulatory framework,” said Sudipto Basu, a telecom analyst.

Global players such as America’s AT&T, Germany’s Deutsche Telekom, France’s Orange and Japan’s NTT DoCoMo have become sceptical about the feasibility of a 3G rollout. They have evinced interest in buying 3G spectrum and are also negotiating with existing players to buy equity stakes.

“The issue is not just the extent of investment required to get licences and establish networks, but more about the uncertainty over the availability and the allocation of radiowaves (spectrum),” Basu said.

To provide efficient voice and high-end data services, 3G service providers also need 2G (second generation) spectrum as the five megahertz of 3G spectrum apportioned with a licence is insufficient.

Foreign players were gearing up to close stake purchase deals with Indian operators such as Unitech Wireless, Essar group’s Loop Telecom and Videocon’s Datacom Solutions to obtain 2G voice spectrum.

However, while the government has given out 2G licences to 12-14 operators in each circle, there is no guarantee of spectrum as much of it is lying unused with defence forces.

The option of tying up with new 2G service providers to operate under the mobile virtual network model is not yet open for foreign players. Under the virtual network model, an operator buys airtime and offers the service under a brand name.

“Foreign 3G players have been advised to wait till the auction is over and not to compound their risks in a situation which is not entirely clear,” said Mahesh Uppal, director, Com First (India), a telecom consultancy firm.

Besides, the current round of policy amendments has been carried out without consulting the Telecom Regulatory Authority of India, which could lead to a fresh round of arguments between the regulator and the department of telecom.

Analysts also feel the exorbitant charges to be paid by firms for 3G spectrum and the cost of deploying the network will impact the financial viability of the operations.