Smooth Access

New Delhi, Aug. 26: Entry costs for 3G services in the CDMA platform are likely to be lower as the government takes steps to modify auction rules for CDMA operators.

Top telecom officials said a limited bidding among a few CDMA players, led by Reliance and the Tatas, was likely to ensure a lower price per circle compared with GSM bids for the same circle.

According to the earlier rule, 3G licences would be allocated to the CDMA player with the highest subscriber base provided it was willing to pay the same price that the biggest GSM operator was paying in that particular circle. In CDMA, therefore, auctions were not necessary.

“This (GSM price) would have been high considering the large number of domestic and foreign GSM players keen on entering the fast growing Indian telecom sector,” said telecom analyst Sudipto Basu.

Analysts also contend that with only one slot available in the coveted 800 megahertz (Mhz) band, few domestic and international players will want to enter the CDMA auction, leading to lower bidding rates. “Besides, far fewer players exist in the CDMA space compared with GSM mobile telephony,” Basu said.

Reliance Communications, Tata Teleservices, Bharat Sanchar Nigam Ltd and new entrant Sistema-backed Shyam Telecom are the main contenders for third-generation CDMA rollout.

Mahesh Uppal, director of Com First (India), said, “Auction of 3G CDMA spectrum will bring in transparency in the system and reveal the market price for CDMA radiowaves.”

The government has also decided to fix the base price for 3G frequencies in the 800MHz band at a fourth of what GSM operators will pay for 3G frequencies. The base price for 1.25 MHz of radiowaves in the 800MHz band will be Rs 40 crore for metros and category A circles, Rs 20 crore for category B circles and Rs 7.5 crore for category C circles.

While the department of telecom (DoT) has made additional provision for allocating spectrum in the 450MHz and the 1900MHz bands for CDMA operators, technical experts said that these bands were inferior compared with the 800Mhz band.

Auction schedule

The DoT today revised the time schedule for the process to appoint an agency for the 3G e-auction. The pre-bid conference for receiving the request for proposals for the designated agency was to start tomorrow.

It will now start on September 8 and consequently all the earlier dates have been revised. The submission of technical and financial bids will be on September 22 instead of September 3, said an official statement.