India’s Broadband Auction: No Free Lunch

Posted by Sam Churchill on

India’s broadband auction, at the end of the 15th day, has so far raised INR127.75 billion ($2.73 billion) for a slot covering the whole of India. That’s seven times the base price for a nation-wide slot, reports the Wall Street Journal.

Bidding will resume Friday. The government is auctioning two slots in the 2.3 GHz band for broadband services in each of the country’s 22 service areas. The auction has so far completed 116 rounds, the Department of Telecommunications said on its website (June 10th pdf).

India’s ongoing Broadband Wireless Access (BWA) spectrum auction was always expected to be aggressive, but many in the industry are still shocked by the high prices, reports Light Reading.

The government has already allocated one block each of 20 MHz of unpaired spectrum to Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL) in their respective service areas.

But the two state-run firms will have to pay the winners’ price. No free lunch.

According to Light Reading:

BSNL, which operates in 20 of India’s 22 circles, has a broadband wireless access strategy, and existing WiMax services. Not so MTNL, which doesn’t want to eat into its existing DSL-based broadband services in its two major metro markets.

“Since we have strong wired broadband capabilities, we are not very bullish about WiMax,” says a top MTNL official on condition of anonymity. “We also feel that the technology is in direct conflict with 3G. We don’t plan to launch any WiMax-related services in the near future. It also calls for very high capex.”

But MTNL will be obliged to pay and will have the spectrum, so plans instead to launch a tender process and appoint WiMax franchise partners that will use its spectrum “on a revenue-sharing basis,” says the executive.

In an interview with The Financial Express, the Chairman of Bharti said:

“The government may be in a celebratory mood with high revenues, but having bid so high, one thing is ensured: Tariffs for 3G services will remain high and unaffordable for large sections of people.”

The broadband auction began May 24, a few days after India’s 3G auction finished. As many as 11 companies are bidding for BWA spectrum (pdf). Apart from BSNL and MTNL, bidders include Airtel, Reliance, Idea Cellular, Aircel, Vodafone and Tata, along with four new players — Augere, Tikona Wireless, Infotel and Qualcomm, and Spice Internet and Infotel.

Qualcomm hopes to win one of those 20MHz slots. But instead of WiMAX, Qualcomm would use TD-LTE in India. Qualcomm is the only U.S. company said to be participating in the auction.

Meanwhile, the WiMAX Forum announced they have completed the 2.3 GHz certification testing profile, which allows WiMAX Forum designated labs to accept tri-band (2.3, 2.5 and 3.5 GHz) products and immediately begin the certification process. The WiMAX Forum Global Congress 2010 meets in Amsterdam, June 16-17, 2010.

The transition to 4G has begun, with 3.6% of mobile devices with baseband connectivity expected to be using 4G standards in 2014. Despite the early lead of WiMAX, LTE is expected to account for over 60% of 4G-enabled mobile devices in 2014, says Instat. Global fixed broadband service revenue totaled $170 billion by the end of 2009, with YoY growth of 14%. DSL remains the largest broadband revenue generator with 62% of total global broadband service revenue. The Asia-Pacific region is spearheading fiber installation, with 80% of the global broadband fiber market, reports ABI Research.

Posted by Sam Churchill on Thursday, June 10th, 2010 at 8:56 am .

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