India’s Broadband Auction: It’s Done

Posted by Sam Churchill on

“Oolon Colluphid used it as the central theme of his best-selling book ‘Well That About Wraps It Up For God’. Meanwhile, the poor Babel fish, by effectively removing all barriers to communication between different races and cultures, has caused more and bloodier wars than anything else in the history of creation.”
Hitchiker’s Guide to the Galaxy

India’s Broadband Wireless Access (BWA) auction finished today (pdf), after 16 days and 117 rounds of bidding, netting the government an estimated INR257 billion (US$5.5 billion). State-owned operators BSNL and MTNL are required to match the auction prices paid for their spectrum, bringing the auction proceeds to more than $8 billion.

According to an official statement (pdf) by India’s Department of Telecoms (DoT), the big winners were fixed-line service provider Infotel, with licenses in all 22 of India’s service areas; and Aircel, which won eight regional licenses.

Eleven companies competed for two 20 MHz bandwidth slots on the 2.3 GHz band. They covered 22 service areas. The BWA auctions followed the completion of the 3G auctions in the country last month, but those did not result in any operator obtaining a pan-Indian 3G footprint.

Notable highlights of India’s broadband auction:

  • Only one company, Infotel, won BWA spectrum for all 22 circles.
  • Reliance, India’s largest-listed conglomerate, is in talks to buy that spectrum from Infotel, according to a Reuters report today.
  • Market leader Bharti Airtel and U.S. chipmaker Qualcomm each bought spectrum in four geographical areas.
  • Qualcomm secured spectrum in Delhi and Mumbai, the two most expensive zones, and plans to use TD-LTE rather than Mobile WiMAX.
  • Vodafone and Reliance Communications, the nation’s number two and three telecommunications players, didn’t win any wireless broadband spectrum.
  • Companies that successfully bid for BWA circles include Infotel (22), Qualcomm (4), Bharti (4), Tikona (5), Aircel (8) and Augere (1). Of these, only Bharti and Aircel are existing mobile operators who have won thirteen 3G licenses each.
  • While they did not participate in the auction, BSNL has BWA spectrum in 20 circles while MTNL has 2.

Together, revenue from the two auctions (3g and BWA) raised 1.06 trillion rupees ($US 22.7 billion), about three times New Dehli’s initial estimates. The 16-day auction generated 383 billion rupees ($8.2 billion), reports the AP. The Indian government raised $14.6 billion from a third-generation spectrum auction less than a month ago.

Mukesh Ambani, the world’s fourth-richest man, was freed to enter the telecom sector last month when he ended a pact with his long-estranged brother Anil Ambani that prevented them from competing on each other’s turf.

When the brothers split up the family empire in 2005, Anil Ambani got control of Reliance Communications, India’s second-biggest mobile phone operator. Reliance is paying about $1 billion for Infotel and said that it would pay the Indian government $2.74 billion for Infotel’s spectrum licenses. Reliance will use TD-LTE on its new spectrum.

With both Infotel (Reliance) and Qualcomm going with TD-LTE, and cellular operators Bharti and Aircel buying another 12 BWA slots, India now appears to be strongly committed to TD-LTE rather than Mobile WiMAX.

India’s largest mobile operator, Bharti Airtel, is the 3rd largest mobile operator in the world, behind China Mobile and China Unicom.

BSNL, the largest Internet Service Provider in India, is a state-owned company that operates in 20 of India’s 22 circles. It has an existing WiMax service. Not so MTNL. Whether the two state-run companies would switch from WiMAX to TD-LTE is unknown.

Tata-owned Videsh Sanchar Nigam Limited (VSNL), which has an existing Wimax network in the 3.3 GHz band, did not win any spectrum in the auction.

Qualcomm India said at a news conference today that the company will announce its new partner or partners in a month’s time, according to the WSJ. The company will offer the partner or partners a stake of about 26% in the venture, as per India’s investment regulations, and plans to exit the venture after creating a long-term evolution (LTE) network.

In a press release today, Qualcomm said:

“LTE is best suited to address the demand for high-bandwidth mobile broadband services in India’s 2.3 GHz band and can seamlessly interwork with current and future 3G HSPA and EV-DO networks. Qualcomm offers the industry’s first 3G/LTE multi-mode chipsets, which will enable a seamless mobile broadband experience for consumers while roaming within India or globally through the use of integrated multi-mode devices.

Qualcomm’s goal is to attract one or more experienced 3G HSPA and/or EV-DO operator partners into the venture for construction of an LTE network in compliance with the Indian Government’s rollout requirement for the BWA spectrum, and then to exit the venture.”

Qualcomm’s apparent winning bid for TD-LTE is bad news for the WiMAX Forum.

Ron Resnick, Chairman of the WiMAX Forum responded to our inquiry, thusly:

Hello Sam,

If you are asking about [the] auction, I believe that every country needs to decide how quickly they want broadband Internet to reach their population. If they want it now, they need to ensure the spectrum will support WiMAX technology. And they need to be sure the spectrum is TDD to use WiMAX.

I have heard different stories about TD-LTE but it is likely behind LTE/FDD — I believe I have seen an article indicating TD-LTE is in 2013.

WiMAX supporters hoped their broadband communications standard would dominate, making India an example for other countries. However, most of the world’s cellular carriers have committed to LTE in frequency pairs. Now it seems both India and China are moving towards TD-LTE for unpaired spectrum as well.

TD-LTE may allow “wireless DSL”. Cellular data caps in the United States make wireless more expensive than DSL or Cable Modems. Clearwire can target both residential and mobile users without data caps. They’ve got data bandwidth.

India’s broadband auction comes less than a month after a larger auction for cellular 3G spectrum. That auction will provide India’s 600 million cell phone users with improved mobile data and GSM compatibility.

Only nine million of India’s 1 billion people have access to broadband. India’s Department of Telecoms hopes the country will have about 48 million broadband users by 2012, and 100 million by 2014.

World-wide, mobile devices with integrated wireless broadband are expected to top 2 billion by 2014, according to research firm In-Stat.

Posted by Sam Churchill on Friday, June 11th, 2010 at 6:19 am .

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