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Cities On The Edge
Favoured business destinations Gurgaon, Bangalore, Chennai, Pune and Hyderabad could become, thanks to poor infrastructure, victims of their own success. Read in-depth articles on each city. Plus personalised travel logs. Only at www.business-today.com.


Moving On
Diluting stake in GECIS was like a child growing up and leaving home, feels Scott R. Bayman, President and CEO of GE India. In an exclusive interview with BT, he speaks his mind on a wide range of issues.

More Net Specials
Business Today,  January 30, 2005
 
 
Spectrum Wars
With the government set to announce its spectrum policy, rival telco camps are lobbying furiously to put one over the competition. At stake: the future of third generation mobile services in India.

It's four in the afternoon and although it is still winter, dusk is at least a couple of hours away in Delhi. In Room No. 210 in Sanchar Bhawan on the capital's Ashoka Road, Nripendra Misra, Secretary, Department of Telecommunications (DoT), is strangely calm. "By March 15, I am confident, the DoT will announce its new spectrum policy," murmurs Misra, who retires on the last day of March. His composure contrasts starkly with the agitation that marks most players in telecom; for starters, everyone would like to second-guess Misra, once the senior-most Indian bureaucrat interacting with the World Trade Organisation (WOT). Right now, the up cadre IAS officer is waiting for recommendations on the spectrum policy, which Pradip Baijal and his team at the Telecom Regulatory Authority of India (TRAI) are now busy preparing at their Safdarjung Enclave office, located a few kilometres away from Sanchar Bhawan.

THAT GSM VS. CDMA THING AGAIN
The spectrum wars have again divided the industry vertically, with companies using the CDMA platform (Reliance Infocomm, Tata Teleservices) on one side and those using the GSM one (Bharti, Hutch) on the other.
ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA (CDMA)

Current allocation of 5 MHz in the 800 band is insufficient; need additional bandwidth in other bands for expansion. Internationally, allocations for CDMA operators varies from 10 MHz-20 MHz.

Want the 1900 MHz band to be allocated to CDMA operators for 3G services. GSM operators should operate 3G services in the 1800 MHz band, not the 2000 MHz band.

Even if the 2000 MHz is allocated to GSM operators, the interference from CDMA's 1900 MHz band to GSM's 3G services can be blocked using guard bands and filters.

CELLULAR OPERATORS ASSOCIATION OF INDIA (GSM)

They are yet to reach the subscriber numbers projected in their original agreement with the government, which stipulates that further frequency allocation is linked to subscriber growth.

CDMA operators should not be given the 1900 MHz band as that would interfere with 3G GSM services in the 2000 MHz band. In fact, CDMA operators should be given the 1800 MHz band.

The CDMA operators are out to kill GSM operators. This suggestion involves rejection filters at every base station and guard bands greater than 5 MHz, involving huge investments.

It's still not clear what Baijal will recommend; nor does anyone know whether Misra and his boss, telecom minister Dayanidhi Maran, have already decided what shape the policy, eagerly anticipated and with the power to make or break telcos should take. Its importance is evident from what Baijal, the TRAI chairman, who has been in and out of long meetings at his HQ, tells this correspondent over the phone: "It's a very important issue (spectrum) and I would like to talk to you on that. You know, there is tremendous pressure on me (from various interested groups)." Baijal could not meet BT till the issue went to press, but one thing is clear: another bloody battle is in the works in the Indian telecom business.

This time, the bone of contention is radio spectrum frequency, a scarce natural resource used by telecommunications and broadcasting service providers to transmit data or voice. Yet again the war is between the two competing mobile technology platforms, GSM and CDMA.

The dispute is over the frequency band at which each technology group will provide 3g (third generation) services that will offer high-end Internet applications on mobile phones at 200 times faster than the current speeds (see That GSM vs. CDMA Thing Again). To cut to the gist, the CDMA lobby wants the 1900 mhz band and the GSM lobby fears this will interfere with their proposed 3g services on the 2000 mhz band, and says CDMA operators should be given the 1800 mhz band. Both sides have their arguments laid out.

"I will lose my bargaining power with vendors and it would make a bad business case even if they agree to make equipments for the 800 and 1800 mhz combination," says an executive at a top CDMA operator. He goes on to say that globally (mainly the us, Canada and Brazil) CDMA operates in the 800 and 1900 mhz band, ergo equipment is available. But the Cellular Operators Association of India (COAI), which represents GSM players, says allocating the 1900 mhz band to the CDMA would be "against" International Telecommunications Union standards (the CDMA lobby denies this) and that this would block the migration of GSM players to 3g services in the 2000 mhz band.

Dayanidhi Maran
Minister, IT & Communi-cations
Maran's sympathies, unlike his predecessors', are reportedly with the GSM lobby
Nripendra Misra
Secretary, DoT

Misra wants everyone to wait for the spectrum policy that he will deliver by March 15
Pradip Baijal
Chairman,
TRAI

Baijal's recommen-dations are awaited but he is likely to go with the CDMA lobby
A.K. Sinha
CMD,
BSNL

The state-owned operator's preference could have some say on the policy
Mukesh Ambani
CEO,
Reliance
Infocomm

Lobbying is out; His hands are full fending off salvos from his brother, Anil
Sunil Mittal
CEO, Bharti Tele-Ventures

His company has over 10 million subscribers for its GSM service and Mittal himself is no pushover

In the past, the CDMA lobby, its cause championed by Reliance Infocomm, has always had the last laugh, but if the current situation is any indication, the regulator (TRAI) and DoT seem to be in rival camps, with the GSM lobby acquiring more clout with the latter. The present DOT under Maran, telecom industry watchers say, is not pleasantly disposed towards Reliance and the CDMA lobby. That could explain why the GSM lobby isn't unduly worried. "We have faith in DOT and the minister Dayanidhi Maran," says COAI's Director General T.V. Ramachandran. However, telecom secretary Misra says, "We have constituted a committee to look into the spectrum requirements for 3g, which would take a technology-neutral stand. It must also not result in monopoly of any technology."

Fact is, the GSM lobby, which accounts for about 40 million subscribers is no pushover. And fact is, Reliance, the company that made a difference in past disputes (getting its and the CDMA lobby's way each time) is currently not best placed to lobby, given the battle between Mukesh Ambani and his brother Anil. Despite that, the spectrum war is likely to be as severe as the limited mobility controversy. Also playing a part are the equipment manufacturers, with Qualcomm (it has proprietary rights over CDMA), Lucent and Motorola batting for CDMA camp, and Siemens, Alcatel and Ericsson for GSM. It promises to be interesting.

CONSTANT REFRAIN
The spectrum war is the latest in the ongoing Us vs. Them saga in Indian telecom.
1995: India kicks of mobile phone services with two GSM operators in a service area. The spectrum allocated is 4.4+4.4 MHz in the 900 band.

1999: With the development of new technologies like CDMA, all licences are made technology neutral. The third cellular mobile licence is given to incumbent operators like MTNL and BSNL.

2001: The government auctions the fourth cellular licence. The spectrum allocated is 4.4+4.4 MHz in the 1800 band, with a possibility of increasing it to 6.2+6.2 MHz. The government allows companies offering basic telephony services to provide 'limited mobile' services. Cellular companies protest.

2002: Reliance Infocomm launches its full mobile service using CDMA technology and also offers national roaming much to the chagrin of the cellular operators. Reliance prices its calls at 40 paise a minute; the cellular companies are forced to cut tariffs.

2003: The government allows migration from a service-specific regime to a unified-licence regime. This means operators like Reliance Infocomm and Tata Indicom (who had missed out on the cellular opportunity in the earlier auctions) can get into business by paying the differential between the entry fees paid by them and the amount paid by the fourth cellular licensee.

2004: A controversy on access deficit charge erupts, with BSNL and MTNL alleging that Reliance Infocomm is avoiding paying ADC by routing international calls as local calls. The Department of Telecommunications fines Reliance Rs 150 crore for this alleged violation of licence conditions.

With both CDMA and GSM operators vying for market share in the growing wireless market, another tug of war starts over the allocation of additional spectrum. CDMA operators want the 1900 MHz band for their 3G services while GSM operators say that this will interfere with their own 3G services in the 2000 MHz band, as already earmarked in the National Frequency Allocation Plan.

2005: TRAI is expected to come out with its spectrum recommendations in end-January or early February. DOT will take a final decision on the allocation of spectrum by March 15.

 

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