You are out at a mall shopping for a dress for your wife, but aren't sure if she'll really like the colour you've picked. You decide not to take any chances, and decide to call her to show her the dress. Yes, show-over a video call. In the UK, Vodafone's 3G customers can already do that, but since you are in India, you'll have to wait for a while, although no one knows how long.
3G, as the name implies, is the next generation of wireless services, which will allow high-speed streaming video, gaming, video messaging, and even mobile TV. As much as customers are eager for 3G services, operators are straining at the leash to offer them. So, what's holding up mobile's next big thing? A lack of appropriate spectrum. Currently, the GSM wireless service is offered on 900 mhz and 1800 mhz, while the CDMA service rides on 800 mhz. Since 3G services shove heavier data 'packets' over the airwaves, they need broader spectrum bands for efficiency, which usually is available in the higher range.
The problem with handling operators spectrum in the higher range is that India's armed forces currently use them. They have offered to vacate, but not before they have been given alternative frequency. There are multiple challenges in sorting out the spectrum issue. To begin with, the state-owned BSNL is supposed to be responsible for providing an alternative communications network for the armed forces, and it did start work on it, when midway the defence headquarters decided that it should upgrade its communications equipment and, therefore, needed a more hi-tech network. Originally, the Department of Telecommunications, which oversees BSNL, had allocated Rs 980 crore for the defence network, but when the cost of building a state-of-the-art network jumped to Rs 4,000 crore or so, it refused to bankroll BSNL, citing funds crunch. A group of ministers (GoM) was scheduled to meet on June 13 to sort out the issue, but the meeting was cancelled without any fresh date being set for a future meet.
However, the stand-off between dot and the defence ministry should not have been that big a hurdle, since the industry regulator, TRAI, has already suggested that 25 mhz of spectrum in 2.1 ghz band be used for kick-starting 3G services. Says Nripendra Misra, Chairman, TRAI: "This portion of the spectrum is already available, so there is no question of any dispute." What's holding up movement on this front is the fact that TRAI had recommended that this part of the spectrum be auctioned to the top five operators, with others getting additional spectrum as and when it becomes available. In fact, before Dayanidhi Maran, the immediate past telecom minister, stepped down, he had promised to bring the 22.5 mhz spectrum into the market by June this year.
Then, there are two other issues that are yet to be sorted out. One is of a spectrum policy itself, and the other is of how to allocate this precious electromagnetic resource. According to Misra, the ball on both the counts is in dot's court. "Firstly, it has to frame a policy and take a decision as to which existing spectrum bands need to be allocated for 3G, and then it must decide how the allocation of spectrum must be executed," says Misra.
For about six months now, dot has been threatening to come out with a 3G policy, but it hasn't yet delivered on the promise. When bt spoke to dot officials, they again said the policy would be out in a month's time. This time around, there's another problem. The new Telecom Minister, A. Raja, who took charge on May 16, 2007, hasn't yet got up to speed on the issues, and may need time to make a decision. As far as allocating the spectrum is concerned, it is almost certain now that the government will conduct an auction. TRAI has recommended a minimum price of Rs 1,500 crore per licence, but among the operators, only Ratan Tata of Tata Teleservices seems amenable to the idea. Others believe that the allocation of spectrum should be need-based-that is, dependent on the number of subscribers an operator has.
There's also the issue of whether the auction will be open to new players. Not surprisingly, the incumbent operators think they should get precedence. "We believe that existing operators must get priority in terms of allocation of this spectrum," says Manoj Kohli, President and ceo, Bharti Airtel. Adds Sanjeev Aga, Managing Director, Idea Cellular: "The licence conditions and surrounding documentation make it amply clear that existing licencees are entitled to 3G spectrum as and when it is available. As per the policy, any new entrant seeking a fresh licence will be eligible for 3G spectrum only after entitlements of existing licencees are met."
Smaller players such as Spice Communications worry that selective auction will be to their disadvantage. "Tendering or bidding is not the answer to the spectrum process. It is important to protect the interests of all the existing operators," says Umang Das, Joint Managing Director, Spice. Airtel's Kohli is optimistic of fair play. "We are confident that the government and industry will find the best solution that is in the interest of the consumer," he says.
To make matters worse for the wireless operators, there's a new contender that has arrived on the scene. It's wimax, a wide area wireless service that provides download speed of up to 75 mbps. Although, it is primarily a data service, it has staked claim for 3G spectrum. gsm operators are lobbying with dot to keep wimax away from 3G spectrum. They also contend that if wimax players are allowed to operate in the imt-2000 band, which the world over is reserved for 3G services, then its signals will interfere with those of GSM operators and affect service quality.
Despite such skirmishes, everyone wants the uncertainty over 3G spectrum allocation to be over as soon as possible. After all, customers are waiting.
Over the last four years, spectrum allocation has made little progress.
November 17, 2003: The NDA government seeks TRAI recommendation on spectrum-related issues
May 31, 2004: TRAI presents the first consultation paper on spectrum-related issues
May 13, 2005: TRAI makes its first recommendations on spectrum
May 22, 2006: DoT asks TRAI to give recommendation on allocation and pricing of spectrum for 3G and broadband
June 12, 2006: Consultation paper on allocation and pricing of spectrum and for 3G and broadband services is put out
September 27, 2006: TRAI submits its recommendations, saying 3G can be initiated immediately on available 2.1GHz band
October, 2006: A DoT committee is appointed to look into spectrum recommendations
May 13, 2007: Maran quits Union Cabinet and a cloud hangs over future of several of his initiatives
May 16, 2007: The Defence Ministry says it cannot vacate spectrum for two years due to delay in setting up of an alternative communications network by BSNL
June 13: The first meeting of the Group of Ministers on availing additional spectrum for telecom services gets cancelled
GSM vs CDMA
The quest for dominance.
If you are a consumer, the battle between GSM and CDMA shouldn't make a difference as long as you get good service. But given that the industry is waiting to make the next technological leap into 3G, the sparring between the two rival technologies will end up affecting you directly. So far, GSM is the more popular technology in India, but as operators go rural and 3G arrives, CDMA may gain an upper hand. "It must be understood that GSM has been around since 1995, while CDMA was launched on a commercial basis only in 2003," says B.V. Raman, the CDMA Development Group's (CDG) Country Head for India.
GSM has eight operators out of which four large players-Vodafone-Essar, Bharti Airtel, Idea Cellular and the state-owned BSNL-account for over 85 per cent of the total GSM subscriber base of 130.6 million. As for the CDMA operators, there are six of them, but Reliance Communications and Tata Teleservices have more than 48.65 million subscribers between themselves, which translates to a market share in excess of 94 per cent.
Elsewhere in the world, the story is even more interesting. "Globally, GSM increased its market share by more than 3 per cent to 83.9 per cent by adding 511 million subscribers in 2006," says Alan Hadden, President, Global Mobile Suppliers Association (GSA). "This was 81 million more than the total of other mobile technologies, including TDMA, PDC, and CDMA." He adds that there have been at least 34 CDMA operators who have migrated to GSM. "These are leading operators in Australia and Brazil," says Hadden. In India, Anil Ambani-owned Reliance Communications has decided to do something similar, although currently CDMA accounts for the lion's share of its subscribers.
Without doubt, the battle ahead will be around 3G and the issues concerning spectrum. There is also the part about rural connectivity where penetration levels are less than 3 per cent. According to Raman, CDMA is better positioned to offer connectivity in rural areas. "The technology uses fewer cell sites and is, therefore, more efficient," he says.
-additional reporting by Krishna Gopalan
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