India delays 3G, WiMAX licensing until next year

India’s much anticipated auctions for 3G and WiMAX licences look to have been delayed further and may now not take place until next year.

The hold up appears to be a result of the government failing to clear the relevant radio spectrum in nine circles, or operating regions, out of India’s total of 22.

In the circles in question – Delhi, Rajasthan, Jammu and Kashmir, Gujarat, East Uttar Pradesh and West Uttar Pradesh, Himachal Pradesh, North East and West Bengal – it appears that it is the defence forces which are yet to vacate the spectrum.

People familiar with the matter told telecoms.com that there are issues of getting the spectrum cleared from defence services using the 1920-1980MHz band, and since the government has committed to holding the 3G and BWA (Broadband Wireless Access, to be used for WiMAX) auctions simultaneously, the BWA auctions would also be similarly delayed.

The best case scenario for the auctions to take place now appears to be early in 2009, possibly even January.

Both the 3G and BWA licenses are expected to win major interest from India’s wireless players given the explosive subscriber growth potential of the country.

By the end of September 2010, there will be 500 million mobile subscriptions in India, according to figures released this week by analyst house and telecoms.com parent Informa Telecoms & Media.

Whilst it took 13 years for India to gain its first 250 million mobile subscriptions, the analyst predicts that the country’s second 250 million subscribers will be added over the next 30 months.

India is the world’s second largest mobile market, as well as the second fastest growing market after China. During the first six months of 2008, Indian mobile operators added over 50 million net additions, with China just keeping ahead with 53.6 million. By comparison, saturated markets such as the UK and France, chalked up net additions of 410,000 and 535,000 respectively.

Principal analyst with Informa, Nick Jotischky, said that the engine for this rapid growth has been increased competition, driven by tremendous consumer demand, with the result of heavy investment from the country’s largest operators.

“The bottom line is with a penetration rate of 26 per cent, India is a hugely attractive investment destination, and will continue to be so for many years. Indeed, our forecasts suggest that the active subscription rate will remain well below 50 per cent until 2010,” said Jotischky.

A second phase of growth is also anticipated to be sparked by the allocation of 3G licences, with Informa forecasting a rapid take up on the back of growing demand for data services. The analyst predicts there will be 7.5 million WCDMA connections by the end of 2010, a figure that will leap to over 120 million by the end of 2013.

The award of 3G licences will also be important to India’s leading operators as they will allow them to differentiate their offerings from those of their competitors as well as provide them with much needed additional spectrum.