India's state-owned players kick-start 3G

MTNL, meanwhile, has begun 3G in central New Delhi with the stated aim of attracting 200,000 to the service within two years.

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India Kick Starts 3G

State-owned BSNL and MTNL have each announced 3G service launches this week. BTNL has rolled out 3G services in an additional 11 cities following on from the launch of its first 3G service in Chennai earlier this month. According to a statement, BSNL has invested $530m in 3G infrastructure.

While the auction of 3G licences has been repeatedly delayed in India due to ongoing disputes between the government and the regulator, BSNL, as a state-owned operator, has already been allocated 3G spectrum in each of India’s 23 ‘circles’ or regions apart from New Delhi and Mumbai where MTNL has been allocated 3G spectrum. Both BSNL and MTNL have a 5MHz slot in the 1920-1980MHz frequency band paired with another 5MHz channel in the 2110-2170MHz frequency band.

If BSNL and MTNL were to have a substantial head start over 3G rivals, particularly if the spectrum auctions – as many industry commentators now believe – are unlikely to take place until the end of this year, the licences would surely look less attractive to investors weighing up India’s 3G opportunity.

And this too could work to the advantage of BSNL and MTNL. The price they both have to pay for their 3G spectrum has to match the highest winning auction bids in each of the respective circles.

BSNL also has a first-to-market advantage when it comes to BWA (broadband wireless access) spectrum.  While the BWA auctions are scheduled to take place the same time as the 3G licence awards, BSNL is already sitting on a chunk of pan-Indian 20MHz spectrum in the 2.5GHz band. Again, BSNL does not have to pay for its BWA spectrum until the BWA auctions take place. BSNL’s 20MHz of BWA spectrum will cost the state-owned operator the same as the highest amount paid for the three remaining 20MHz BWA licences that are up for auction, two in the 2.3GHz frequency band and another at 2.5GHz.  

BSNL is opting for mobile WiMAX for its BWA allocation and using kit supplier Soma Networks as a franchisee partner in the circles of Goa, Andhra Pradesh and Maharashtra, BSNL has passed over the WiMAX capex burden to Soma in exchange for a service revenue-sharing deal with the kit maker – 70/30 in favour of Soma.

Across the three states BSNL has WiMAX courtesy of Soma, the operator says it is targeting around three million subscribers within five years.

In separate news this week, Soma says it will be bidding to take the franchisee model to more BSNL circles and so extend its WiMAX commitment.