3G auction announced, BSNL and MTNL gain head start

India’s telecoms regulator announced details of the country’s upcoming auction for 3G licences but said state-owned telcos Bharat Sanchar Nigam Ltd (BSNL) and Mahangar Telephone Nigam Ltd (MTNL) will be awarded 3G licences immediately.

Indian consumers will be able to access 3G mobile services within the next six months.

The move gives the operators a few months’ head start over private sector competitors, however both will need to pay a licence fee equal to the highest price paid in the auction, which could see up to ten 3G operators licenses in the country. A date for the auction has not been set yet.

India is divided into 22 major telecommunication circles based on geography and BSNL chairman Kuldeep Goyal said the company would rollout an India-wide 3G network within six months, starting from the north and east of the country.

The Department of Telecommunications (DoT) expects to earn US$7.1 – US$9.5 billion from the auction of licences for each circle. DoT has fixed the reserve prices for licences at around US$40 million for metros and category A circles, US$20 million for category B and US$7.5 million for category C. The reserve for a pan-Indian licence is US$500 million.

Industry experts predict that by 2012 there will be 45-70 million customers or 10 per cent of the subscriber base using 3G, which offers Internet access at speeds 30 times faster than 2G. However, the auction could disadvantage new players that win bids as they would need to buy a universal access service licences (UASL) as well.

Some parties that are interested in entering the country such as Sprint and some Asian telcos said the guidelines would make it unviable for them to receive 2G spectrum simultaneously.