3G and BWA Stiff Base Pricing adn Reactions

3G and BWA Wireless spectrum auction base price announced, as usual government has exceeded all predictions, My prediction too. Do read my previous analysis on expected revenue to government Here. As usual reaction from industry is totally against high price. Government is looking at money and not affordability, some strong reaction from Industry icons.

• Pan-india 3G spectrum base price is 35 Billion INR.
• 3 nos of 20MHz spectrum total base price is 17.5 Billion
• 2 nos of 1.25MHz slot of EV-DO spectrum base price is 8.75 Billion

Stated by one of the popular Telecom journal in  India tele.net. COAI (Cellular Operators Association of India) expressed concerns about huge difference between base price of 3G spectrum adn BWA. COAI is very much concerned about WiMax operators backdoor entry in to 3G, they further explained that since WiMax and 3G can offer similar type of services and availability operators will choose WiMax and get in to 3G customer base with less spectrum cost. AUSPI (Association of Unified Telecom Service Providers of India) also expressed concerns over price difference and limiting the number of spectrum to 2 in case of CDMA. They have also criticized about government policy of increasing the competition in auction by reducing the number of participating band. On the other hand ISPAI (Internet Service Providers Association of India) expressed concerns about huge base price and further limitation in roll out obligations.

In my view government intention to gain as much as 250 Billion in revenue is met. This huge difference between competing technologies enable big muscle players to hold all possible spectrum and hence technology monopoly in Indian Telecommunication industry. Internet service providers will have huge problem in terms of keeping their present customer and gaining new customers. Mobile operators will easily meet coverage and roll out obligations by using their available passive and back bone infrastructure where as Internet service providers can not. On the other hand ISP stron hold of IP back bone will leverage more managed services business opportunity. Government should use alternate mechanisms to bridge digital divide, allowing operators to use 700MHz spectrum to meet rural coverage obligations is one such solutions.