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Broadband victors get voice option

New Delhi, Feb 18: Telecom companies that paid big bucks to acquire broadband wireless spectrum in June 2010 and then failed to launch over-hyped 4G data services have now been granted the option of offering voice calls if they are prepared to fork out another Rs 1,658 crore.

The Telecom Commission held out the bait to the telecom companies that have struggled to launch high-speed broadband wireless services in the 33 months since the big-ticket auction. But it wasn't immediately clear how many would grab the offer.

Telecom secretary R. Chandrashekhar, who is also the commission's chairman, told reporters that the framework for the new licences would be ready by the end of March.

The commission is the highest decision-making body on policy issues within the department of telecom (DoT).

Only six companies had successfully bid for BWA spectrum. Of them, only one ' Reliance Jio Infocomm Ltd (earlier Infotel Broadband Services Pvt Ltd) ' won the licences in all 22 circles for which it paid Rs 12,847.77 crore.

Some believe that the Mukesh Ambani-owned venture may leap at the offer since it hasn't been able to get its 4G service off the ground. If they do so, it could re-ignite sibling rivalry since Anil Ambani's Reliance Communications is a big 2G telecom player offering both voice and data services. Voice services contribute more than 85 per cent to the domestic telecom operators' revenue.

Others, however, reckon that Reliance Industries may not be interested since data and high-speed Internet services offer higher margins.

There is a good reason why: the 2G spectrum auction last November yielded just Rs 9,407.64 crore after 14 rounds of bidding ' less than a quarter of the Rs 40,000 crore that the government had been hoping to raise from the 20-year lease-out of scarce radiowaves.

The yield from the 2G auction was less than what Reliance paid for the broadband wireless access (BWA) spectrum.

Mobile telephony companies have been bleeding badly because of the intense price wars. Many feel that Reliance Jio Infocomm would not want to go into that space after having stumped up so much for BWA spectrum. It can never hope to offer matching voice call rates without driving a spike through its balance sheet.

The other firms which have broadband licences include Bharti Airtel, Aircel, Qualcomm, Tikona Digital and Augere .

While Bharti Airtel and Aircel have unified access services licence under which they are allowed to provide voice services both on fixed as well as landline, the other companies were given Internet Service Provider (ISP) licence that sets restrictions on providing call services across networks.

Reliance Industries, the country's biggest company by market value, paid Rs 4,800 crore in 2010 to buy a 95 per cent stake in Infotel Broadband, which owned radio waves for broadband Internet services.

The Cellular Operators Association of India, which lobbies on behalf of GSM operators such as Bharti Airtel, Vodafone and Idea Cellular, has opposed the idea of allowing ISP licensees to offer voice services using broadband spectrum.

Fresh auction

The government also plans to hold a third round of auction of unsold airwaves in 18 telecom circles immediately after the March spectrum sale to comply with a court order, added Chandrashekhar.

DoT is also planning to increase the amount of airwaves it has put on block in the Karnataka and Rajasthan zones in the auction due in March, he added.

Last week, the Supreme Court directed the government to auction all the airwaves that were freed up after the apex court ordered in February 2012 the cancellation of 122 licences issued to a bunch of cherry picked telecom companies in January 2008 through a flawed process. Only a slice of the airwaves was offered in the November auction.

Quiz: How well do you know India's economy?

Question 1

Which of these products is India the world's largest producer of?

Poll Choice Options
  • Wheat
  • Rice
  • Milk
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