'Don't stifle basic mobile telecom to push 3G services'
New Delhi: The growth of India's mobile telephone industry can suffer if the government continues to link the allocation of radio spectrum for service providers to the auction of this scarce resource for third generation (3G) services, experts warn. They also maintain that the policy to allocate additional airwaves based on the number of subscribers with each service provider is outdated and that a pragmatic policy must be unveiled to ensure the robust growth of the Indian telecom industry. "We ask the government to take a holistic, comprehensive view on this issue and develop a suitable policy framework keeping in mind the interests of all stakeholders," said T.V. Ramachandran, Director General of the Cellular Operators Association of India. "The existing subscriber-linked formula for 2G (second generation services) has totally outlived its time. A new policy is required," Ramachandran told IANS. The 3G services allow fast connectivity to enable applications like video-on-demand and mobile TV. At present, a start-up telecom operator gets 4.4 MHz of 2G spectrum along for a licence fee of 1,651 crore ($330 million). For additional spectrum, the eligibility is linked to the number of subscribers, depending on the area of operation. Additional allocation of 2G spectrum is essential to help telecom operators expand their subscriber base for basic telephone services like voice and data, as it would otherwise lead to network congestion because of limited spectrum. India has been adding 10-15 million new phone connections to its telecom network every month, which has taken the total subscriber base to 452.91 million -- the largest after China and ahead of the US. Even though the government hopes to take up the auction of 3G spectrum allocation by the end of this year, much also depends on the recommendations of a ministerial panel set up under Finance Minister Pranab Mukherjee, which is scheduled to meet July 31. The Telecom Regulatory Authority of India (TRAI), the industry watchdog, also feels that subscriber-linked auction of 2G spectrum may be cumbersome as it would be very difficult to ascertain for which technology -- 2G or 3G -- the spectrum is being used. "A new 2G spectrum policy shouldn't be held back," said Jaideep Ghosh, Director with the global consultancy and audit firm KPMG. "Also, 3G spectrum, in any case, will be used to offer 2G services as well, since it will take time for 3G to pick up." Even the latest Economic Survey of the Indian government says that telecom licensing and the allocation of radio spectrum should be de-linked. It says while the licence fee should be nominal, spectrum should not only be auctioned in a transparent manner but also made freely tradable. "The number-based formula is quite unorthodox. It provides little incentive to use the scarce resource efficiently. It rewards those who add subscribers indiscriminately," said Mahesh Uppal, Director of Delhi-based telecom consultancy Com First. "Spectrum should be given in a way which reflects its value," Uppal told IANS, adding a strict rollout obligation on the operators was also a must to prevent them from making unrealistic bids. The 3G auctions, scheduled for January, have been postponed twice because of differences between the finance and the communications ministries. The finance ministry wants the reserve price of 2,020 crore ($400 million) for pan-India spectrum doubled.