BSNL Wants to Return BWA Licence, But Reliance Industries Goes Full Steam Ahead

BSNL

Mail Today reports that BSNL is seeking to return its broadband wireless access (BWA) spectrum and be granted a refund of the BWA fees it has paid. The state-owned incumbent was granted BWA spectrum in the 2.4-GHz range in 22 circles but wants to return spectrum for 17 of these. BSNL has several concerns, chief among them being the following:

• It is the only one of four holders of BWA spectrum to be deploying WiMAX: the others are rolling out LTE. It is therefore at a disadvantage when it comes to interoperability, mobility (roaming) and procurement cost.
• The 2.4-GHz spectrum is not as valuable as the 2.3-GHz spectrum that was granted to private operators.
• Given these and other problems, the franchise model is unlikely to work.

In the report, a BSNL spokesperson was cited as saying that it paid 83.13 billion Indian rupee (USD1.67 billion) in BWA spectrum fees last year and made an overall loss of INR60 billion.

Reliance Industries

While BSNL is seeking to partially withdraw from BWA, Reliance Industries plans to have rolled out LTE to 700 cities nationwide by mid-2012, reports The Economic Times. The company is reportedly in negotiations with Alcatel-Lucent, Ericsson, Huawei and 15 Taiwanese and Chinese OEMs with a view to offering a range of tablets from INR3,000 to INR15,000, as well as with a number of tower firms. According to the source, the group is also talking to Walt Disney and other providers on offering games and other applications to the youth market. It also appears likely that Reliance Industries and the other BWA licencees will be allowed to offer voice services: most likely through a wholesale arrangement given the immaturity of VoLTE, although it would also be possible to offer a variant of VoIP over an LTE connection.

Outlook and Implications

• BWA Shake-Up: In the original BWA auctions from June 2010, the winners were Infotel Broadband Services, which won pan-Indian spectrum; Qualcomm (four circles); Bharti Airtel (also four circles); Aircel (eight circles); Tikona Digital Networks (five circles) and Augere (Mauritius) Ltd (one circle). BSNL and MTNL had been granted spectrum prior to the auctions, but had to match the winning bids from the subsequent June 2010 auction. Since the auctions, Infotel has been acquired by Reliance Industries, Qualcomm has faced the possibility of losing its licences (see India: 14 September 2011: DoT Warns Qualcomm on BWA Licences). The move by BSNL is therefore the latest change in the BWA landscape since the auctions. It appears unlikely that the government will look sympathetically on BSNL's request for a refund, although it is equally unlikely that BSNL will change its mind and proceed with WiMAX deployment.
• 3G Progress so Far: To date MTNL (December 2008), BSNL (February 2009), Tata DoCoMo (November 2010), Bharti Airtel (January 2011), Aircel (February 2011), Vodafone (March 2011) and Idea Cellular (March 2011) have launched commercial 3G/HSPA networks. All the operators are therefore still in the process of improving coverage and broadening the range of devices available to customers. Vodafone Essar hit 1.5 million 3G subscribers in March 2011 (1.1% of its customer base); Reliance hit 2 million 3G customers at the end of June (1.4% of its customer base); and Bharti Airtel's 3G customer base stood at around 2 million at the end of March (1.2% of its total customer base). Reliance Industries' launch of commercial LTE services in mid-2011 is potentially disruptive to the current 3G operators' commercial operations. While there is potential for the plans to slip, the group's previous experience in the telecoms sector means that it should be well prepared for commercial launch and to compete effectively with the incumbent mobile operators.