BWA Auction in India Ends

After 16 days and 117 rounds of bidding, the auction of BWA spectrum in India concluded today with provisional results. According to Dow Jones, the government said it would earn 385.43 billion rupees (US$8.23 billion) from the auctions, including payments by state-run BSNL and MTNL, which were already given some spectrum before the auctions but now must match the winning bids. Infotel Broadband Services Pvt. Ltd. emerged as the biggest winner by surprise, provisionally winning a slot of pan-India BWA spectrum for 128.48 billion rupees. U.S.-based Qualcomm won spectrum in four service areas for 49.12 billion rupees, while local mobile industry leader Bharti Airtel emerged as the winner for four service areas at a cost of 33.14 billion rupees. The other provisional winners include Aircel with eight service areas for 34.38 billion rupees, Tikona Digital Networks Pvt. Ltd. with five areas for 10.58 billion rupees and Augere (Mauritius) Ltd with one service area for 1.25 billion rupees. The provisional results need to be approved by the government.

Outlook and Implications

• Intense Competition for Spectrum: The BWA auction followed the earlier concluded 3G auction (see India: 20 May 2010: India Ends 3G Auction; Raises US$14.6 Bil. for Government). Together with the 677.19 billion rupees raised from the 3G auction, the government will generate a total of about 1.063 trillion rupees from the two events, compared to the 350 billion rupees it had estimated in its federal budget. Although competition for BWA spectrum was not as intense as the earlier 3G auction, operators’ strong interests still drove the bid price for one slot of pan-India BWA spectrum to 128.48 billion rupees, more than seven times the 17.50-billion-rupee starting price. Among the major bidders, Reliance Communications, Vodafone-Essar, and Idea Cellular had earlier dropped out of the race.
• Driver for Broadband Penetration Growth: The BWA spectrum will allow winners to offer high-speed Internet access, as well as VoIP and IP TV services. More importantly, the winners could eventually use the spectrum for voice and high-speed data services, amid uncertainty over the granting of 2G and 3G radio bandwidth in the future. The allocation of the spectrum will help stimulate the expansion of broadband Internet in a still nascent market. In spite of the fact that 104 telecom service providers are providing broadband services, the broadband penetration rate is still below 1% compared with teledensity of 53%. The National Broadband Policy, announced in 2004, expected 20 million broadband connections by 2010, but the target now looks unlikely to be met. The Telecom Regulatory Authority of India in a consultation paper issued earlier this month, estimated the country to have about 48 million broadband users by 2012, and about 100 million by 2014, from the current nine million. Considering about 70% of India’s population lives in the country’s rural areas, wireless broadband services will have to play a key role to realise such ambitious forecast.