Broadband ways to go! ( numbers are in crores of rupees. One crore is 10 million)
India's trillion rupee leap into broadband era
Broadband wireless auctions point to both WiMAX, LTE on the ground.
By Anand Parthasarathy
The Indian government has raised over Rs 385 billion ( $ 8.23 bn) as the 16-day long auction for Broadband Wireless Access (BWA) spectrum came to an end on Friday. The government had offered two slots of bandwidth to offer wireless broadband internet services in the country's 22 service areas.
Add the Rs 677 billion reaped from the auction of 3G cellular spectrum in May and the total revenue from telecom spectrum is in excess of a trillion rupees ( Rs 1000 billion or $ 22 bn).
Some of the established cellular players like Reliance Communication, Vodafone-Essar and Idea Cellular opted out, when they perceived the auction prices to be unrealistically high.
Instead we have a virtual newcomer like Infotel Broadband Services, bid for and get the only all-India licence across all areas for Rs 128 billion or $ 2.74 bn. Within minutes of the auction closing however, Infotel had acquired a more familiar face – that of the ‘ other’ Reliance entity, the Mukesh Ambani-let Reliance Industries , which had announced that it was acquiring 95% of Infotel for Rs 48 billion – that’s just over a billion dollars.
A little over a billion dollars was also what global CDMA tech provider Qualcomm spent to acquire slots of broadband in metros Delhi and Mumbai and the states of Kerala and Haryana. Qualcomm’s investment is an interesting exercise in quick in and out. It is there to promote the LTE or Long Term Evolution path to 4G – an alternative broadband route to WiMAX . “Qualcomm’s goal is to attract one or more experienced 3G HSPA and/or EVDO operator partners into the venture for construction of an LTE network in compliance with the Indian Government’s rollout requirement for the BWA spectrum, and then to exit the venture.”, says a company release.
Only Tikona and Augere perhaps , among the successful bidders are firmly in the WiMAX camp. The state-run BSNL and MTNL have already rolled out some WiMAX services, using the head start thery were given. The rest will be wooed vigorously in coming weeks by both LTE and WiMAX providers. The small print in all this is that while existing cellular players -- especially the CDMA providers -- might well see advantages in staying with technology that comes from a big CDMA player like Qualcomm, the full blown LTE with 10 MBPS and better speeds is a couple of years away. WiMAX on the other hand is up and ready and its evangelists in India like WiMAX India Chairman CS Rao have been saying in effect: a technology in hand is worth two in the bush, two years later.
Which way the biggest potential BWA player –Infotel in its new Reliance plumage – will go, is therefore a crucial element in deciding which will be the dominant technology that will drive India’s broadband goals for her billion plus people. As it happened in the case of primary cellular services where both CDMA and GSM co- exist, it is clear that India is going to be a region where LTE and WiMAX will both be around for some considerable time to come.
But in the short term this is not going to come cheap: “The results of the BWA auction announced today point to a 'high cost-high tariff' regime in the near term as operators would likely try to recover their investments in the shortest time frame”, feels Naveen Mishra, Lead Telecoms Analyst, IDC India.
And comments Prashanto Roy, Chief Editor IT Publications, CyberMedia : How will the players (especially Infotel) recover the license costs, along with the equipment and rollout costs? That is the genius expected of Indian operators: in this low-ARPU (average revenue per user) market, they have to do it, and still keep their services competitive.The only caveat: cheap broadband alone will not drive penetration. There's affordable broadband available in cities, and penetration is still low. But I'm optimistic about the ramp-up, driven by a host of applications, from government services to entertainment. It's gradually coming together: the timing is right.”.