India To Auction Wireless Broadband Spectrum

The Indian government is not very pleased with the allegation that the government is ignoring broadband in India. Telecom minister A.Raja said that releasing spectrum for broadband wireless access might help bridge the gulf between the governments promise of 20 million subs by 2010, and the woeful situation of not even 3 million subs as 2007 (ironically, the Year of Broadband) draws to a close. The government has issued guidelines for BWA services, looking to address the lack of broadband in rural areas:

Spectrum in the 2.5 GHz band is going to be auctioned, limited, however to only Category A ISPs, state owned telcos BSNL and MTNL, and Universal Access Service Licence holders (mostly, private telecom operators). The base price of the auction will be 25 percent of amount for 3G spectrum, and there’s annual charge of 0.5 percent of Adjusted Gross Revenue (AGR), which may be revised to 1 percent after 3 years. There are rollout obligations, no mergers or reselling of spectrum is permitted. [release]

Frankly, broadband is not 3G or akin the same as mobile telephony, so a similar set of guidelines should not have been set. While prevention of hoarding of spectrum (and licences) is welcome, broadband is a business most operators are struggling with. Rollout obligations - particularly in case of a costly rural rollout - coupled with a price discovery mechanism like auctions, might not find many takers, apart from large telecom operators who are willing to take a punt on wireless broadband.