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ARTICLE Indian Telecom Players Gear Up for Massive WiMAX Deployment By Basharat H. Ashai, Market Analyst - Asia Pac & Middle East
India has been grappling with 3G and BWA/WiMAX spectrum allocation issues for quite sometime. In September 2006, TRAI, The Regulatory Authority of India, recommended that 3G spectrum be auctioned, thereby ending speculation that it would be given away for free to existing operators. TRAI identified 2 x 25 MHz of spectrum in the 2.1 GHz band for 3G services to be auctioned following a simultaneously ascending auction (SAA) format. As per the TRAI guidelines, five operators would be accommodated in blocks of 2 x 5 MHz in this band in the first lot. The remaining operators will be allocated spectrum as it becomes available. However, the 3G spectrum allocation continues to be unresolved as TRAI and the DoT (Department of Defense) have been at loggerheads over the issue of allowing foreign players into the India 3G market. TRAI opposes the move, saying the entry of foreign players may result in higher tariffs. The DoT’s stance is that the participation of the foreign players in the bidding process will increase competition and thus generate larger auction revenues. It is expected that the India government will refer the issue of participation to an empowered group of ministers for a final decision, as differences between TRAI and the DoT persist without any compromise or resolution in sight. The slow decision making process in terms of BWA/WiMAX spectrum allocation has really affected the potential of a technology like WiMAX in India. The spectrum in the 2.3-2.4 GHz and 2.5-2.69 GHz bands was not available for allocation back in September 2006, and so the authority decided that allocation of spectrum in these bands would only be decided when the bands became available. The good news is that these bands have now been vacated and TRAI has recently issued a consultation paper on the allocation and pricing for the auction of 3G and WiMAX spectrum for 3.3-3.6 GHz, 2.3-2.4 GHz and 2.5-2.69 GHz bands. The consultation has been sought on various points including:
Most of the major companies, such as Intel, BSNL, Reliance, Nokia, Qualcomm, Ericsson, and Cisco, have already responded to the consultation paper. The BWA/WiMAX spectrum allocation process is expected to be finalized by the end of June 2008. However, BSNL, a public sector company, has already been given the advantage with the allocation of 2 x 10 MHz of spectrum in the 2.5GHz band for mobile WiMAX rollout. BSNL has huge plans for deploying WiMAX in India. In December 2007, BSNL signed a revenue sharing model agreement with Soma Networks. After all the initial expenditure deductions (spectrum license fee, international bandwidth charges and other expenses), revenue will be shared based on a ratio of 70:30 between Soma Networks and BSNL respectively. Through the Soma Network, which will be deployed in Gujarat, Maharashtra and Goa, and Andhra Pradesh, BSNL expects to target 3 million mobile WiMAX residential subscribers. A total of 3,000 base stations from Soma Networks will be deployed. As per the BSNL spokesperson, 300 base stations will be deployed by the end of 2008 provided the spectrum is officially allocated within the next two months. BSNL further expects to reach 0.15 million mobile WiMAX subscribers on the Soma Network by the end of 2008 subject to the spectrum availability within the next two months. BSNL has floated a rural WiMAX tender worth $US472 Million. This project will be funded by the DIT (Department of Information technology). Thirteen vendors, excluding Soma Networks, have participated in the tender process including Nokia Siemens, Alcatel-Lucent, Telsima, and Nortel. A total of 1,000 base stations and 0.2 million CPEs will be deployed. The vendor selection will be finalized by June 2008. BSNL is also planning to cover urban India (70 cities) with WiMAX. The equipment for setting up the network in urban India will be funded by BSNL itself. The tender, which is still in-process, is valued at $US 472 million. An investment of $US 118 million is expected by BSNL in WiMAX by the end of 2008. BSNL has also issued an Expression of Interest (EOI) invitation, proposing mobile WiMAX deployments in some states through franchises on a non-exclusive revenue sharing basis. BSNL’s Plans to WiMAX India
Bharti Airtel has adopted a wait and see strategy for its WiMAX deployment plans in context of the upcoming BWA/WiMAX spectrum allocation in India. Currently Bharti Airtel has in excess of 100 Alvarion base stations deployed in 20 locations across India for last mile connectivity to its corporate customers. Airtel has wireline deployments, but they are not widespread, and therefore sees last mile connectivity as the driving force behind WiMAX. The operator has deployed fixed WiMAX using 3.3 GHz with access to 2 x 6 MHz FDD spectrum. VSNL (now TATA Communications) is currently rolling out enterprise WiMAX services in 133 cities, with plans to expand into roughly 300 plus cities by Q3 2008. This would represent almost complete country-wide coverage for the enterprise market. TATA will consider mobile services (based on the 802.16e-2005 standard) once the company gets new spectrum allocation in the 2.3-2.4 GHz band. TATA has deployed more than 1700 base stations as of May 2008 and expects to deploy several thousand more base stations in the next 3 to 5 years -- an investment of several hundreds of millions of dollars. The operator is also working very closely with chipset, CPE and base station vendors. TATA has floated an RFI for 802.16e-2005 solutions and the company is in the process of evaluating approximately 8 vendors. There are some Indian operators that are focused more on deploying WiMAX in countries outside India. Reliance Globalcom is a major example in this category. Reliance Globalcom has announced its intention to invest $US 500 million to establish WiMAX operations in 20 countries over the next two years. Reliance also plans to build and acquire WiMAX networks in emerging markets, such as Asia, Europe, Latin America and Africa, as part of its acquisition of eWave World, a London-based telecom company which holds WiMAX licences in several countries. Reliance Globalcom expects to expand that number to 50 by 2012. There is a lot of uncertainity in India with regard to what will be the maximum amount of spectrum allocated under each frequency band. Barring BSNL, service providers are not sure how much money they should invest in WiMAX at this point in time. The challenge will also be how many players can be accommodated with the spectrum that the government plans to allocate, and whether service providers will be able to make a viable business model out of it. But all service providers are eagerly awaiting the allocation, especially CDMA providers who do not have a wireline broadband infrastructure. For them, WiMAX is a very good solution because wireless broadband is still in the nascent stage in India. The government policy is to reach 20 million broadband subscribers by 2010, although it is highly unlikely that this target will be reached easily as India’s broadband subscriber base today stands at just above 3 million. To add another 17 million broadband subscribers in 3 years is a big challenge. But with the plans that the Indian telecom players have for WiMAX, this figure does not seem that gigantic. Detailed BWA/WiMAX Analysis for India is available in “BWA/WiMAX India Market Analysis & Forecasts 2007-2014 - 2nd Edition” For more information you can contact the author. Basharat@maravedis-bwa.com Copyright © 2008 by Maravedis Inc. All Rights Reserved.
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