Reliance Industries subsidiary wants Govt to keep Rs 28,000 crore reserve price for 4G spectrum

Telecom Lead India: Infotel Broadband Services, a
Reliance Industries company, said the reserve price for 700 MHz (4G LTE)
spectrum may be kept around 7-8x of 3G auction prices– approximately Rs. 28,000 crore.

The reserve price set by the government for
pan-India 3G spectrum was Rs 3,500 crore for an operator and Rs 1,750
crore for BWA.

The Reliance Industries firm has bagged 22 BWA licenses
across the country in 2010 and is yet to launch TD LTE services. Market
sources suggest that the company has not yet signed major LTE equipment vendors
and rollout is expected in late 2012.

On the other hand, several leading telecom players such as
Bharti Airtel, Tata Teleservices, Vodafone, among others, may be pitching for
700 MHz spectrum. If established players grab 4G spectrum, it will pose severe
challenges to the Reliance Industries firm.

Is Reliance Industries waiting for NTP 2011 to offer voice over
LTE 4G services

If NTP 2011 guidelines allow opening up of the IP telephony
in India, one of the biggest beneficiaries will be Reliance Industries’ LTE
business. At present, LTE technologies enable services providers to offer data.
LTE with data and voice will become a compelling combination for bandwidth
hungry customers in India.

Infotel Broadband Services, in its recommendation to TRAI, said: The Authority
stated that the 700 MHz (698-806 MHz) spectrum band is considered the most
important band for broadband deployment. It is suitable from the point of
both capacity and coverage. The digital dividend spectrum in the UHF range has
very good propagation characteristics and is suitable for the roll-out of
mobile broadband in rural and other difficult-to-reach areas.

According to the internal note from Infotel Broadband
Services, 700 MHz band has following characteristics:  better propagation;
signals travel farther and pass through walls and other obstacles much better
than existing cell phone networks do, leading to a less number of cells to
provide the same coverage; less capital expenditure is required for roll-out of

The 700 MHz spectrum requires less power to run a mobile
phone/Internet cell on the 700 MHz band than other bands, which are at higher
frequencies. Due to less CAPEX, larger wavelength and better propagation
characteristics, this band is useful to provide wireless broadband services
particularly in rural & far flung areas.

The spectrum is suitable for the higher bandwidth hungry
application e.g. 4G services. Thus higher bandwidth at lower cost can be
provided. The spectrum in the 700 MHz band allow for the creation of a national
broadband public network with enhanced communication capability.

 TRAI earlier said that an LTE network at 700 MHz would
be 70 percent cheaper to deploy than an LTE network at 2.1 GHz – GSMA.
Two to three times as many less sites required for initial coverage at
700 MHz compared to 2.1 or 2.5 GHz.

Infotel Broadband Services said as the duration of the
spectrum holding is of 20 years, the reduced Capex has a multiplier effect. In
addition, the reduced base stations would mean reduced Opex. Therefore, the
economic value of the spectrum in 700MHz band is not only higher than 2100MHz band
but is also higher than the 900/800MHz band.

The reserve price shall continue to be categorized as
for Metros, Class A, B, and C circles as was in the case of 3G auctions and,
should be in the same ratio as was in the 3G auction.