How BWA / 3G roll out obligation is blocking telecom growth in India

Telecom Lead India: India
has around 13 million broadband users. As per the India government policy, the
BWA and 3G licensees need to provide street level coverage using the 3G and BWA
spectrum in at least 90 percent of the service area within five years after
getting spectrum. The DoT policy is affecting growth of broadband in telecom
industry in India.

Companies such as Bharti Airtel, Tikona, Qualcomm, Reliance
Industries, Aircel, MTNL, BSNL, Augere, etc have received license in 2010 and
are yet to start BWA business. 3G operators such as Reliance Communications,
Vodafone, Airtel, MTNL, BSNL, Tata Teleservices, Aircel, etc are struggling to
grab subscribers.

3G investments force Indian operators to report 85% dip in
profit in 2011-12

Besides the operators, the government policies are partly
responsible for the expected decrease in net profit for 2011-12.

If the government had put stringent roll out obligations,
all these operators would have launched BWA services and enhanced their 3G

The roll out obligation for broadband wireless access (BWA)
and 3G are posing major challenge to the broadband growth. Technology is not a
major problem for Indian operators. Government should have asked them to
complete around 50 percent of the service area in first two years. Growth in
India will be slow due to poor policy,” said head of a telecom association who
does not want to be quoted.

DoT document shared during 2010 auction said the licensee
shall ensure that at least 50 percent of the district headquarters in the
service area will be covered using the 3G spectrum, out of which at least 15
percent of the DHQs should be rural short distance charging areas within five

The document said if the licensee does not achieve its roll
out obligations, it shall be allowed a further period of one year to do so by
making a payment of 2.5 percent of the successful bid amount per quarter or
part thereof as liquidated damages. If the operator does not complete its roll
out obligations even within the extended period of one year, the spectrum
assignment shall be withdrawn.

The number of broadband connections in India stood at 13.35
million by the end of December 2011, with Maharashtra (including Goa)
accounting for the highest number at 0.23 million.

As per the draft National Telecom Policy 2012, the government has set a target
to achieve 175 million broadband connections by 2017, and 600 million by 2020
at minimum 2 Mbps download speed.
Maharashtra (including Goa) leads the race with 23.55 lakh broadband
connections, followed by Tamil Nadu (including Pondicherry) with 16.62 lakh
connections as on December 30, 2011.

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