3G mobile telephony not so 'next-generation'

Over eight years after third generation (3G) mobile technology made its commercial debut in Japan, Indian phone users got only a taste of official flip-flop on roll-out of the service during 2009 that also saw CBI raiding telecom ministry over spectrum allocation.

As for the mobile users, whose numbers swelled to more than 500 million for the first time, they got the option of paying for calls on per second usage basis instead of the fixed one minute call.

As much as the falling tariffs delighted consumers, the CBI raid on Telecom Minister A Raja's office dampened spirits at the Department of Telecom. The result is many crucial decisions like implementation of Mobile Number Portability, policy on spectrum allotment for expansion of services and even 3G mobile telephony were either relegated to the back-seat or delayed inordinately.

Despite severe inter-ministerial (ministry of telecom and ministry of defence) differences over vacation of spectrum (airwaves used for transmitting voice and data), the government ended the year with the promise of auctioning 3G spectrum as per schedule on January 14, next year.

Although it appears to be a daunting task, the government's determination, especially Finance Minister Pranab Mukherjee's resolve to mop up funds to bridge fiscal deficit, looks to make this auction possible, although many other countries have moved to the next level of mobile technology.

Addition of 10-15 million new mobile subscribers every month made India the fastest growing telecom market in the world and it also helped the country to achieve 500 million users much ahead of 2010 target.

If private players flourished by adding new subscribers, the state owned firms -- BSNL and MTNL -- lost market share mainly due to official apathy and the resultant delayed execution of projects.

The case in point is BSNL, which started with over 30 per cent market share about seven years ago and was considered a major threat to private players, but was reduced to marginal player with a market share of little over 10 per cent and still falling.

Nothing short of an induction of a strategic partner in BSNL could save the falling PSU. But this would not be an easy task for the government with strong unions blocking the attempt every time.

The sector in general is prone to controversies, be it over allotment of spectrum, issuance of new licences or tariff regulation.

A major controversy erupted during the year when the CBI raided the DoT offices. The agency filed cases against 'unknown officials' for alleged irregularities while allocating spectrum to new players in 2008.

Minister A Raja ruled out resignation, saying he had followed procedures and taken decisions "in consultation with the prime minister".

It all began when two new operators -- Unitech and Swan Telecom -- inducted foreign partners and sold equity at much higher premium within few months of getting licence and spectrum, compared to what they paid to the government.

The allegations also echoed in Parliament. Opposition parties, claiming a scam of Rs 60,000 crore (Rs 600 billion), said the DoT under Raja allocated 2G spectrum at 2001 prices causing revenue loss to the exchequer.

As the demand for auctioning 2G spectrum gained momentum to get its true value, the DoT referred the matter to TRAI along with a host of other issues including the possibility of imposing a cap on the number of players in a circle.

On the tariff front, it all started with one of the new players in the GSM segment -- Tata DoCoMo -- which started offering one paise per second billion option. Competition followed suit at the risk of putting margins under pressure.

One of the leading and incumbent private player went to an extent seeking telecom regulator TRAI's intervention to ensure that new operators do not indulge in predatory pricing.

However, the trend of per second billing caught on and fell further with some operators even offering half a paise per second call charges for both local and STD calls.

It is pertinent to mention that Telecom Minister A Raja, whose decision to induct new operators in the already overcrowded market came uner severe criticism, had said that the move would lead to lowering of tariffs and much wider choice to users.

Going at this rate the tariffs are bound to fall further and may touch as low as 10 paise a minute for local call and 25 paise for STD.

Experts feel that tariff would continue to fall further in 2010 when few more new players start services. The year 2010 looks to be quite challenging with 3G telephony and MNP happening in the months to come.