India’s Ministry of Defence (MoD) has told the Department of Telecommunications (DoT) that it will not hand over spectrum for 3G services until the regulator addresses security concerns regarding the frequencies it has been offered in return. According to the Economic Times, the MoD currently has ownership of frequencies the DoT wants to allocate to 3G operators. The telecoms regulator has proposed a spectrum swap under which the MoD will be offered space on the existing networks of state-run mobile operators Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) in exchange for its 3G frequencies. However, the MoD is concerned that the BSNL and MTNL networks are not secure enough for military use and wants the system upgraded. Analysts estimate that making the networks fully secure could send costs spiralling upwards to INR27 billion (USD600 million), almost three-times the original expected outlay. The DoT must now decide whether to acquiesce to the military’s demands and, if so, who will foot the bill.
According to TeleGeography’s GlobalComms database, the allocation of spectrum is a hot topic in India, particularly in regard to quality of services and the introduction of next generation technologies. In October 2006 the Telecoms Regulatory Authority of India (TRAI) identified the 450MHz, 1900MHz and 2100MHz bands to be utilised for 3G cellular services. As expected, the regulator suggested auctioning the frequencies, with a sliding scale of starting prices varying across the 23 telecoms circles. The proposed base price for spectrum covering the biggest circles in Delhi and Mumbai would be INR800 million (USD17.4 million), Chennai and Calcutta would start at INR400 million with spectrum in all other telecoms circles set at INR150 million. The highest bidder in each circle would choose the best spectrum band, with runners-up being required to offer a price equal to at least 75% of the winning bid. The TRAI is now in talks with various private and state-run companies, including the DoT, to free up frequencies for 3G.