On May 28, the Telecom Regulatory Authority of India (TRAI) called all the telecom operators for an urgent meeting to discuss an important issue that threatens to take the sector into yet another round of turf battle.
The issue that has split the industry is whether the Government should price spectrum for broadband wireless access services using technologies such as WiMax differently or should it be treated on a par with pricing decided for third generation mobi le spectrum.
While existing GSM operators, Ericsson, Nokia, Qualcomm and others who are promoting 3G technologies want the pricing to be the same for all types of wireless technologies, companies such as Reliance Communications, Tata Teleservices, Intel and Motorola want WiMax spectrum to be priced lower.
Rethink spurred by ITU move
The telecom regulator had earlier recommended a differential pricing for the two types of wireless access technologies but then decided to review its decision in the light of developments at the International Telecommunications Union — the global telecom standards and regulatory body.
When TRAI had made its initial recommendations in 2006, WiMax was still an evolving technology and was not considered as next generation. Therefore, in its earlier suggestion, TRAI said that the base price for WiMax should be lower. So while the reserve price for third generation technologies such as WCDMA and EVDO may be pegged at a maximum of Rs 80 crore for each service area (Circle), for WiMax, the regulator had suggested a maximum of Rs 10 crore. However, in 2007, the ITU decided to consider WiMax as a third generation mobile technology, which got the Indian regulator to rethink on its earlier recommendations.
For and against
But companies such as Intel, which is betting big on WiMax, say that there is no reason for a rethink and TRAI should stick to its earlier position. “There should not be any comparison between 3G and WiMax. While 3G is essentially a voice-based technology that also does data, WiMax is best suited for data at present. India is lagging way behind other countries in terms of broadband penetration and we believe that WiMax will enable much faster rollouts. Government should keep the entry cost low to enable cheaper and faster broadband access to consumers,†says R Sivakumar, Managing Director (South Asia), Intel.
On the other hand, Qualcomm, which is expecting major revenue in the form of royalties from 3G technologies, is opposed to the idea of differential treatment.
We do not believe that there should be significant differences in the reserve prices between frequency bands. Given that the propagation characteristics of these bands (for WiMax) are not significantly different from 2.1 Ghz (used for 3G mobile service) and the lack of sound economic rationale for introducing such a difference in the reserve price, Qualcomm believes that price of spectrum should be on a par with that of the 3G reserve price fixed by TRAI. This approach will ensure a level playing condition and encourage the deployment of spectrally efficient and cost-effective technologies,†says Kanwalinder Singh, President, Qualcomm India.
The entry of Wimax has also realigned the equation between global technology providers. Nokia, which is considered a global rival to Qualcomm, this time is in agreement with the US-based company's views. The proposed differential pricing by subsidisation in spectrum allocations for broadband services may bring increased broadband penetration in the short term but will create problems and complexities in the long term, specially related to utilisation of spectrum. We believe that a uniform spectrum pricing policy for the systems rendering same services should be implemented, says a note from Nokia to TRAI.
A lot at stake
The difference of opinion between the equipment vendors is not merely academic. The stakes are, in fact, very high. Companies such as Intel and Motorola are making huge investments in developing products based on WiMax technology around the world. Intel is also investing billions of dollars to fund operators who want to roll out a wireless network using WiMax.
But Intel’s main concern is that, as of today, devices and network equipment for rival 3G technologies are much cheaper due to the global scale and volume. While WiMax is just beginning to take off globally, 3G has been deployed in a number of countries. A 3G-enabled handset, for instance, is available today for less than Rs 10,000.
Though Intel is confident that it will be able to bring down costs for WiMax devices gradually, a lower entry charge, in the form of spectrum price, compared to 3G, would help it to position the technology as an attractive proposition, especially to the new players in the Indian cellular segment. Clearly, a massive uptake in India is crucial to Intel’s global plans for WiMax.
On the other hand, Qualcomm, Ericsson and Nokia know that 3G has an edge in terms of the pricing for the end consumer and they don’t want to give any room that will allow WiMax operators to cushion that advantage in the form of lower entry cost.
Operators' stance
Obviously the issue has also divided the telecom operators depending on who has bigger plans for deploying WiMax. Reliance Communication, Tata Teleservices and Maxis-backed Aircel are playing the affordability/rural card and have demanded that TRAI stick to its earlier recommendation of fixing lower reserve price for WiMax.
The government's main objective is proliferation of affordable broadband services. For this purpose the regulatory costs in provisioning of broadband services should be kept at bare minimum. Linking broadband wireless access (BWA) to 3G service for determining levies or allocating spectrum on similar terms is not appropriate. In case allocation BWA and 3G are considered at par and spectrum is allocated at same terms then BWA service shall never be able to take off,†says an RCOM executive.
Dismal broadband scene
To be fair, penetration of broadband services till now has been dismal. Only 4 million subscribers have taken a broadband connection compared to a target of 10 million by 2007. The primary reason for the poor penetration is the limited number of fixed line telephones. Therefore, to meet the Broadband Policy objectives and targets, heavy deployment of wireless access services will be needed. Technologies like WiMax can be used to increase broadband penetration in the country.
While GSM operators agree on the need for wireless broadband technologies, they allege that the affordability plank is being used by the WiMax camp to get freebies from the Government.
“This is similar to the way they brought in CDMA technology in 1999. They claimed concessions saying that CDMA will be used for providing fixed wireless telephones to provide affordable services to the poor man. But a few years later, all of the CDMA operators became full-fledged mobile service providers. Now they are saying that WiMax will be used for providing wireless broadband to the villages when everyone knows that the technology will be capable of doing exactly what a 3G technology can do,†says a GSM representative.
The Association of Unified Telecom Service Providers of India (AUSPI), representing RCOM and Tata Tele, charges GSM operators with blocking competition. “WiMax technology, as of today, can be used only for providing wireless broadband access. Though voice may be possible someday why should we be asked to pay a higher fee for something that may or may not happen in the future? GSM lobby is always trying to block competition,†says S.C. Khanna, Secretary General, AUSPI.
The TRAI is expected to give its final views on the issue shortly. However since the stakes are high, a decision either way will be contested. That means consumers will have to wait longer to get access to high-speed wireless Internet access.
