A Simplified Policy for Cellular Services

The new guidelines for cellular services have simplified the bidding process,
technology, and implementation issues, and the industry now has to look for the
faster deployment of the new network.

The year 2001 is a welcome sign for the cellular loving people of India, as
the government is out with guidelines for the fourth operator in cellular. If
things move according to plan, licenses will be issued by mid 2001 and one can
see deployment of these networks in the 3rd quarter of 2001 or by the end of the
year. The new policy is a simplified one, as the government has learnt from
mistakes in the past. The much awaited launch of the Dolphin service of MTNL is
scheduled in January or February of the current year (both GSM and CDMA based).
It will bring a lot of cheer to consumers, as it will result in low airtime
costs, better packages, and provide cheaper and affordable services, when the
third and fourth operator is expected to start services in all the circles. One
can also see improvement in quality-of-service due to increase in competition.

Bidding

The government has issued guidelines for 24 circles–four metro circles and
17 state circles, which includes the second operator in West Bengal, and Andaman
& Nicobar, where there is no operator. The bidding process is simplified and
is based on multi-stage, informed ascending bidding with a pre-qualification and
three rounds of bidding. With no cap on number of bidding, the existing cellular
service provider has the privilege to bid for maximum circles to provide synergy
to their existing operations. The new operator also has the privilege of
entering India in a big way, as one can operate in metro and state circles
simultaneously. To eliminate speculative bidding, the government has asked the
bidder company to submit a Financial Bank Guarantee (FBG) of amount equal to Rs
50 crore, Rs 25 crore and Rs 15 crore for A, B and C service areas respectively.
They also have to submit a Performance Bank Guarantees (PBG) of amount equal to
Rs 20, Rs 10, and Rs 2 for A, B, and C circles respectively, before signing the
license.

Technology

In terms of technology, the new guidelines are open as the service provider
can choose any digital technology, which supports their business model. But,
only those digital technologies are permissible that have been used for a
customer base of one lakh or more for a continuous period of one year anywhere
in the world. The frequency slots of 4.4 + 4.4 MHz will be allotted to the
service provider in bands of 1710-1785 MHz-paired with 1805-1880 MHz, and vacant
slots of 890-915 MHz will be paired with 935-960 MHz. To avail more bandwidth,
the service provider has to pay revenue sharing at the rate of 18 percent (11
percent in case of Andaman & Nicobar) to accommodate a large number of
subscribers and to provide a number of value-added services.

Implementation

The government has taken a cautious step based on past experiences so that
the project is not delayed due to operational problems. The cellular licensees
will have to make their own arrangement for getting Right of Way (RoW) and the
metro service providers have to rollout ninety percent of the service within one
year of signing the license. The licensees are provided direct connectivity to
all service providers in the service area, as per the mutual agreement between
them, whereas, inter-circle or international long distance calls have to be
routed through the National Long Distance service provider.

The issue of guidelines will result in bringing more
operators in cellular services and help in realizing the goals of NTP 1999,
achieving a tele-density of seven by the year 2005 and fifteen by the year 2010.
The government guideline of not restricting the number of operators in cellular,
will give good impetus to providing connectivity to all regions and people in
the country.

Pravin Prashant