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June 11, 2010
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India’s Broadband Wireless Access (BWA) spectrum (radio airwave) auction has officially concluded on June 11, 2010, following 16 days of aggressive bidding. The auction has reaped a staggering INR385.43 billion (US$8.2 billion) in revenues for the government.
The BWA auction began on May 24, 2010, following the closure of the pan-India 3G auction on May 19, 2010, which fetched a whopping INR677.19 billion (US$14.4 billion) in revenues, overwhelming the government’s expectations. The combined revenues from the 3G and BWA auctions is roughly INR1,060 billion (US$22.6 billion), thrice the initial expectations of INR350 billion (US$7.5 billion).
The Indian government plans to use the windfall from the 3G and BWA auctions to bridge the high fiscal federal deficit and partly fund payments towards food, fuel and fertilizer subsidies, according to India’s Finance Ministry.
India’s Department of Telecommunications (DoT) has auctioned two blocks of spectrum in the 2.3 gigahertz (GHz) band for BWA in 22 service areas (“Circles"). One block has been reserved for state-run Mahanagar Telephone Nigam Ltd (MTE) and Bharat Sanchar Nigam Ltd (BSNL). These operators now have to pay the government a sum equivalent to the highest bids in each circle.
A total of 11 operators bid at the BWA auction to grab a chunk of spectrum to roll out the next-generation mobile broadband services. Bidders include local players such as Bharti Airtel, Vodafone’s (VOD) Indian arm Vodafone Essar, Reliance, Idea Cellular, Tata Communications, Aircel and Spice Internet. Others are newcomers Tikona Digital, Infotel Broadband, UK-based wireless broadband operator Augere Holdings and the surprise applicant Qualcomm (QCOM).
According to the DoT, the lucrative Delhi and Mumbai circles registered the highest bids. Infotel bagged BWA license in all 22 circles while Aircel and Bharti won licenses in 8 and 4 circles, respectively. Qualcomm managed to secure licenses in 4 circles including key markets of Delhi and Mumbai. Other winners are Tikona (in 5 circles) and Augere (in 1 circle). Telecom heavyweights Vodafone Essar, Reliance and Idea Cellular pulled out from the auction.
Winners at the BWA auction will be able to launch high-speed mobile broadband services based on the WiMax or TD-Long Term Evolution (LTE) 4G standards starting September 1, 2010. While the WiMax technology has been already embraced by operators around the globe, TD-LTE based services are yet to be available commercially.
Despite the high teledensity (thanks to the rapid wireless growth), broadband penetration in India is meager with just 9 million users (0.7% penetration) at the end of April 2010. The scenario should change as carriers roll out blazing-fast broadband services leveraging the BWA spectrum.
Besides wireless Internet, the operators will be able to deliver a range of services such as mobile video, mobile e-commerce, Internet TV and mobile computing, thereby creating opportunity for broadband industry growth in India.
Read the full analyst report on "QCOM"
Read the full analyst report on "VOD"
Read the full analyst report on "MTE"
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