New phone cos to be allowed to bid for 3G

India’s department of telecommunications, or DoT, plans to allow new telecom aspirants, apart from foreign companies such as AT&T Inc. and BT Group Plc. to bid for fresh telecom licences for offering so-called third generation, or 3G, phone services in the country.

Indian telecom regulator Trai had recommended in September 2006 that only existing firms be allowed to bid for such licences as they can then pair the spectrum with existing networks.

“We could allow other new, prospective services providers to bid for these licences, but they will have to obtain a UAS licence after they succeed in bidding,” said a senior DoT official who did not want to be named. Indian telecom regulations mandate signing of a universal services access licence, or UASL, by telecom aspirants to be able to offer phone services in the country.

The 3G mobile phone services allow users to surf the Internet or download content, including music and video, at speeds faster than allowed by current technologies deployed on Indian cellular networks.

The government could earn around Rs20,000 crore from an auction of radio spectrum to phone firms offering 3G mobile phone services later this year.

“It has been DoT’s philosophy to introduce as many players as possible in order to lower the tariffs, allowing the market to decide on the number of players needed,” said Romal Shetty who heads research firm KPMG’s telecommunications practice. “This move will further allow foreign companies such as Deutsche Telecom AG and AT&T to enter the Indian market.”

Union information technology and communications minister Andimuthu Raja hadsaid in November that the government would auction up to 25MHz of frequency required for delivering 3G phone services, allowing up to five companies to offer such services.

However, it wasn’t immediately clear whether DoT would allow new entrants to participate in the auction or limit them to phone firms already offering services in the country.

Meanwhile, Indian mobile phone firms, such as Bharti Airtel Ltd and Reliance Communications Ltd are readying more profitable offerings as their average customer billings shrink with a service that is predominantly led by voice.

The average revenue per user for 3G services “could range anywhere between Rs500 and Rs700 depending upon the pricing strategies adopted by the operators,” a Mumbai-based telecom analyst at a foreign brokerage house, who did not want to be named, had told Mint in February.

“We could see around 15 million 3G customers in the first year of launch.”