The department of telecommunications (DoT) on Wednesday allocated spectrum as per schedule to 10

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telecom operators to pave the way for the launch of 3G telecom revolution in India by the end of this year. It, however, amended the UAS licence agreement with operators to include 3G.

The amendment brings with it a rollout obligation for 3G operators, including fixed timeline for service launch in metros, district headquarters and rural areas. Operators, who would have the licence for 20 years, would have to set up 90 per cent of the service in metros and 15 per cent in rural areas in the first five years of the launch.

Airtel, Reliance Communications (RCom) and Tata Teleservices (TTSL) said they would launch the service by the end of the year. The service is likely to be kicked off in Delhi and Mumbai. Bharti Airtel and Reliance Communications had each won 3G airwaves in 13 of the 22 telecom zones on offer. Aircel, Vodafone Essar, Idea Cellular and Tata Teleservices had won 3G airwaves in 13, 9, 11 and 9 circles, respectively. BSNL and MTNL started offering the 3G service early last year.

Sanjay Kapoor, chief executive, Bharti Airtel, told Financial Chronicle, “The allocation has happened as per schedule and we are in the process of rolling out the service as per the stipulated timeline. Most of our work is done and we should be ready to roll in a phased manner by the year-end.” He indicated the service would be launched first in key metros but did not specify the cities citing “strategic reasons”.

He said, “It is a service that customers have waited for long and this to my mind is going to empower consumers in India as never before besides fuelling GDP growth.”

Syed Safawi, CEO, wireless business, RCom, said, “By releasing the 3G spectrum as promised, the government has paved the way for the next revolution in mobile telecommunications. Reliance Communications is fully geared to bring alive this superior 3G experience to all its consumers.”

A TTSL spokesman said, “We are delighted to have received 3G spectrum for commercial use in nine telecom circles after the amendment in the UAS licence. We have already placed orders for 3G-network equipment. We will now closely work with our partners NTT Docomo, who are acknowledged as the world leaders in telecom technology development, to put our network and content in place. We look forward to speedy rollout of world-class 3G services, which will redefine the telecom experience in India.”

TTSL last month placed its network equipment order with Nokia Siemens. Kanika Atri, head marketing, Nokia Siemens, said, “The allocation of spectrum as planned will allow the operators to quickly offer 3G services. Our strong local preparedness includes India’s first 3G manufacturing facility at Chennai, global network solutions centres in Noida and Chennai already serving 3G customer globally. We recently announced India’s first private operator 3G deal with Tata Teleservices and we look forward to partnering with other operators in ushering 3G in India.”

Samaresh Parida, director, strategy, Vodafone Essar, said, “We are pleased to receive the spectrum today. Our implementation is on schedule and we will launch 3G services for our customers in a few months.” Aircel spokesperson declined comment. The company is contemplating starting the service early next year.

Telecom operators have been eyeing the 3G launch as the next big step in their growth trajectory given the falling average revenue per user (ARPU) in voice calls. The 3G launch is expected to herald the arrival of the high revenue business cycle since it involves value-added services payable at a premium.

All major operators have lined up distinct pricing strategies to drive in volumes to reap rich dividends. The 3G services would bring with it high-speed mobile broadband services, better quality of voice calls, and video calls. Users can download music files, full movie and other files at high speed. According to Trai, the regulator, India had more than 635 million subscribers at the end June, adding on average about 15-16 million subscribers a month.

Shiv Putcha, principal, telecom, Ovum Consulting, said, “It is a good beginning. Year-end timeline is possible but it would not be a national rollout. Most of the operators have either closed the equipment supplier or just about to do so.” He said the amended guidelines did not impose “any such thing that would unduly exercise the business cycle of the operators.”

On the rural rollout provision, he said, 3G was essentially a metro phenomenon and hence the rural challenge would be interesting to watch.

Putcha pointed out that operators would have to pay annual spectrum charges as per a new format. “We will have to study the fine print to see if it really would make a big difference.”

Telecom practice head at KPMG India, Romal Shetty, said, “This is the first deadline met by the government. This will indeed usher in a new telecom revolution in the country with operators all geared to put up their best ever performance in view of serious revenue implications the successful 3G rollout would have on their business cycle.”

He did not see any major impact of the amended guidelines though he said one would have to study them carefully.

The wireless teledensity in urban areas rose to around 112 per cent in mid-2010 while it stood at 24 per cent in rural areas. An independent research paper suggested that the deployment of 3G services on a national scale would play a vital role in bridging this huge gap. The “Indian 3G Mobile Forecast to 2012” said the number of 3G mobile subscribers was expected to grow at a CAGR of around 80 per cent between 2011 and 2013 to around 55 million by the end of the period.