3G licence comes gratis in unified regime - DoT likely to lose substantial revenue
New Delhi: With a unified licensing regime just weeks away from being enforced, the private basic operators like Reliance Infocomm and Tata Teleservices will not just manage to get a full mobility licence by paying additional entry fees, but will also now get a 3G (third generation mobile technology) licence for free. 3G licence has proved to be a substantial revenue earner for Governments across Europe, North America and the Asia-Pacific, where an average 3G licence has been sold for Rs 30,000 crore.

According to industry sources, the Telecom Regulatory Authority of India (TRAI) in its recommendations on unified licence has not mentioned anything separately about the 3G licences and instead taken a broader perspective that "the operator should be always free to use the best service and technology route". In other words, 3G services have been subsumed under the overall unified licence, despite the fact that the Government could have raked in huge amounts of licence fees if it decided to sell the licences at a later stage. In fact DoT has been in the process of formulating guidelines for 3G services and was toying with various options to give out licences.This is now put on the backburner because of the sudden urgency shown by the Government to migrate to a unified licence regime for basic and cellular operators.

Although DoT can, if it wants, still charge huge spectrum fees for the frequency that is allotted to 3G services, it will still be less than what it could have made by auctioning it. With data services (including high-speed video and audio transfer as well as mobile Internet) estimated to be the main source of revenue for telecom operators in the coming years, there has been a clamour for 3G licences in most countries. In India too, a vast potential exists and DoT could have raked in substantial revenue, the sources said. While the private cellular operators too will be getting a 3G licence free, they are not very happy. In fact they had made representations to DoT in the past that they should be allowed to offer 3G services without having to bid for the spectrum. The unified licence regime has however nullified the advantage they were hoping to corner.

Having realised this, the private cellular operators have even written to the finance minister, Jaswant Singh, last week pointing out the omission by the TRAI. The Cellular Operators Association of India (COAI) had in its letter stated: "The TRAI has quoted extensively in about international precedents, especially the European Union. It is glaring that the TRAI has omitted to mention that through such an unified licence, the basic operators would have been in effect gifted a free 3G licence, which internationally (including in the European Union) have been auctioned for significant moneys. In a summary analysis of the values of 3G licences undertaken by COAI in 2002, the average value of a 3G licence is over Rs 30,000 crore."
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