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Roaming Ruckus: Operators under DoT's scanner for 3G agreements

October 31, 2011
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It took multiple rounds of dialogue between the telecom department, the regulator, operators and the government to finally have 3G spectrum auctioned in 2010. Eight of the nine licensees have already launched high speed services but the battle does not seem to be over yet.

In July 2011, in an effort to reduce costs and offer pan-Indian 3G services, Vodafone, Bharti Airtel and Idea Cellular signed bilateral roaming agreements, both inter- and intra-circle, to provide 3G services to users in circles where they did not have spectrum.

Two months later, the Department of Telecommunications’ (DoT) Telecom Enforcement, Resource and Monitoring (TERM) Division wants to prevent them from offering services in circles where they do not have 3G spectrum by entering into roaming agreements with competing players who have airwaves.

The department has also asked state-owned operator Mahanagar Telephone Nigam Limited to put on hold its plans of signing a roaming deal with private players Tata Teleservices Limited (TTSL) and Aircel for 3G mobile services, at least till the union government decides on whether such deals are permitted under the licence conditions.

The government’s key concern is whether such an arrangement is tantamount to spectrum sharing, which is not permitted under the licence conditions.

According to Kunal Bajaj, director, Analysys Mason, “The roaming arrangement does not include spectrum sharing because the equipment and network belong to the operator that owns spectrum. It would have been a case of spectrum sharing had operators used their own equipment and network on someone else’s spectrum.”

In defence

Operators argue that the arrangement is legal as DoT had clarified that roaming agreements will be allowed for 3G services.

Vodafone, in a written reply to DoT seeking clarification on the issue, stated, “The Unified Access Service (UAS) licence expressly allows operators to enter into roaming agreements with other licensees, and to provide national and international roaming services to their customers.”

The letter added, “Inter-circle was permitted by DoT through an amendment to the UAS Licence and the Cellular Mobile Telephone Services licence on June 12, 2008. The amendment permits operators to enter into mutual commercial agreements with other service providers for intra-circle roaming facilities.”

As per the letter, the industry (telecom operators) had specifically asked DoT whether intra-circle roaming for offering services to customers would also be applicable for 3G in case some operators are not able to acquire spectrum in all circles.

In response to the above query, Vodafone’s letter said DoT had clearly stated that “the roaming policy is applicable to the licences and not to specific spectrum bands. Therefore, roaming facility will be permitted.”

However, the key point here is that while mobile licences allow operators to enter into roaming agreements, service operators have gone a step ahead and are selling connections even in areas where they do not have spectrum. Earlier, roaming agreements for 2G services were primarily done to cater to subscribers who travelled from one circle to another. But for 3G services, operators have got into an agreement, whereby connections are being sold in the same circle.

For example, in Madhya Pradesh neither Bharti Airtel nor Vodafone has 3G spectrum but they have 36,490 and 1,558 subscribers respectively, according to DoT. This has been made possible because the two operators have entered into an agreement with Idea Cellular.

While Vodafone has spectrum in only nine circles, it offers 3G services to its customers in 20 circles. Airtel has 3G spectrum in 13 circles but offers 3G services in 20 circles. Idea Cellular has 3G spectrum in 11 circles but offers 3G services in 19 circles.

Going forward

With the operators challenging the TERM division’s stance, the industry seems headed for another regulatory scuffle. The department has already referred the matter to the Telecom Regulatory Authority of India, which has asked telecom operators to provide details of their 3G roaming agreements.

If the final decision goes against any such agreement, it can have an adverse impact on all 3G operators, none of whom has pan-Indian 3G spectrum to serve their nationwide 2G user base. Bharti Airtel, Aircel and Reliance Communications each own 3G spectrum licences in 13 of the 22 telecom circles, while Vodafone owns licences in 10 circles, and Idea Cellular and Tata Teleservices Limited in nine circles each.

While nobody can guess how long this debate will continue before there is any clarity on the issue, it has once again raised the need for a stronger and more transparent policy and regulatory framework for the sector.

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