Why the 3G roaming pact is good news for telcos

The decision by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to allow roaming pacts for 3G services will help telecom companies improve their data revenue.

Operators such as Airtel, which now has 3G services in 13 circles can now offer data services in the other nine circles as well through a roaming deal with players that have spectrum in these circles.

Spectrum sharing “The judgment of TDSAT on 3G intra-circle roaming pacts is good for the telecom industry. It will allow spectrum sharing and optimal utilisation of precious spectrum. It will help in further proliferation of 3G services across the nation and operators can concentrate on their 3G service rollouts and marketing,” said Hemant Joshi, Partner, Deloitte Haskins & Sells.

At present, none of the operators have pan-India footprint when it comes to 3G services. That’s because when spectrum was auctioned in 2010, the Government sold only 15 MHz in each circle. This allowed only three operators in each circle with 5 MHz each. As a result an operator like Idea Cellular do not have 3G services in a lucrative market like Delhi even though it has 2G spectrum for voice telephony.

The Tribunal order allows Idea Cellular to start offering 3G services in Delhi by taking bandwidth from Airtel or Vodafone. Data revenues, which account for about five per cent of the total telecom industry revenue could now increase to 10 per cent as operators get access to new markets.

It also enables struggling operators to generate additional revenues by giving 3G bandwidth to other operators. “This will drive efficient usage of spectrum. Today, an operator with excess spectrum has no option to monetise it thus keeping it idle,” said an operator.

While Idea, Airtel and Vodafone already have a roaming pact, other players said that they will get into similar alliance. Aircel, Tata Teleservices and Reliance Communications, for instance, have already announced inert-circle roaming deal this week and they are likely to extend the pact to intra-circle roaming also.

Auction process One of the concerns against allowing roaming was that it could undermine the auction process as operator would stop bidding for spectrum.

Rajan Mathews, Director General, Cellular Operators Association, said that such concerns are unfounded because mobile operators need access to more spectrum going forward.

“To meet data growth demand, each operator would require an average holding of at least 50 MHz. Right now, the average holding is around 15 MHz and roaming pacts won’t increase it. Operators, which want to offer world class data services, will still bid in auctions,” said Mathews.