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Fourth cell operators caught in red tape

Thomas K Thomas

Almost ten months after they bagged the fourth operator licences, mobile companies are still uncertain when they will be able to launch services.

While Bharti is awaiting frequency clearance from the Standing Advisory Committee on Frequency Allocation, Idea Cellular (formerly Birla-AT&T-Tata) and Escotel have not been allotted spectrum.

Reliance is expected to launch its service in Kolkata before September in time to meet the rollout obligations, and Essar-Hutchison has deferred its plans to launch services in May.

Sanjeev Aga, chief executive officer of Idea Cellular, said: "We were planning to launch our service in Delhi by June. But since spectrum has not yet been allocated to us, we are not certain when we will foray in the Delhi market."

Aga, however, added that Idea Cellular had already put in place a large part of the required network in the city.

Manoj Kohli, chief executive officer, Escotel, said: "Until there is clarity on allocation of frequency, operators cannot plan. Till the allocation of frequencies, we cannot even start basic operations like applying for SACFA clearances and ordering equipment because some of it is frequency sensitive. This has resulted in a substantial delay in our launch plans. The department of telecommunications should defer the effective date of licence by 6-9 months."

Bharti, which bagged eight new licences, is set to roll out its services starting from Uttar Pradesh (west), but the company cannot launch the services because it has not been able to test its network in the absence of the frequency clearance.

Anil Nayyar, president (mobility), Bharti, said: "There are three issues that are creating uncertainty. First, spectrum has not been allocated. Second, even in cases where spectrum has been allocated, clearance is not coming. And third, BSNL is not giving us points of interconnection in all places."

For Escorts, efforts are on to rope in a strategic partner for its telecom service company Estel, to part finance the company's investment plans of Rs 1,000 crore in the four new circles over the next three years. Operations in the new circles are expected to start by September.

"We had not been allocated any frequency till the middle of April. Even now, frequencies have been allocated for only very few cities," said Kohli.

Bharat Sanchar Nigam Ltd is set to launch its nationwide cellular service in September. According to analysts, the entry of BSNL will worsen the conditions for the fourth cellular operators because they also have to tackle competition from the existing private cellular operators. And with airtime tariffs already as low as Rs 1.40 a minute, the new players do not have much leeway on the pricing front. What could also prove to be a challenge for the cellular operators will be the onslaught from the basic service providers offering wireless in local loop.

Analysts, however, point out that the operators can bank on the fact that the cellular market is growing 80 per cent a year. For instance, MTNL which launched its cellular service in March 2001, has already crossed the 100,000 mark with not much marketing effort. The new entrants are also betting on new applications and products to get a toehold in the market.

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