Should BSNL Return 3G Spectrum As Well?

The Department of Telecommunications has, in principle, accepted the demand of the Government-owned Bharat Sanchar Nigam Ltd. (BSNL) to surrender its Broadband Wireless Access (BWA) spectrum in 17 circles. (See Indiawatch: BSNL Can Give Up BWA and BSNL Seeks to Surrender BWA Spectrum.)

The cash-strapped, state-owned operator had paid INR 101.8 billion (US$1.94 billion) for 3G spectrum and INR 83.1 billion ($1.58 billion) for BWA spectrum. The return of the BWA spectrum could mean a refund of around INR 80 billion for the company. Surprisingly, the company has decided to keep BWA spectrum in three circles, though its reasons for doing so are not very clear.

BSNL, along with the other Government-owned operator, Mahanagar Telephone Nigam Ltd. (MTNL), had procured the 3G and BWA spectrum about a year before the private operators. However, the operator was unable to captialise on this headway. Both BSNL and MTNL had been allotted spectrum in a non-standardized band.

In this regard, does it make sense for the operator to return the 3G spectrum as well? In spite of being the first operator to launch 3G services in the country, it has just 1.5 million 3G subscribers. Does it make sense to run the entire infrastructure for so few subscribers? Besides, the operator can easily use its CDMA network to cater to the data subscribers. (See IndiaWatch: Three-Fold Increase in BSNL's Losses.)

BSNL's successful return of the BWA spectrum might inspire other cash-strapped operators (including private companies) to follow suit. Like BSNL, MTNL also might benefit by returning the BWA spectrum. MTNL, which operates in just two metro cities (Delhi and Mumbai) is also suffering financial losses and it will make perfect sense for the operator to return the spectrum. Others, such as Tikona Digital Networks Pvt. Ltd., which is believed to be experiencing some financial problems, might also be seriously contemplating the return of BWA spectrum.

It remains to be seen whether Government would be willing to take back so much spectrum after the successful auction held last year. (See .)

Gagandeep Kaur, Editor, Light Reading India