Airtel 3G: To Rule The Airwaves No More?

The buzz is that Bharti Airtel may have to stop 3G services in 7 circles in the country where it did not have 3G licenses but operated through intra-circle roaming agreements, and will also impose a hefty penalty on the company. It has been reported by a leading financial daily that the Department of Telecom may ask Bharti Airtel to stop 3G services in 7 circles in the country by the end of March 2013, viz. Maharashtra, Madhya Pradesh, Kolkata, Uttar Pradesh (East), Gujarat, Kerala and Haryana. These are circles where the company does not have 3G spectrum licenses but offers 3G services through roaming pacts. Bharti Airtel has 3G licenses in 13 circles including Delhi, Mumbai, Andhra Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh (West), Rajasthan, West Bengal, Himachal Pradesh, Bihar, Assam, North East and Jammu & Kashmir, but offers 3G services in 20 circles. Among its principal competitors, Idea Cellular has 3G spectrums in 11 circles and offers services in 19 circles, while Vodafone has 3G spectrums in only nine circles but its services extend to 20 circles. The 3G spectrum auction in India began on April 9, 2010. At the end of the auction, i.e. by May 18, 2010, the government could raise Rs 50968.37 crore. In the auction of 3G airwaves, no company managed to get spectrum in all of the 22 circles that India is currently divided into. Bharti Airtel, Vodafone and Idea had entered into an intra-circle roaming agreement (ICR) to offer 3G services in circles where they could not bag 3G spectrum. This agreement between the three telcos will allow each of them to have a pan-India presence, and that too at reduced costs. Bharti Airtel has entered into intra-circle roaming agreements with Idea and Vodafone to share their 3G networks in Gujarat and Uttar Pradesh (East) respectively. In the current situation, Bharti Airtel could be fined a penalty of Rs 350 crore, i.e. Rs 50 crore each for the 7 circles where it provides roaming 3G services through agreements with Vodafone and Idea. This has reportedly been approved by the telecom minister, Kapil Sibal. The roaming agreements surely work in favour of telecom companies as it is a remarkable technique to offer pan-India 3G services to all customers without paying for the spectrum charge for all the circles. It also helps to use the available infrastructure resourcefully. On the governments part though, it has led to loss of revenue, as the only sanctioned way by which all these telcos could have offered 3G services to consumers all over India is by bidding for all the circles separately, thereby raising its price. Consumers also end up losing as they have to pay roaming charges to use the services even within their own circles.