Watch out - Rel Comm GSM Coming soon!

The Department of Telecommunications (DoT) has granted three companies – Reliance Communications, HFCL and Shyam Telelink – the right to use GSM technology in their existing licence areas, where they currently offer mobile services using CDMA technology.

Late tonight, sources said the approval letters had been issued to the operators. When contacted, two operators confirmed the development, but declined to give details.

The move makes Reliance, which runs GSM services in seven circles (the North-East, Assam, Orissa, West Bengal, Madhya Pradesh and Bihar) ready to operate GSM services in rest of the country.

All that the company needs to do now is to pay the required licence fee of Rs 1,617 crore to the DoT and install the relevant equipment.

According to sources, Reliance Communications is ready to pay the fees immediately and is in a position to get the network up and running within four to six weeks time.

The DoT will grant the company an additional 4.4 MHz in the 1,800 MHz band across the country for this purpose.This will be in addition to the existing CDMA network that Reliance runs nationwide.

Even Shyam and HFCL are eligible to get GSM spectrum in Rajasthan and Punjab respectively, where they run CDMA-based networks.

Once Reliance’s GSM network is up and running, it would provide stiff competition to the likes of Bharti Airtel and Vodafone Essar in a bid to gain market share.

This will also impact CDMA vendors like Qualcomm, which receive royalties for the CDMA handsets that operators like Reliance use. With Reliance moving to a competing standard, there is a downside for the US-based company, analysts said.

Reliance had applied to the DoT for GSM spectrum for 15 circles in February 2006. HFCL had applied for 21 circles in May 2007. Shyam Telelink — in which Russian Sistema recently acquired a 10 per cent equity stake, applied in late September this year for nationwide licences.

The DoT had recently cleared the policy, allowing dual usage of technologies (CDMA as well as GSM) to existing licensees.

The department’s move came at the end of an action-packed day, which started with representatives of the three companies being called to Sanchar Bhawan for discussions.

As the news broke, the Cellular Operators Association of India (COAI), which represents GSM operators like Bharti Airtel, Vodafone and others, cried foul and said the move was a violation of norms.

In an attempt to ward off the DoT move, the COAI shot off a letter to the DoT stating that crossover allocation of spectrum or dual frequency allocation is not permissible.

Director-General TV Ramachandran said: “We are greatly disturbed to hear rumours that the government has issued, or is considering of issuing, a letter to a large CDMA operator, permitting the company to hold a crossover allocation of spectrum. This is based on application filed by the company in February 2006, when such crossover allocation was clearly not permissible”.

The GSM operators’ body also claimed that crossover of technologies is not permissible under the present policy and license regime had been recognised by both DoT and Trai.

Further, Trai had also stated that “such crossover is not permissible”, even though the same may be allowed through an amendment in license.