3G tangle

The Supreme Court has barred Sunil Mittal-owned Bharti Airtel from extending intra-day roaming facilities in seven circles where it has no 3G licence but offers the service free. The main contention of Reliance Communications, which has filed a case against Bharti, is it’s losing 3G market share due to Bharti’s “tactics”.
Bharti, along with Idea Cellular and Vodafone, have been operating in these circles through pacts with other carriers. The apex court has ordered all three not to extend intra-circle roaming facility to new customers. Bharti has been asked to stop these operations in the seven circles of Kolkata, Madhya Pradesh, Haryana, Gujarat, Maharashtra, Uttar Pradesh (east) and Kerala. But as a small relief, it has been allowed to service its existing subscriber base.
Nothing seems to have worked with 3G services, right from its auction to implementation and client addition. For one, the spectrum prices were kept artificially higher by the government as limited resources were on offer. Furthermore, the kind of response companies expected from customers was nowhere around. The steep price offered initially was a turn-off, which forced companies to slash prices drastically, further impacting their revenues. Bharti, Idea and Vodafone have a combined 3G customer base of 12 million subscribers, with Bharti making up 6.8 million.
The judgment is clearly a setback for Bharti, along with others. More importantly, with competition in the sector likely to escalate with Reliance Industries gearing up for 4G services at prices lower than 3G, growth of the latter is expected to take a beating. This might prompt companies to bring down their prices in order to prevent migration.
So, for Bharti, which has spent some Rs.15,609 crore towards licences of 3G and broadband wireless access – and this does n’t include other costs and the penalty amount it may have to cough up – there is a lot at stake, apart from its reputation.