Merely days after the announcement of the 3G policy, ET reports the Wireless Planning and Coordination (WPC) wing of DoT has cleared allocation of 3G spectrum to state owned BSNL and MTNL.

We had covered this in our thoughts on 3G, pointing to the four month head-start this would give state-owned telco’s over private firms. The spread now seems to have increased with BSNL and MTNL capable of launching services by year-end and private telcos being able to jump into the fray only by mid-2009.

The move is being justified by stating BSNL has been given a 10 million broadband connection target by 2010, up from a current base of 1.7 million customers. As I stated previously, roll-out options incase of state-owned telco’s should be different compared to firms committed to maximizing shareholder value. If increasing broadband penetration is being looked at justification for a head-start, why isn’t the last mile being unbundled? For that matter, BSNL is sitting pretty on an authorised capital of Rs 10,000 crore, that’s $2.38 billion worth of capital that can be used for subsidies to drive wired broadband and probably subsidize a few hundred thousand PC’s. The popular bumper sticker comes to mind, Don’t steal, the Government hates competition.

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