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3G auction may wait till 2G is solved
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#1
NEW DELHI: India’s highly anticipated 3G auctions which await the decision of a group of ministers (GoM) are now likely to be held ransom to the resolution of issues relating to 2G spectrum allocation, a senior DoT official told ToI.

‘‘There are strong linkages between the 3G auctions and several of the pending decisions relating to 2G spectrum,’’ the official admitted.

The DoT, through a high-powered committee has produced a detailed report on the allocation methodology and pricing strategy for 2G spectrum, making a departure from the earlier subscriber-linked criteria used for spectrum allocation. Currently mobile operators get 4.4MHz of startup spectrum bundled with the license agreement, with a line of sight through subscriber-linked norms to 6.2MHz and even beyond.

This process of allocating spectrum based on subscriber linkages has been a matter of controversy. The DoT, in an attempt to bring in transparency and fiscal prudence, now wants to move to market-based pricing for 2G spectrum allocation.

However, its 2G report which deals with serious issues including M&A norms, spectrum farming and spectrum sharing was recently referred to the Trai. When asked why this step was necessary since the DoT is the final implementing authority of its own report, the DoT official said, ‘‘There are licensing issues involved in implementing the 2G report.’’ Under section 11 of the Trai Act, the powers to modify licenses sits with the telecom regulator, and therefore the need to refer the 2G report back.

So far there have been two schools of thought with regard to the implementation schedule for the 2G spectrum report. One argues in favour of the implementation of 3G auctions first as that will allow benchmark to be set for the per MHz pricing of 2G spectrum in future.

The second opposing view propelled by certain players in the GSM industry has argued that the 3G network is an overlay on the 2G network. So till such time proper roadmap, pricing and availability for 2G is established companies may not be in a position to place rational 3G bids. It now seems that the second view is gaining some currency in the DoT.

Confirming that the Trai could take upto September to give its views on the 2G report, the official agreed this could push 3G auctions to either November or early 2010, as mid-December to early January is a near washout owing to Christmas and New Year holidays.

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#2
Oh thats bad news for those which are waiting for 3G.
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