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3G auctions to begin from April 9
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#1
The government has finally set the ball rolling on the auction of 3G spectrum. The Department of Telecom (DoT) announced April 9, 2010, as the day when the auction of the long-pending 3G airwaves would start. The telecom department will issue the notice inviting application (NIA) for bids from prospective bidders from Thursday.

As per the schedule released by DoT on Wednesday, the pre-qualification of bidders would take place on March 30, mock auctions would be held on April 5 and 6. The Broadband Wireless Access (BWA) or Wimax spectrum auction would start two days after the close of 3G auctions.

The telecom minister A Raja on Monday had assured that the government would issue the NIA during the week and the auctioning of 3G spectrum would start after 45 days of issuing the notice. The auction of 3G airwaves, which will allow users access to ultra-fast internet services, full movie streaming on mobile phone and mobile TV, has been delayed for close to two years over issues of freeing up of spectrum and setting bid prices.

The 3G spectrum auctions, originally scheduled to happen in 2007, hit a roadblock amid disagreements between DoT and the finance ministry over the bid price and the number of slots to be auctioned in each circle. The government later formed an Empowered Group of Ministers (EGoM) to resolve the issues.

The auctions got delayed for the second time over non-availability of spectrum in a few circles as a chunk of 3G airwaves are held by the defence forces. However, the telecom minister on Monday said the standoff between all the ministries has been sorted out. But, he didn’t give any details.

The government will auction four slots of 3G spectrum in each circle, in addition to the one already allotted to state-owned telcos BSNL and MTNL, Mr Raja had said. The 3G auction is expected to fetch the government about Rs 35,000 crore. Telecom operators including Bharti Airtel, Vodafone Essar, RCom and the Tatas have already expressed their keenness to bid for the next generation technology.

The reserve price for pan-India 3G spectrum has been set at Rs 3,500 crore and Rs 1,750 crore for WiMax. Currently, all telecom services in the country are offered on the 2G platform, except to state-owned telcos, BSNL and MTNL, who already have commercial 3G services at place. While 2G widely caters to the voice market, 3G is believed to spur up the data traffic in the country.

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#2
To start on April 9 for three slots instead of the original four.

After numerous missed deadlines and controversies for over a year, the Department of Telecommunications (DoT) today announced that auctions of licences for third generation (3G) high-speed telecom services would start from April 9.

The delays have been on account of differences between DoT and the defence ministry over spectrum availability. The defence services had signed an agreement with DoT to release spectrum before the original January 14 auction deadline but then backed out, saying the alternative network plan was not ready.

The new schedule misses the crucial deadline fixed by Finance Minister Pranab Mukherjee, to complete the process before March 31 to take advantage of auction revenues for the 2009-10 financial year, which would have helped reduce the government's financial deficit.

It is not clear whether Mukherjee can take credit for the revenue from the auctions, which are expected to be completed by the end of April, in 2009-10. A senior officer in the Comptroller and Auditor General of India said: “The transaction has to be completed before March 31 to credit revenues in this fiscal year. The government accounts are open only for a week after the fiscal year ends.”

In an official statement today, DoT said it would issue notices inviting applications (NIA) for potential bidders tomorrow for three slots instead of the original four, suggesting that revenues would be far lower than original estimates of Rs 35,000 crore. The fourth slot will be auctioned later since spectrum for it will be available only in 2013.

One slot has already been given to state-owned MTNL and BSNL to roll out services in Delhi and Mumbai and the rest of India, respectively. The government had estimated revenues of about Rs 30,000 crore from 3G (Rs 7,500 crore each) and the rest from auction of two slots of broadband wireless access (BWA).

The last date for receiving applications is March 19 and the pre-qualification of companies will be announced on March 30. A mock auction for interested players will be conducted on April 5 and 6, and April 9 would mark the start of the actual auction process, expected to take around 10 days.

Auction for BWA services —- technology that enables high speed broadband — will take place two days after the close of the 3G auction. There are two BWA slots on the offer.

Telecom operators welcomed today’s announcement. Says Anil Sardana, managing director, Tata Teleservices Limited: “We are really glad the government has announced the revised schedule for the 3G auction and we look forward to the entire process being completed within the given time-frame.”

The auction is expected to attract most telecom incumbents such as Bharti Airtel, Vodafone-Essar, Aircel, Idea Cellular, Tata Teleservices and Reliance Communications since the licences come bundled with spectrum, the airwaves that enable wireless communications. Newcomers like Uninor are planning to bid only for certain cities.

Meanwhile, several telecom companies have been lobbying the government to postpone the auction, citing lack of credit as a result of the stiff rate wars following the entry of new players. However most experts say they do not expect many consumers to shift to 3G initially, primarily because of the high cost of 3G mobile handsets, which start at Rs 7,000.

“The 3G market in India will be 5 to 10 per cent of the total mobile users. There are about 120 million GPRS users, out of over 500 million total mobile subscribers,” predicts Kedar Sohoni, president of Informate, a telecom research firm.

Others say the spectrum will help incumbents to grow. Says telecom analyst Mahesh Uppal: “The use of broadband wireless services is not likely to go up immediately with the introduction of 3G. Broadband services like video downloads and other bandwidth-hungry services may take time to grow. But, 3G spectrum is critically required by incumbents who have shortage of 2G spectrum in big cities — without it, they would not be able to expand voice services to their customers or sustain their quality.”

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