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Nine-member EGoM to take call on 3G cap
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A panel of ministers will on Friday debate a proposal to auction only three slots for private players in the upcoming auction of
third-generation (3G) wireless spectrum amid an escalating stand-off between the telecom
department and the armed forces over the control of airwaves. If the nine-member empowered group of ministers (EGoM), headed by finance minister Pranab Mukherjee, accepts the proposal, it can result in a steep increase in bid prices as mobile firms will scramble to get access to the scarce resource.

Following the decision of EGoM on Friday, DoT will issue a notice inviting applications (NIA) for sale of 3G airwaves. The panel will also decide whether private participation should be restricted to just two players in Rajasthan and the North-East because of the limited availability of 3G spectrum during the auctions scheduled to begin in mid-January 2010, an official of the department of telecom (DoT) told ET.

Thirteen mobile phone firms are jostling for space in the Indian telecom market and three more companies are due to launch services by next year, and operators are expected to engage in a bidding war to grab 3G airwaves vital for high-end services.

The government had earlier announced that it would auction four slots of 3G spectrum to private operators in all circles and require the winning bidders to make the full payment within 15 days. With number portability is scheduled to be implemented from early 2010. Large operators who do not win 3G airwaves may see an exodus of high-end customers to their rivals.

ET was the first to report on December 9 that the uncertainty over the availability of airwaves may result in the January auctions being limited to three private players. The DoT official pointed out that since the country’s defence forces had not vacated additional spectrum in time for the auctions, it had no option but go ahead with the sale process for just three private operators.

“We have enough radio frequencies to accommodate a minimum of three players in every circle. The armed forces have failed to adhere to an MoU between the communications and defence ministries earlier this year, where they had agreed to vacate 10 MHz of airwaves (for two telcos) prior to the auction,” the DoT official said.

Escalating the stand-off with the defence, DoT will also inform the panel that armed forces are “spreading misinformation” about the amount of
3G frequencies they hold as well as vacating some of it for commercial telephony.

“DoT does not agree with the ministry of defence that the entire 60 MHz of 3G spectrum in the 1920-1980 band is with defence, and only the 10 MHz of 3G spectrum released by them on signing the MoU is available for the auction,” another official in the communications ministry said. To prove its case the DoT will present before EGoM on Friday its records to show that it is already the custodian of all the 60 MHz of 3G spectrum in most circles.

Besides, it will also tell EGoM that the 10 MHz, which the armed forces have claimed to have vacated, is already available with the communications ministry and has even been allotted to state-owned BSNL and MTNL for 3G services. Both PSU operators are already providing 3G services using the 10 MHz of 3G spectrum the defence claims to have vacated, DoT sources added.

Following the decision of EGoM on Friday, DoT will issue a notice inviting applications (NIA) for sale of 3G airwaves. DoT has failed to keep its December 8 deadline to issue notices inviting bids for the upcoming third generation (3G) spectrum auctions. NIA will be a legally binding document providing all details regarding the sale of airwaves, including the exact availability of 3G spectrum in each circle and the specific frequencies bands that would be awarded to the winners.

“So far, we have been unable to issue NIA since defence has failed to vacate spectrum. If EGoM agrees to three slots, then we can go ahead with NIA specifying these details including the exact sub-band where all three winners will be awarded 3G airwaves. We do not need spectrum from defence if the auction is for three players,” a DoT official observed.

The ministerial panel decided in August that a total of five players would be allowed to offer 3G services in every circle, one slot reserved for BSNL and MTNL. It set the base price for pan-India 3G spectrum at Rs 3,500 crore.

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