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Telecom: 3G policy being reconsidered |
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The Prime Minister’s Office has asked the Communications and IT Ministry to refer the policy on third generation mobile services to a Group of Ministers on IT headed by the Finance Minister, Mr Pranab Mukherjee. The DoT (Department of Telecommunications) favoured taking its proposals on 3G auctions to the Cabinet again instead of to the GoM in a bid to push for a quick decision.
The auction was scheduled to be held in January but was postponed due to differences between the various Ministries on the issue of pricing of 3G spectrum auction and the number of players to be allowed in a circle. While the Finance Ministry wants a higher base price at Rs 4,040 crore, the DoT wants it to be under Rs 3,500 crore. There is also a difference of opinion on the number of slots, with one side wanting it to be restricted to five while the other wants as many as eight operators to be given 3G spectrum. The Government has included 3G auction in its first 100-day agenda and therefore the GoM has been told to decide on the policy quickly.
A decision could be taken quickly as the Finance Ministry is keen to include revenues from selling spectrum in the upcoming Budget on July 6. According to DoT’s estimates, the Government should get in excess of Rs 35,000 crore by auctioning 3G and broadband wireless access spectrum. The GSM-based mobile players have also sought clarity on 2G spectrum allocation before auctioning 3G radio waves.
Price issue: It is understood that the Department of Telecom will agree with the Finance
Ministry’s suggestion of doubling the base price for third generation (3G) mobile spectrum. The base price may be fixed at Rs 4,040 crore. The DoT was in favour of a base price of Rs 2,020 crore or at Rs 3,500 crore to keep the spectrum affordable for the operators. But the Finance Ministry wants at least Rs 40,000 crore from selling spectrum in order to bridge the Budget deficit.
Number of slots: Both Ministries have diluted their stance on the number of slots to be auctioned. According to DoT officials, 5 Mhz of 3G spectrum will be given to six highest bidding operators. While the Telecom Ministry earlier wanted 3G spectrum to be given to at least eight players, the Finance Ministry was pushing for five.
In addition, three slots will be auctioned for WiMax spectrum and another for CDMA operators. It has also been agreed to double the base price for WiMax players from Rs 1,010 crore to Rs 2,020 crore. For CDMA operators, the base price will be Rs 500 crore as they will get only 1.25 Mhz spectrum compared to 5 Mhz for GSM operators. State-owned BSNL and MTNL have already been given spectrum for both 3G and WiMax services.
It should be noted that with the Defence Ministry agreeing to vacate more spectrum, the Department of Telecom now has enough bandwidth to accommodate as many as 11 players for offering third generation mobile services in six circles. Barring Delhi, West Bengal, Rajasthan and Gujarat, the DoT can give out 5 Mhz spectrum each to more than five players in all the other regions. According to records of the DoT’s Wireless Planning Coordination wing, 60 Mhz spectrum is available in six circles, 50 Mhz in two circles of Haryana and Madhya Pradesh, and 45 Mhz in Punjab.
The Regulators advice: Meanwhile, the telecom regulator (TRAI) has told the Government that it should explore allotting 3G spectrum to more than one CDMA-based mobile operator. As of now, the DoT is planning to auction spectrum to only one CDMA player as it does not have spectrum to accommodate more players. However, the telecom regulator has suggested that optimum utilisation of existing users in the 800 Mhz band could free up enough spectrum for one more player.
The recently announced information memorandum for 3G auction had not specified the policy for CDMA players. The Association of Unified Telecom Service Provider had written to the Government that limiting 3G auction to GSM operators would destroy the level playing field. In its recommendation, TRAI last Wednesday said that only existing CDMA players may be allowed to participate in the auction. It also said that the price of this spectrum should be 25 per cent of the amount paid by the GSM players during their auction to be held in February.
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