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The Department of Telecommunications has announced the guidelines for the auction of allotment of spectrum for 3G and for broadband wireless spectrum using protocols such as worldwide inter operability fro microwave access (WiMax) in the country. While spectrum in 2.1 GHz band was allocated for 3G auction, 2.5GHz and 2.3GHz spectrum bands were identified for WiMax.
In the case of 3G, the successful bidders will be allotted the spectrum for 20 years. Up to 10 players will be allowed in the 3G space, which includes foreign players. Those holding a UASL (Universal Access Service License), and have previous experience of running 3G services can bid for the spectrum.
In the first year of operation, operators will be exempted from the annual spectrum charge of 1% of the Adjusted Gross Revenue. Rollout obligations include covering 90% of metro area's within 5 years from date of spectrum allocation.
The state owned companies BSNL and MTNL have been accorded a 3G licence without waiting for the auction and they would roll out their services within six months.
Some of the guidelines for WiMax spectrum allocation are similar to 3G, such as allowing UASL holders to bid and exempting operators from the annual spectrum charge of 1% in the first year.
The government plans to give out 5-12 licences and is hoping to rake in Rs.400 billion from the auction. The base price for pan India 3G licence has been set at Rs.20.2 billion. These services are expected to rollout in mid-2009.
However, the policy has been questioned by both the TRAI and the Minsitry of Finance. The Telecom Regulatory Authority of India has told the Government that there should be a review of some parts of the recently announced policy for third generation mobile policy, including the decision to allocate spectrum to CDMA operators based on subscriber base criterion.
In its letter to DoT, the telecom regulator said: "As various service providers have been given licences in different service areas at different periods of time, the Authority feels that keeping the subscriber base as the criterion for deciding the priority of allotment shall be against the level playing field and the principle of equity.
Therefore, the Authority suggests that in order to ensure equity, level playing field and optimum pricing in allotment in 800 MHz band, the DoT may consider the auction route."
The Ministry of Finance (MoF) has charged that it was not consulted in the matter and this is both inappropriate and in contravention of the cabinet decision. The finance ministry in its communication to DOT has stated that under the Transaction of business rules 1961 it is mandatory for other government departments to consult them in respect to all issues which have financial implications. Accordingly, it has asked DOT to set up consultative meetings with appropriate authorities in the MOF so that requisite approvals are obtained before the policy is finalised.
However, the Department of Telecom has said that there will be no delay in auctioning spectrum for 3G mobile services and there will be no change in the announced policy guidelines. The DoT has told the Ministry of Finance that the guidelines, including issues related to spectrum pricing, was finalised after proper consultation.
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