NEW DELHI, INDIA: The government finally kick started the 3G and BWA auction process today, by issuing the notice inviting applications for the auction process.

The award of 3G Spectrum and BWA (Broadband Wireless Access) Spectrum shall be conducted as separate and distinct processes, according to the notice on the website of the DoT. Each of these auctions is an independent process and is not linked to any of the other auctions in any way, it clarified.

Out of the 22 telecom zones 17 will have three blocks each of 2x5 MHz for auction, whereas Punjab, West Bengal, Himachal Pradesh, Bihar and Jammu & Kashmir will have four slots each.

The reserve price varies from Rs. 30 crore to Rs. 320 crore based on the category. For Class A and Metro (excluding Kolkatta for which it is Rs. 120 crore) the reserve price is Rs. 320 crore, while for Class B it is Rs. 120 crore. For category C, the reserve price is Rs. 30 crore.

Since a Unified Access Services (UAS) license or an Internet Service Provider (ISP) license can only be awarded to an Indian company, as per DoT guidelines, any foreign players applying for 3G, BWA auction will need to form, or acquire, an Indian company, to obtain a UAS license or an ISP-category ‘A’ license.

However, they are allowed to participate in the auctions directly and apply for or acquire a license subsequently through an Indian company, where they hold at least 26 per cent equity stake.

The right to use the 3G Spectrum shall be valid for 20 years from the 'effective date' unless revoked or surrendered earlier, subject to the operator continuing to have a UAS/ CMTS license. In case the UAS/ CMTS license is canceled/ terminated for any reason, the spectrum usage rights shall stand withdrawn forthwith, the notice said.

Even before the auction, the government had allocated one block of 2X5MHz spectrum in Delhi and Mumbai for MTNL and one block of 2X5MHz of spectrum in the remaining service areas for BSNL.

BSNL and MTNL shall not be participating in the 3G auction, but shall be required to match the winning price achieved in the respective service areas in the 3G auction as payment for the spectrum allotted to them, the document said.

When it comes to BWA Spectrum, the government has allocated one block of 20 MHz of unpaired spectrum in Delhi and Mumbai for MTNL and one block of 20 MHz of unpaired spectrum in the remaining service areas for BSNL. Here also they will have to pay the winning price, though they shall not be participating in the auction.

There are two blocks each of BWA Spectrum in all areas and the reserve price varies from Rs. 15 crore to Rs. 160 crore based on the category of the respective zone.

DoT said that the licensee to whom the spectrum is assigned shall be required to provide required street level coverage using the 3G Spectrum in at least 90 per cent of the service area within five years of the effective date.

DoT said the auction will have two phases -- clock stage and frequency identification stage.

"The clock stage will establish the bidders to be awarded a block in each telecom service area where there is at least one block available to auction. In each service area bidders will bid for a right to a single spectrum block not linked to any specific frequency," said the notice.

This stage will result in a common winning price for all the blocks within a circle and subsequently the bidders from the service area. The clock stage will be followed by a frequency identification stage that will identify specific frequencies for the winning bidders.

"The frequencies identified will be announced simultaneous with the outcome of the clock stage. The frequency identification stage will be a random identification of frequencies performed automatically by the electronic auction system."