Foreign players to bid for 3G spectrum in India

CIOL Bureau
New Update
NEW DELHI, INDIA: The controversy over the auction of 3G spectrum seems to have come to an end with the Department of Telecom (DoT) permitting foreign telecom operators to participate in the spectrum auction process.

It has been learnt that A Raja, Union Minister of Communications and IT, has given the final nod to DoT to allow foreign players to bid for 3G spectrum. However, these foreign players should have experience in providing 3G services.

The minister will announce the 3G policy today. He is also likely to announce the policy on WiMax and number portability.

The announcement has been delayed due to many reasons, including political uncertainty in the country.

On number portability, the government has decided to grant licences to two mobile number portability service providers in the country, who will act as a clearing house to allow mobile users to seamlessly change their operator without changing their number, according to a Business Standard report.

According to DoT sources, along with the existing telecom players, foreign players will also be allowed to participate in the bidding process of 3G spectrum.

The base price band for auction of spectrum has been fixed at Rs 1,940 crore. Foreign players will have to shell out Rs 1,650 crore ore to acquire unified access service licence.

"A set of guidelines has been drafted allowing foreign players to bid for the 3G spectrum. Foreign players will have to fulfill criteria to take part in the bidding process. Prior telecom experience will be the first criteria to participate in it. It will also include the balance sheet of the companies and clearance of the Foreign Investment Promotion Board (FIPB)," the source informed.

According to research firm Ovum, global majors such as AT&T, DT and NTT DoCoMo, might find it a welcome relief to enter into the India market via the 3G route. In contrast, the existing telcos could have opposite feeling: the high price for 3G spectrum and forthcoming intensified competition will bring increased pressure.

Incidentally, DoCoMo made the first launch of commercial 3G service in the world.

Currently DoT has around 25 MHz of 3G spectrum, which will be auctioned to the top five bidders. According to guidelines, the two-PSUs – Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) would be offered 3G spectrum. In that scenario only three more players would be entertained in the bidding process.

Meanwhile, BSNL already has a 2Mbps Evolution Data Optimized (EVDO) offering, which experts termed as 3G service.

"Till the time defence releases additional spectrum for the telecom industry, the present disposal of 25 MHz of 3G spectrum would be auctioned," the source said.

BSNL is building an optic fibre network for the defence to create an alternate communication channel. Once the network is ready, defence will release 45 MHz of spectrum for commercial purpose. It may be mentioned here that the telecom regulator had earlier proposed DoT not to allow foreign bidders to participate in the auction.

However, DoT has taken the decision to permit foreign biggies to bring in more revenues to the government exchequer. The auction of the 3G spectrum would bring in revenues to the tune of Rs 50,000 crore.