The auction of 3G or third-generation spectrum, which will enable telcos offer data-rich services, starts today, but even as it becomes clear that the state stands to rake in money from the process, three larger questions critical to the future of the Indian telecom business remain:
1. Whatever happened to 2G or second-generation spectrum?
The policy of allocating this to old telcos, whose networks are overloaded, and newcomers remains mired in ambiguity.
2. The auction will likely result in telcos overpaying for 3G spectrum. Can we hope that the government won’t step in a few years from now and offer a relief package to such firms, many of whom will be taking on debt to fund their bids?
After all, this is exactly what happened when India issued telecom licences (which were bid for) in the 1990s.
3. Finally, who will benefit the most from 3G? Telcos, because it could help improve profitability? Customers? Or the government, which needs the money?