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3G spectrum auction may be delayed, likely now in February

3G spectrum auction may be delayed, likely now in February
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First Published: Mon, Jan 04 2010. 10 49 PM IST

Graphics: Ahmed Raza Khan / Mint
Graphics: Ahmed Raza Khan / Mint
Updated: Mon, Jan 04 2010. 10 49 PM IST
New Delhi: The auction of spectrum for mobile phone companies to offer third-generation (3G) services is set to be delayed for at least one last time and will likely start on 12 February instead of 14 January. This will be the fifth postponement of the auction in 15 months.
The entire auction process is expected to be completed now by 5 March, according to an internal note of the department of telecommunications (DoT) reviewed by Mint. A notice inviting applications (NIA) will be issued by 10 January.
Graphics: Ahmed Raza Khan / Mint
NIA is a legally binding document providing details on the sale, including the exact availability of 3G spectrum in each telecom circle and in which frequency it is available. It will also detail policy governing payments, time frames and other information required by potential bidders.
“We have to be very careful with the information that is included in the NIA as we can be challenged in court if there is anything wrong with that information,” a senior DoT official said explaining the latest delay.
“Getting all the information together and rechecking it is taking longer than was earlier anticipated,” said the official, who spoke on condition of anonymity as he is not authorized to speak to the media.
Interestingly, just last week, telecom minister A. Raja had assured that the auction would be held on time despite his ministry missing a deadline to send out invitations to potential bidders.
The government has been in the process of auctioning 3G spectrum for the better part of two years now. 3G spectrum allows telecom operators greater capacity for voice calls and high-end services such as high-speed Internet, video-conferencing, interactive gaming, mobile TV and high-speed downloads on mobile phones.
The government is looking to raise between Rs25,000 crore and Rs35,000 crore in the current fiscal from the auction of spectrum.
The auction is likely to start by the end of February, the Business Standard had reported on its website on 29 December. DoT is working on the new timeline for the auction of frequency that would be issued shortly, the report said.
According to DoT’s internal note, NIA has to be vetted by the ministry of law through DoT’s legal adviser after the auctioneer has incorporated necessary changes. It has also to be approved by an interministerial committee looking into the matter as well as the secretary of DoT, P.J. Thomas.
The note says that successful bidders will have to pay the entire amount by 10 March for 3G spectrum while for broadband wireless access (BWA) spectrum, the winners will have to pay the entire amount by 20 March.
DoT officials said that the bidders would be asked to deposit 25% of the bid amount by 28 February and the balance by 10 March in case of 3G and for BWA spectrum, the schedule is 25% to be paid by 10 March and the remaining by 20 March.
The so-called empowered group of ministers dealing with the spectrum issue still has to take a decision on these dates.
The time frame is in line with the finance ministry’s stance that all the money should come in within this fiscal so the government can use the proceeds to bridge its fiscal deficit. “They are saying that the money has been accommodated in the budget and has to come in within the fiscal,” said a second DoT official, who also didn’t want to be named.
Analysts expect phone firms to spend between $1 billion and $1.5 billion (Rs4,650-6,975 crore) on all-India 3G spectrum, while building the high-speed networks will cost another billion dollars.
BWA spectrum is necessary for rolling out WiMax services to significantly increase broadband penetration, especially in far-flung areas where cables cannot reach. WiMax, short for worldwide interoperability for microwave access, is a telecom technology similar to Wi-Fi, or wireless fidelity, a standard that helps handheld devices and laptops access the Internet. WiMax is faster and offers a longer range.
shauvik.g@livemint.com
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First Published: Mon, Jan 04 2010. 10 49 PM IST