3G auction in limbo again?

3G auction in limbo again?

New Delhi: Just when it seemed that all possible issues related to India’s auction of licences for so-called third generation, or 3G, telecom services had been addressed, the sale process appears to have come to an abrupt halt, in part because an old problem between India’s department of telecommunications (DoT) and ministry of defence has resurfaced.

The issues, some of which remain unresolved, were discussed at a meeting of the empowered group of ministers (eGoM) chaired by finance minister Pranab Mukherjee on Tuesday.

eGoMs are ministerial groups that take policy decisions, especially on knotty issues.

Two senior officials at DoT, who did not want to be identified because they are not authorized to speak to the media, and a third person who attended the meeting, said there were three major issues that are still unresolved and which resulted in the meeting of the eGoM being inconclusive.

According to the person who attended the meeting, who spoke on condition of anonymity, the main issue related to differences between the defence and telecom ministries on account of "interference" from state-owned Bharat Sanchar Nigam Ltd (BSNL) in seven to eight circles, leading to the defence forces having security concerns. Resolving the issue would require more discussions, the person said.

In another issue, the defence ministry has accused state-owned telcos BSNL and Mahanagar Telephone Nigam Ltd of going slow on building an optical fibre cable (OFC) network which the Armed Forces will use for communication, vacating 3G spectrum that they are sitting on.

The defence ministry’s stand is that it cannot vacate spectrum till the OFC network is ready in time, in keeping with the agreement signed between it and DoT in May 2009.

According to that agreement, the Armed Forces were to vacate the spectrum by August 2010.

The third issue is that members of the eGoM aren’t happy about the changes in the auction terms.

The draft of the notice inviting applications (NIA) that has been reviewed by Mint says that the government is looking to auction only three slots of spectrum across the country.

In August, the eGoM had decided that four slots of 3G spectrum would be auctioned wherever available.

Decisions taken in an earlier EGoM on auctioning four slots stand for the moment, the person added.

At this meeting, the government had also pared its expected revenue earnings from the auction to Rs25,000 crore as opposed to Rs35,000 crore mentioned in last year’s budget.

Another issue, which has been resolved, according to DoT officials, is related to payment. Some members of the eGoM want winning bidders to pay at least 75% of the bid amount up to six months after the auction, when spectrum is allocated. The members have agreed on this.

Apart from Raja and Mukherjee, home minister P. Chidambaram, defence minister A.K. Antony, law minister Veerappa Moily, agriculture minister Sharad Pawar, tourism and culture minister Ambika Soni, minister of state in the Prime Minister’s Office Prithviraj Chavan and Planning Commission deputy chairman Montek Singh Ahluwalia are members of the eGoM.

The eGoM met to finalize the NIA for the auction of 3G spectrum. The meeting was expected to be the last of the eGoM meetings before the auction.

The DoT officials also said that the auction, scheduled to be held on 12 February, may be delayed. The auction had originally been scheduled for 10 January.

Analysts following the auction closely say there is a chance that the auction may not happen in this fiscal.

“These are the same issues that have been haunting the auction for a while now. It does not look like it will happen this fiscal as it will most probably take the ministers three weeks to meet again,"said an expert in telecom laws who did not want to be identified.

“The delay is unfortunate. One major problem is that India is going from being a country respected for its regulatory environment to one that is being sneered at and made fun of (because of the delays)," said Kunal Bajaj, managing director at strategy consulting firm BDA Connect.