New Delhi: The department of telecommunications (DoT) may renege on its promise to allow winning bidders of high-frequency airwaves for mobile telephony to jump a two-year-old queue and get access to low-frequency airwaves ahead of 343 waiting applications.

The new terms are likely to be included in a notice inviting applications for the auction of high-frequency airwaves, also called third-generation (3G) spectrum, two DoT officials said on condition of anonymity as they are not authorized to speak with the media.

Legal hurdle: DoT is considering allowing older applicants to stay ahead in the 2G queue because of a Delhi high court judgement. Ramesh Pathania / Mint

Every company needs a UAS, or universal access services, licence to offer any form of telecom service in India. Start-up, or 2G, spectrum refers to low-frequency airwaves.

3G mobile telephony enables faster data usage and higher capacity for voice calls. The technology provides users facilities such as video streaming and video conferencing on their mobile phones.

“We had thought of allowing the winning bidders to be given priority (for 2G spectrum), but that would not be fair to the older applicants," the official added.

The older applicants include firms whose applications for 2G spectrum were put on hold by DoT in 2008, after the department arbitrarily advanced its cut-off date for applications.

DoT had initially invited applications for 2G spectrum up to 1 October 2007, but announced in January 2008 that only applications submitted by 25 September 2007 were being considered. Of the 463 applications, only 120 licences were issued to nine companies, while the rest were asked to wait.

Later, while announcing the auction of 3G licences, DoT said winning bidders would also be given access to 2G spectrum ahead of the older applicants—in a move to attract foreign operators.

But the Delhi high court ruled last November that DoT’s arbitrary advancement of the 2G spectrum application deadline was illegal. The decision was given on a petition filed by Chennai-based telecom company STel Ltd.

Although the department has challenged the ruling in the Supreme Court, it is now mulling over allowing older applicants to stay ahead in the 2G queue because of the high court judgement, the second DoT official said.

The government is expected to come out with final rules and regulations for the long-awaited auction of 3G and broadband wireless access spectrum.

The notice inviting applications for the 3G spectrum auction was to be issued on 11 January, but has been held up due to differences between DoT and the defence ministry, the first DoT official said.

The notice is a legally binding document with all relevant details needed by potential bidders in the auction. Other issues that are to be dealt with in the applications include the number of slots and frequency of the spectrum to be allocated as well as issues related to the payment schedule.

Officials said there will be four slots of spectrum up for auction, and the process should finish within the current fiscal.

“There are already around 12 operators in all the circles (administrative divisions for mobile telephony) in India. And given that there are only at the most five slots of spectrum up for auction, it is unlikely that the foreign operators will stand a chance," a Mumbai-based analyst with an international brokerage said on condition of anonymity.

“There is no shortage of interest, but the incentive is not there. The confusion over auctions has been on for the better part of three years. This has led to many losing interest completely," he added.

India is the world’s fastest growing telecom market, as well as the second largest after China. The country added 17.65 million mobile phone subscribers in November, taking the total to 506.04 million subscriptions.

Research and analysis firm Gartner Inc. has predicted that total subscribers in India will reach 737 million by 2012, with 20% of those using 3G.