3G spectrum auction from 14 January; govt allows foreign bidders

3G spectrum auction from 14 January; govt allows foreign bidders

Amid raging controversy over irregularities in the allocation of spectrum to new companies last year, the Union government has announced a fresh road map for starting 3G or third-generation mobile services, the radio waves for which would be auctioned from 14 January.

The department of telecommunications (DoT) has said the auction of 3G spectrum would be carried out in four stages—invitation of bid, pre-qualification, auction and grant of spectrum. DoT would hold a pre-bid conference on 16 November and the mock auction would be conducted on 11-12 January.

“The auction of 3G spectrum would start on 14 January, 2010," DoT said, adding that this is an indicative schedule and subject to revision.

According to the revised schedule, there is a slippage of at least one month compared with the original plan announced by the empowered group of ministers.

The earlier deadline given by the government was 7 December. However, due to lack of clarity on the availability of radio waves for auctioning, the process got delayed further.

The plan to auction 3G spectrum comes at a time when DoT’s policies for 2G mobile services (award of licences and subsequent allocation of spectrum) has come under scrutiny and the Central Bureau of Investigation is looking into the alleged irregularities.

DoT is facing a charge that 2G spectrum was doled out to new players cheaply by not auctioning it and rather bundling it with the licence, causing a huge loss to the exchequer.

The revised memorandum said that foreign firms would also be allowed to bid for spectrum for 3G mobile services.

“Interested foreign entities are allowed to participate in the auctions directly and apply for licences subsequently," the revised information memorandum, containing details about eligibility criteria and time schedule, said.

Foreign entities can operate telecom services in India only through an Indian subsidiary with not more than 74% foreign shareholding, subject to the approval of the Foreign Investment Promotion Board.

The memorandum also gives details on the spectrum charges the successful bidders will have to pay over and above the spectrum acquisition fee. An annual spectrum charge would be levied on the total adjusted gross revenue of 2G and 3G services taken together.

However, there would be a moratorium of one year on the payment of annual spectrum charges for the stand-alone 3G operator. No moratorium would be applicable to the existing operators holding both 2G and 3G spectrum.

Stating the roll-out obligation, the memorandum said, in the metros, the licensee to whom spectrum is allocated shall be required to provide service in at least 90% of the area, within five years.