3G auction likely to be pushed to September

The much awaited 3G (third generation) telecom spectrum auction will not be conducted this financial year and may be pushed to August-September, going by the recommendation of the law ministry.

The decision would hit the finance ministry’s math on bridging the fiscal deficit—it was targeting to raise Rs 35,000 crore from the 3G and BWA (broadband wireless access) auction by March 31.

The delay comes despite an empowered group of ministers headed by finance minister Pranab Mukherjee brainstorming several times recently, and prime minister’s advisor Sam Pitroda being brought in to settle the spectrum issue.

The Department of Telec-ommunications (DoT) has finalised the 3G NIA (notice inviting application) draft, which was sent to the law ministry for vetting.

Although no official announcement has been made by DoT or any other government agency on deferring the 3G auction beyond this financial year, it is learnt that the law ministry has cited “serious legal challenges” in the bidding process if spectrum cannot be made available till September.

As per the DoT plan, 3G auction was scheduled for mid-February, but spectrum for starting the service would have been allocated only around August-September.

According to legal experts, including in the law ministry, telecom service providers cannot be expected to pay for spectrum without a firm commitment from the defence forces on vacation of airwaves, which would be subsequently allocated to telcos.

DNA had reported in its edition dated January 11 and 12 that there were strong indications of the 3G auction being deferred beyond the current financial year.

Many telecom service providers are opposed to a 3G auction this fiscal as either they are focused on expanding their 2G services, or are yet to recover from the impact of the global economic meltdown. Recently, the CDMA (code division multiple access) lobby had demanded auction of EVDO (evolution data optimized) spectrum along with that for 3G and BWA (broadband wireless access).

All that may have been taken into consideration before the government decision to defer the 3G auction.

DoT secretary PJ Thomas told this paper, “I have no information on this (3G auction getting deferred)”. Another government official who did not want to be named quipped, “Is 3G that important? As long as we have a good 2G service, we should be thankful.”

A finance ministry official had recently said, “if the money is not paid in full now by the telcos, why hold the auction in a hurry? It’s not a distress sale, its auction of premium asset.”