DoT, Defence at odds over spectrum ownership

The spectrum battle being fought between the ministry of defence (MoD) and the department of telecommunications (DoT) is now focused on who’s the custodian of the precious airwaves.

Although the ministry of defence is arguing that only 10 MHz that it has released recently is available for the proposed 3G (third generation) telecom auction, DoT is of the view that much more spectrum can be put up for bidding.

According to DoT, the 10 MHz spectrum released by defence is in addition to the spectrum that is already available for 3G auction, and MoD is contesting that.
DoT records, “reconciled with the ministry of defence”  as of 2007, show that a chunk of the pan-India 60 MHz spectrum can be auctioned in many circles across the country.
This issue is expected to come up all over again at the meeting of the empowered group of ministers (EGoM) headed by finance minister Pranab Mukherjee on Monday.

The number of 3G slots that can be put up for auction, scheduled to begin on January 14, 2010, is expected to be sorted out at the EGoM meeting.

The most recent buzz has been that most circles in India would have three 3G slots for auction, while a couple of circles would have only two 3G slots. But DoT is likely to give its own list of 3G spectrum availability to the EGoM.

As per the list, among the metros, Chennai has the maximum 3G spectrum at 60 MHz, followed by Kolkata at 50 MHz, Mumbai at 30 MHz and Delhi with the least at 15 MHz. In effect, that means Chennai could possibly auction as many as a dozen 3G slots, including one for Bharat Sanchar Nigam Ltd (BSNL), Kolkata could accommodate 11 bidders (including BSNL), Mumbai 6 players (including MTNL) and Delhi only 3 telcos (including MTNL).

Apart from Chennai (and Tamil Nadu), 60 MHz of 3G spectrum is available for auction in some other circles also — Andhra Pradesh, Karnataka, Kerala and Orissa. In Madhya Pradesh and Haryana, 40 MHz of 3G spectrum is available.

Among others, Punjab has 35 MHz of 3G spectrum, Maharashtra and Bihar have 30 MHz each, Jammu & Kashmir, Assam and Uttar Pradesh (East) 25 MHz each, UP (West) and Himachal Pradesh 20 Mhz each, Gujarat 15 MHz, West Bengal 10 MHz, North-East 5 MHz and Rajasthan none at all.

An estimated 5MHz of spectrum is required for every 3G player. So, while Chennai, Kolkata, Mumbai, and Delhi can have 12, 11, 6 and 3 3G carriers each; Andhra Pradesh, Karnataka, kerala and Orissa can accommodate 12 each; Haryana and Madhya Pradesh 8 each; Punjab 7, Bihar and Maharashtra 6 each; Jammu & Kashmir, UP East and Assam 5 each; UP West and Himachal Pradesh 4 each; Gujarat 3, West Bengal 2 and Rajasthan nil.

Since telecom players, including Tata group chairman Ratan Tata, are demanding level-playing field in terms of quantum and timing of spectrum allocation, the government will have to decide the modus operandi of 3G auction on Monday.

If the ministry of defence insists that most of the 60 MHz spectrum in the 1920-1980 band is with it and the future release of 3G spectrum will be done in phases, DoT may have to defer the 3G auction beyond this financial year.

The government is targeting between Rs30,000 crore and Rs35,000 crore from the proposed 3G and Wimax auction. This revenue will help the government bridge the steep fiscal deficit.

The reserve price for pan-India 3G spectrum has been fixed at Rs3,500 crore, while that for Wimax at Rs1,750 crore.

But, depending on the number of 3G slots available for auction across the country, the reserve price may have to be altered. Also, winners in the process of auction may be allowed to pay in parts for the  3G spectrum, depending on when airwaves are actually released.