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ShareNew Delhi: Uncertainty over the proposed auction of 3G (third generation) telecom spectrum has prompted a meeting of three key cabinet ministers this week.
Immediately after his return from the G-20 Summit in Scotland, finance minister Pranab Mukherjee is scheduled to discuss the spectrum sale issue with communications minister A Raja and defence minister AK Antony on November 11. The crucial meeting is expected to determine the fate of the 3G auction at this juncture.
For the finance ministry, the 3G spectrum auction, set to begin on January 14, 2010, is of huge significance. The auction, which has been deferred many times in the past for various reasons, is expected to fetch the government an estimated Rs 35,000 crore. And this money would go a long way in bridging the country's steep fiscal deficit -- 6.8% of the GDP.
The recent government decision on the disinvestment policy (divesting at least 10% government stake in all profitable PSUs) is also seen as a step to manage the fiscal deficit.
As the auction for 3G has been deferred so many times in the recent past, the government has mentioned in its information memorandum issued in October that the latest schedule is only indicative and may have to be altered.
Going by sources in the know, with the department of telecommunications (DoT) under the CBI scanner for alleged irregularities in allocation of 2G (second generation) spectrum to some companies, causing a loss of around Rs 60,000 crore to the exchequer, a section in the government is of the view that sale of 3G spectrum must be kept on hold till the investigation comes to a logical conclusion.
More so, as the Winter session of Parliament is set to begin soon (November 19). But those arguing in favour of the 3G auction during this financial year are citing the need for the technology to meet the government's ambitious broadband target (20 million by the end of the year 2010) and of course the big bucks it is expected to bring.
As for the DoT, a top official claimed that all was well with the proposed 3G auction process, and that there was no concern related to vacation of spectrum from the defence forces.
But, it is believed that the defence ministry is yet to give a firm commitment on vacation of some of its unused spectrum, which can further be allocated to telecom players for both 2G and 3G services.
An MoU was signed between the ministry of defence and DoT some months ago on spectrum vacation by the defence forces, in lieu of which DoT was supposed to have provided an alternate optic fibre communications platform to the defence forces. While DoT wants the required 3G spectrum from the defence forces in one go before the auction process begins, the defence ministry is learnt to be insisting on the completion of the alternate communications platform before parting with its spectrum.
Several letters have been exchanged between the finance, defence and communication ministries over the past many months on the controversial subject of spectrum, which is a scarce natural resource.
The reserve price for auction of pan-India 3G spectrum has been set at Rs 3,500 crore, and that for broadband wireless bidding at Rs 1,750 crore.
3G systems represent the next step in the evolution of mobile cellular communication. 2G systems focus on voice communication, while 3G systems support increased data communication. They allow high speed data transfer of at least 144 kbps, mobile internet access, entertainment and triple-play converged communications services, and have markedly greater capacity and spectrum efficiency than 2G systems.
