There’ll be no 3G spectrum waitlist

Inequality in the number of 3G (third generation) slots being allocated across circles and high reserve price for auction of spectrum remain the stumbling blocks they were to the planned 3G rollout in the country.

The two main concerns raised by potential bidders last December were very much alive at Monday’s pre-bid conference between the government representatives and the telcos.

After the pre-bid meet on December 23, 2008, the government had decided to indefinitely defer the 3G auction, which has now been scheduled to begin on January 14, 2010.

Interestingly, new foreign players stayed away from the 3G pre-bid conference last year due to the global economic meltdown, and they remained largely absent this year too as the pan-India 3G reserve price of Rs 3,500 crore is being seen as too high. The existing foreign telcos, including Vodafone and Telenor, were, however, present.

As for the mood, this time the pre-bid conference was rather muted, compared to the stormy one last year. Although many questions remained unanswered at the industry-government interaction forum, a system of waiting list in 3G spectrum allocation (as proposed by the industry) has been ruled out by the government.

Referring to the concept of a waiting list, a top official in the department of telecommunications (DoT) said, “I don’t think that’s a very good model. We want to keep out of a system of uncertainty of who will get what.”

Industry captains including Bharti group chairman Sunil Mittal recently expressed concern over Delhi and Gujarat having only two 3G spectrum slots for auction, against four slots in most other circles. Pointing at the flawed system, his argument is that a Delhi operator or a subscriber should not be made to “suffer the scarcity premium” compared to say Mumbai.
To resolve the problem, the Bharti chief offered a solution — auction 4 slots with the top two bidders getting the spectrum at closing (of the process), and the third and the fourth bidder being granted the spectrum as soon as more spectrum is vacated by Defence in June 2010.

Last year, the government had to defer the 3G auction ahead of the general elections, and one of the main reasons was the ‘arbitrary’ allocation of slots across circles. 
DoT is meanwhile negotiating with the defence ministry to get sufficient spectrum from them so that four slots can be allocated across circles.

Sam Pitroda, advisor to the Prime Minister on public information infrastructure and innovations, is expected to hold crucial meetings in the coming days with the defence ministry officials to resolve the spectrum vacation problem.

A clear picture on how much spectrum and how many 3G slots can be allocated across India will emerge by December 7. The committee of secretaries, set up to monitor the issue of vacation of spectrum by Defence and reallocation of that spectrum to telcos earlier, referred the matter to Pitroda recently.

The government is officially gung-ho about holding the 3G auctions during this financial year as it is expected to bridge the huge fiscal deficit. This is despite several question marks on the matter.

Although industry is seeking clarity on 2G (second generation) spectrum allocation, a policy recommendation that is being worked on by the Telecom Regulatory Authority of India (Trai), before the 3G auction, a DoT official argued that there’s no link between the two. According to him, Trai recommendations and policy changes are a continuous process.

But industry sources pointed out that the information memorandum on 3G auction may have to be revised drastically after Monday’s pre-bid conference, which may delay the bidding process. Random allocation of spectrum to the winning bidders is one issue, which is being opposed by the industry. Also, the process of online 3G auction is being perceived as complex by industry players.

3G systems represent the next step in the evolution of mobile cellular communication. While 2G systems focus on voice communication, 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.