3G auction model to be showcased to states

The Centre wants to showcase the success of 3G (third generation) telecom spectrum auction to the state governments, it is learnt.

The cabinet secretariat has asked the Department of Telecommunications (DoT) to prepare a presentation on how 3G auction was conducted in the country and list the reasons behind its success, a source said.

DoT’s 3G presentation will be shown to the various state governments so that the auction procedure could be replicated across other sectors, it is learnt.

The 3G and BWA (broadband wireless access) spectrum auction is being seen as a hugely successful model as the government was able to raise Rs 1,06,000 crore worth of revenue from the process, against the finance ministry’s budget target of just Rs 35,000 crore.

While Rs 68,000 crore came from 3G auction, the remaining Rs 38,000 crore was the revenue generated from BWA bidding. The revenue generated is more than three times of the finance ministry target and five times that of the reserve price.   

The UPA government, faced with a steep fiscal deficit, is looking at the 3G auction model as a formula for future revenue generation in sectors other than telecom as well.

As for the next round of 3G auction, one would have to wait until 2013 at least. According to DoT officials, the next tranche of 3G spectrum would be vacated only in December 2012.                 

For the recently held auction, spectrum will be made available for 3G only in September, while that for BWA this week.  

When asked whether price of telecom services would be unaffordable because of the huge revenue outgo from the industry on 3G and BWA, a DoT official argued that most telcos would use the 3G spectrum to offer `voice’ services and therefore prices cannot go too high.

“As there are telecom companies, which have not bid for 3G, offering cheap tariffs, others can’t raise the prices either,” the official explained. “Competition will make it affordable,” he said.

Affordable 3G and BWA services would hold the key to improve the rural teledensity in the country and boost broadband connectivity. Even with over 600 million phone connections in India, the rural teledensity is just about 20 per cent. And the next wave of telecom growth is expected in rural areas.

Besides the high revenue generated from the spectrum process, DoT is showcasing other aspects of 3G and BWA bidding including `fair and transparent process’, `unique auction design’, and `e-auction’.

Elaborating on the fair and transparent process, DoT has said in a statement that “the true market value of the spectrum was determined through an efficient and transparent process.”

On unique auction design, DoT stressed that “an innovative design incorporating the best practices from global auctions was used”.

As for e-auction, this was the first time that an e-auction of such magnitude was conducted by the government.