(1 August 2008 5:30 pm)

NEW DELHI: The government has allowed overseas players to bid for 3G spectrum. Unveiling its policy on 3G, the government has also said that five players would initially be permitted per circle for 3G rollout.

The floor price has been set at Rs 20.20 bn for pan India 3G auctions.

The reserve price for a 2x5 MHz block of spectrum for Mumbai, Delhi Metro and Category ‘A’ cities would be Rs 1.60 billion, which is twice the price recommended by the Telecom Regulatory Authority of India.

Announcing the the detailed guidelines for 3G and BWA (Broadband Wireless Access) services laying down the road map for rolling out these services in the country, Communications and Information Technology Minister A Raja said the price for Kolkata Metro and Category ‘B’ would be Rs 800 million while for ‘C’ service areas shall be Rs 300 million.

The Minister said the 3G spectrum would be allocated through a simultaneous, ascending e-auction process, which shall be conducted by a specialised agency. A separate auction would be done for each telecom service area.

The announcement was made at a press conference here in the presence of Minister of State Jyotiraditya M. Scindia.

With the introduction of these services, the quality of voice telephony will be improved as 3G spectrum would enable service providers to provide good quality services to a larger number of subscribers.

Further, additional value added services will become widely available to the public. BWA services will ensure quick roll out and enhanced penetration of broadband especially in rural areas, where there is problem of last mile connectivity. It will facilitate availability of e-governance services like tele-medicine, e-medicine, e-ticketing, e-education etc, through broadband to the large section of rural population. Auctioning of 3G and Broadband spectrum will be done through e- auctioning by a specialized agency separately. New players would also be able to bid thus leading to technology innovation, more competition, faster roll out and ultimately greater choice for customers at competitive tariffs.

No annual spectrum charge shall be payable for 3G Telecom services in the first year from the date of allotment of spectrum. The licensee will have to pay annual spectrum charge of 1 per cent of AGR after a period of one year. There will be roll out obligations to avoid spectrum hoarding. If licensee does not achieve its roll out obligations, it shall be given one year to comply on payment of 2.5 per cent of its successful auction bid (i.e. spectrum acquisition price) per quarter or part thereof. If licensee does not complete its roll out obligations even within this one-year, the spectrum assignment shall stand withdrawn.

Spectrum for the 3G Policy will be auctioned in blocks of 2x5 MHz in 2.1 GHz band (1920-1980 MHz paired with 2110-2170 MHz). The number of blocks to be auctioned would vary subject to the availability of spectrum in different telecom service areas. In exceptional cases of non-availability, the number of blocks may be less than 5 in a telecom service area. The actual number of blocks to be auctioned in each telecom service area will be announced well before the auction.

In the 450 MHz band, in 800 MHz band for EVDO services, and in 1900 MHz band (1900 – 1910 paired with 1980-1990 MHz) shall be auctioned when it becomes available. UASL CDMA telecom service providers may have the option to seek 2x1.25 MHz in 800 MHz band subject to availability at a price equivalent to the highest winning bid in 2.1 GHz auction prorated to a per 2x1.25 MHz price. The seniority for allotment shall be the subscriber base in a telecom service area.
One block shall be allocated to MTNL in Delhi and Mumbai/Metro service Areas and BSNL in other Service Areas at a price equal to the highest bid in the respective service area.

The BW licences would be granted through an e-auction, process, which shall be conducted by a specialised agency. Auction of 3G and BWA services would be done separately.
Any person who holds a UAS licence or who fulfils the eligibility criteria for obtaining a Unified Access Service Licence (UASL) under the Department of Telecommunications guidelines of 14 December, 2005, and has previous experience of running 3G telecom services can bid for 3G spectrum.

With regard to the BWA guidelines, the government said The BW licences would be granted through an e-auction, process, which shall be conducted by a specialised agency. Auction of 3G and BWA services would be done separately.

Any person who holds a UAS licence or any person who fulfils the criteria for obtaining a UAS licence according to the DoT guidelines of 14 December 2005 and has previous experience; apart from ‘A’ and ‘B’ category Internet Service Providers (ISPs) can participate in the auction.

Spectrum shall be auctioned in the 2.5 GHz, and 2.3 GHz bands for data services. Each successful bidder can get 20 MHz in 2.3 and 2.5 GHz bands in a telecom service area. The number of blocks shall be two in 2.3 GHz band and two in 2.5 GHz band. The reserve price per MHz in 2.3 GHz and 2.5 GHz bands shall be 25% of the 3G reserve price. Spectrum in 700 MHz and 3.3-3.6 GHz bands shall be auctioned as and when it becomes available.

FICCI welcomed the 3G auction policy as a positive step and said these auctions will be watched by investors all over in terms of addressing of many years of controversies in license and spectrum allocation. This would also provide help for building of a greenfield pan -India state-of-the-art communications infrastructure and services in the country and bring in fresh investments to the tune of $8–10 billion over the next 2-3 years. Ficci President Rajeev Chandrashekhar said the 3G policy and auction guidelines would allow for an open, global and transparent auction process consistent with international best practices.