3G spectrum bids to start at 3500cr, WiMAX 1750cr

Govt Expects To Get A Minimum Of Rs 25,000 Crore From Auctions A MINISTERIAL panel has fixed Rs 3,500 crore as the minimum bid price for the auction of third-generation (3G) wireless spectrum, evoking dismay from telecom companies that see it as exorbitant.      But telecom minister A Raja's announcement that the government hopes to complete the auction of 3G radio frequencies—vital for services such as video-calling and high-speed internet access on mobile phones—within 90 days came as a relief for mobile firms, which have already begun preparations to launch the new service.      The empowered group of ministers (EGoM) headed by finance minister Pranab Mukherjee also fixed the base price for WiMAX spectrum for wireless broadband services at Rs 1,750 crore.      The EGoM also decided that a total of five players would be allowed to offer 3G services in every circle, of which one slot would be reserved for state-owned telcos, BSNL & MTNL.      This new reserve price is nearly Rs 500 crore lower than that agreed to by Mr Raja and Mr Mukherjee during a meeting with Prime Minister Manmohan Singh in June.      "This is final. We hope to complete the auctions within 90 days from today (August 27) and we expect to get a minimum of Rs 25,000 crore from these auctions," Mr Raja told ET.      This estimate is lower than the one made by Mr Mukherjee, who said while presenting the Budget that the government hopes to collect Rs 35,000 crore from the auctions. Last year, when announcing the auctions, Mr Raja had said the Centre would get a minimum of Rs 40,000 crore.      In July, the government had decided to refer the issue to an EGoM despite the agreement between the two ministers to double the reserve price to Rs 4,040 crore and allow up to seven players, including BSNL & MTNL, per circle. This was because the new UPA government was keen to avoid any further controversy on the auction of frequencies for 3G and WiMAX.      Mr Raja denied that the Rs 3,500 crore base price was a compromise to bury the differences between the telecom and finance ministries.      "The department of telecom had presented three options to the EGoM. The EGoM only finalised the option it deemed best," he observed. COAI, AUSPI slam move  The three options were to retain the reserve price at Rs 2,020 crore as recommended by regulator Trai, doubling it to Rs 4,040 crore as demanded by the finance minister, or agreeing to a figure of Rs 3,500 crore.      BSNL and MTNL have already been given 3G airwaves and they have launched services on this platform. However, they will have to match the price offered by the highest bidder in the upcoming auctions.      Industry associations representing operators on both the CDMA and GSM technology platforms slammed the government over the reserve price as well as the number of slots.      "Trai had initially recommended that the base price for 3G spectrum should be Rs 1,010 crore. This was then doubled to Rs 2,020 crore. But the new reserve price of Rs 3,500 crore is far too high and does not make the 3G business for operators viable," said director-general of the Cellular Operators Association of India TV Ramachandran. COAI is the lobby group representing GSM operators.      Mr Ramachandran said COAI was "extremely disappointed by the government's move to fix the base price for WiMAX spectrum at Rs 1,750 crore".      "It is internationally accepted and proved that WiMAX is a competing technology to 3G and can be used for providing both voice and data," he said. COAI also said the government should not favour one platform over the other by allowing different base prices.      On the other hand, the Association of Unified Service Providers of India, the body representing CDMA players, alleged that the government was "creating an artificial scarcity of 3G spectrum".      "In most circles, there is enough 3G airwaves for 8-12 players. By restricting the auctions to four private operators, the government is hoarding this scarce resource," pointed out SC Khanna, secretarygeneral of AUSPI. He warned that India could end up like Europe, where operators bid huge amounts for 3G spectrum but are unable to pay up, forcing many of them into the red.      But Mr Raja defended the decision of the EGoM.      "Trai had recommended that the auctions be limited to five players and we adhered to that," he said. He added that it was vital for the base price for WiMAX spectrum to be lower than that of 3G as these airwaves would be used to provide wireless broadband to rural India.      Despite being critical of the government, all telcos said they would bid for 3G spectrum.