The Hindu Business Line : Licence renewal may be tied to 3G permits

New Delhi, June 5 The Department of Telecom is planning to ask the existing mobile operators to pay for extending their licence term if they wish to offer third generation services.

Existing players such as Airtel have been given a licence for 20 years of which 10 to 14 years are over. So while Airtel may get 3G spectrum for 20 years, its licence is valid for only 6 more years.

Revenue potential

According to DoT estimates, Airtel will have to cough up Rs 1,120 crore for renewing its licence before it can start 3G services.

All other existing operators including BSNL, Reliance Communication, Tata Teleservices, Idea Cellular and Vodafone may also be asked to pay up for extending the licence period.

The Government could earn as much as Rs 2,000 crore from this move. This is over and above what the companies pay for 3G spectrum during the auction.

However, the 3G policy is stuck on the issue of allowing foreign and new players to participate in the auction.

Auction hitches

While the telecom regulator wants the auction to be restricted to existing operators, the Finance Ministry is in favour of going for an international competitive bidding.

The Telecom Regulatory Authority of India has said that there is enough number of existing operators to ensure competition and for meeting the revenue targets of the Government.

It has said that the 3G auction should be restricted because existing operators will be able to roll out services faster while new players will take 2-3 years before they roll out their network and launch the service.

TRAI’s views are backed by the existing GSM players who want foreign players out of the bidding process.

However, the Finance Ministry wants the bidding to be opened up as it will enhance competition and bring more revenues to the Government.

Legal repercussion

DoT is caught in between these two views as it fears legal repercussion of taking a decision either way. “

International competitive bidding as suggested by the Finance Ministry requires certain eligibility conditions for new players which would include experience of providing mobile services. Some existing 2G licensees do not have this experience and they may go to court and delay the process,” said a DoT official.

They added that if a non-licence holder gets 3G spectrum on the basis of an auction, then they will have to be given a licence.

There are already 342 applications pending for grant of licence on first-come first-served basis and these applicants may go to court if the 3G winner is given licences ahead of them. DoT has, therefore, left the final decision on this issue to the Prime Minister.

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