The Hindu Business Line : DoT agrees to increase 3G reserve price

Dialling up
3G base price may be raised from Rs 2,020 crore to Rs 3,450 crore
Maximum of only five 3G operators in each circle
Auction for CDMA players to be done separately

Thomas K. Thomas

New Delhi, Jan. 13 In a bid to get the auction process for 3G mobile services back on track, the Department of Telecom has proposed a compromise formula to fix the reserve price at Rs 3,540 crore. The Finance Ministry had suggested a base price of Rs 4,040 crore while the DoT had earlier wanted to keep it at Rs 2,020 crore.

In a note prepared for the consideration of the Cabinet Committee on Economic Affairs, DoT has also said there was no need for sending the proposals back to the telecom regulator for ratification. It said the Department of Legal Affairs has given a view that it was not mandatory to seek recommendations of TRAI and, therefore, a fresh reference was not required.

The tussle between DoT and the Finance Ministry over the base price has already delayed the auction twice. While the Finance Ministry wants to make sure that it receives at least Rs 30,000 crore from auctioning both 3G and broadband wireless access spectrum even if there is a collusion among various players to keep the bid price low, the DoT wants to make sure that the services do not get expensive as a result of a higher bid price.

Explaining the rationale for not fully agreeing with Finance Ministry’s views DoT said the current reserve price for category C circles should not be changed since operators may not find a business case in case the fee is increased. DoT has suggested that the present reserve price of Rs 40 crore for category C circles such as Assam, Bihar and North East should be retained.

It has, however, agreed to the Finance Ministry’s suggestion to double the fee for metro regions from Rs 160 crore to Rs 320 crore for each of the 4 service areas and category A circles, including Gujarat, Maharashtra and Karnataka. For category B regions, DoT has proposed to increase the fee by one and a half time.

“A very high reserve price in category C and B circles would discourage the entry of smaller regional players as they may not be able to justify the business plan,” DoT said in the note for CCEA.

The base price for broadband wireless access spectrum for technologies such as WiMax has also been proposed to be increased from Rs 1,020 crore to Rs 1,725 crore. Finance Ministry had suggested bringing this up to Rs 2,020 crore.

DoT has left the final decision on this issue to the CCEA which is expected to take up this issue at its next meeting.

On the number of slots to be auctioned, DoT has retained the original decision to accommodate 5 operators including one slot reserved for BSNL or MTNL.

DoT has also proposed to auction 3G spectrum for CDMA operators in the 800 Mhz band. The information memorandum issued by the government had not mentioned a roadmap for CDMA based operators. DoT has said the base price for CDMA operators should be 25 per cent of what the GSM players have to pay. So if the base price for GSM players is fixed at Rs 3,450 crore, CDMA operators will have to pay a minimum of Rs 862.5 crore. DoT has enough spectrum to accommodate only one CDMA player.