The Hindu Business Line : 3G, WiMax auctions to be held simultaneously

Bidding moves
The Government wants to ensure that it gets aggressive bids for both streams of radio frequencies
RCom, Tata Tele and Aircel are looking at deploying WiMax technology in a big way

Thomas K. Thomas

New Delhi, Sept. 25 In a bid to cut out the possibility of any manipulation by operators, the Department of Telecom has decided to conduct simultaneous auction for third generation mobile services and broadband wireless technologies such as WiMax.

Earlier, the DoT was planning to conduct the auction sequentially by first putting 3G spectrum on the block followed by WiMax.

According to DoT officials, the decision to conduct simultaneous auction was taken so that the operators are not given an opportunity to speculate or try to get any undue advantage during the bidding for WiMax spectrum. The move will also ensure that the Government gets aggressive bids for both streams of radio frequencies given the uncertainty of the end result during the auction.

“If 3G auction is conducted first, then there is a possibility that the WiMax bids will not be as high as we expect it to go. By conducting the auction together, we are eliminating the chances of any manipulation,” said a senior Government official

Officials said that since most of the operators would want a piece of either 3G spectrum or WiMax to sustain their business in the future, they would go all out for acquiring at least one of the two in a simultaneous process. If the auction was done sequentially, then some of the operators may have had the option to skip the 3G auction altogether and then participate in WiMax auction assuming that a few companies which win 3G may not be interested or have the money power to take part in another round of bidding.

That would have meant less competition, allowing the operators to take away the WiMax spectrum with much lower bids. Simultaneous auction, on the other hand, raises the uncertainty levels, which, in turn, will make the auction for both 3G and WiMax equally aggressive.

WiMax vs 3G

While WiMax is known to have potential similar to 3G technology in terms of the type of services and speed, globally, it is currently being deployed primarily for data services, including wireless broadband.

However, technology companies such as Intel are investing in developing standards that will enable WiMax operators to carry voice calls soon. Handset makers such as Motorola are also developing hand-held devices that are expected to rival 3G phones. Market watchers expect telecom players to offer voice services using WiMax technology within a matter of 6 months to a year.

Since DoT has already allowed WiMax to be used for both data and voice services, it is not much different from a 3G licence. A sequential bidding would have allowed some companies the option of not bidding for 3G given its higher base price compared to that of WiMax. While 3G bidders will have to pay at least Rs 2,020 crore for pan-India spectrum, operators who win WiMax spectrum will have to pay only Rs 1,010 crore.

Operators including Reliance Communications, Tata Teleservices and Aircel are looking at deploying WiMax technology in a big way.

However, since the bids will be invited circle-wise, DoT can conduct simultaneous auctions only in areas where it has spectrum for both technologies. In other circles, the auction will have to be done sequentially.

The status on this will only be known once the defence forces start releasing spectrum. Industry observers said that in areas where spectrum for both are not available immediately, DoT could conduct the auctions one after the other as long as the time gap between the two is at least six months to keep the playing field level.

Related Stories:
DoT eases roll-out obligation for WiMax players
3G spectrum for CDMA operators to be auctioned
Higher base price for 3G, WiMax auction proposed
Telecom players divided over WiMax spectrum pricing

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