No auction for CDMA players in 800 Mhz and 1900 Mhz for now.

Making it competitive

3-4 slots of 5Mhz each to be auctioned for 3G

2 slots of 20 Mhz each for BWA

M&A rules tightened to keep 3G market competitive

New players to get UAS licence at Rs 1,650 crore over bid amount

Our Bureau

New Delhi, Feb. 25

The Government on Thursday invited applications from telecom operators for bidding for third generation (3G) and broadband wireless access (BWA) spectrum to be auctioned, starting April 9.

According to the Notice Inviting Application (NIA) released by the Department of Telecom, 3G spectrum will be given to three top bidders in 17 circles, while five circles will have four players, excluding state-run BSNL and MTNL.

Air waves for broadband services will be allocated to two operators in all the circles. In effect, India will have at least four 3G players and two broadband operators in each circle. Five circles, including Punjab, Jammu & Kashmir, West Bengal, Bihar and Orissa will get five 3G operators.

CDMA operators

The Government has decided not to hold auctions for CDMA players in the 800 Mhz or 1900 Mhz category, for now. CDMA players will have to bid for slots in the 2.1 Ghz if they want to offer 3G-enabled services.

Mr S. C. Khanna, representing CDMA players, said that though the guidelines are in the right direction, the Government should provide growth roadmap for CDMA players also.

Spectrum available in the 2.5 Ghz for BWA services has also been kept out of the current auction process, till interference issue with the Department of Space is resolved. DoT has put two slots in the 2.3 Ghz on the block for BWA players.

Operators who win the bid will have to pay the entire amount within 10 days, although they can commence services only by September 1. The floor price for pan-India 3G and BWA spectrum has been kept at Rs 3,500 crore and Rs 1,750 crore, respectively.

New and foreign players will have to pay Rs 1,650 crore in addition to the bid amount for acquiring a Unified Access Service licence (UASL). However, they will not get start up 2G spectrum bundled with it.

Existing players got 4.4 Mhz of 2G spectrum when they acquired UASL. However, standalone 3G players need to pay only one per cent of their annual revenues as spectrum charges, while the fee for those with both 2G and 3G has been increased by one percentage point to what they are already paying.

Therefore, players such as Bharti Airtel who are paying about 4-5 per cent of revenues as spectrum charges, will start paying 5-6 per cent if they win the auction. New players with only 3G spectrum also get a one year moratorium on spectrum charges.

All operators, existing and new, who win BWA spectrum will pay only one per cent of their revenue. Internet Service Providers have also been allowed to bid for BWA spectrum.

M&A rules

In order to keep the 3G market competitive, the DoT has kept the Merger and Acquisition rules tight. If two 3G players merge their business, then they will be allowed to keep only one slot of 5 Mhz chunk and the other slot will have to be surrendered. DoT has also imposed roll out obligation, wherein operators have to cover 50 per cent of each district in 5 years.

(This article was published in the Business Line print edition dated February 26, 2010)
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