3G players may have to wait for spectrum

Defence delays may force DoT to defer allocation.

Some successful bidders for 3G telecom services may have to wait six months longer to start operations after the defence ministry told the Department of Telecommunications (DoT) that it would be in a position to release the 20 Mhz of spectrum it had committed only in June 2010 instead of December this year.

As a result, DoT is thinking of reworking the terms of the bid document for such high-speed telecom services so that some of lowest successful bidders out of the four planned per circle will have to queue to receive spectrum.

DoT has decided to go ahead and put up for bidding four 3G licences per circle, a process it expects to complete by December. It has adequate spectrum for most circles except the lucrative Delhi (which has spectrum for just two players), Gujarat (also two) and Rajasthan and the north east (none).

“We will go ahead with the auction of 3G spectrum according to the timeline. If the defence forces are unable to vacate the spectrum on schedule and do so only in June, then some successful bidders will be put in queue for spectrum,” a senior DoT official told Business Standard on condition of anonymity.

This means consumers in these circles might have to wait till 2011 before they have a wider choice or any choice of 3G operator.      

DoT has already given 5 MHz of 3G spectrum to state-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd for the areas in which they operate.

The defence services have asked for extra time for testing and security clearances before they vacate the spectrum (20 MHz for 3G and 25 MHz for 2G services) and shift to an optical fibre network that has been developed for them by BSNL. The telecom service provider has committed to handing over the new network by the end of October. A defence ministry spokesperson declined to comment on the development.    

Industry analysts say the process of deferring spectrum allocation to some operators may leave DoT open to accusations of the lack of a level playing field since bidders in queue will lose the first-mover advantage.

Others suggest that the government should peg the auction to the current availability of spectrum and open bids for the remaining two operators after June when defence provides the additional 3G spectrum.

Meanwhile, the information memorandum for the 3G auction was expected to be finalised by September 29 but has already been delayed and might be ready sometime next week.

Also read: September 4: Cabinet Secy calls meeting with DoT, Defence on spectrum release