Telcos have no problem with e-auction of 3G spectrum

Telecom operators have endorsed the online mechanism designed by NM Rothschild for conducting 3G spectrum auction, saying the process virtually eliminates any scope for unrealistic bid.

All the top telecom firms including Airtel, Vodafone, Idea, Aircel, RCom and Tatas would be participating in the e-auction process, the first of its kind in the world, to acquire 3G spectrum for which the auction begins on April 9.

As per the mechansim designed by Rothschild, the price of spectrum will escalate gradually after every round depending upon the demand and number of blocks available in each of the 22 service areas, one of the leading operator said.

The price would be increased by a maximum of up to 10 per cent of the reserve price in each circle in a round depending upon the demand. The three price escalations would be 10, five or one per cent given the number of operators vying for spectrum in a particular area.

If there are six bidders for three slots in the opening round, the auctioneer (Rothschild) would escalate the price by 10 per cent in round two and would invite fresh bids and if only five bidders remain, the price would further go up by five per cent in the round three and so on.

In case demand and supply is same, the price would go up by only one per cent in the following round and if the number of bidders are less than the number of blocks on sale, the price would remain unchanged.

Asked whether the method of conducting auction was complicated, most of the operators replied in the negative and said they rather found it very transparent and fair.

The government would be auctioning three blocks of spectrum in most of the circles with the exception of Punjab, West Bengal, Himachal Pradesh, Bihar and Jammu and Kashmir, where four slots would be offered for sale.

Simultaneous auction would be held in all the 22 circles, Rothschild said, adding that any operator would be allowed to re-enter the bidding round in any circle even after quitting in the earlier rounds.

All the operators have been provided the necessary software and they can participate in the process from any corner of the world. The auctioneer also claimed that no bidder can find out about whom they are up against.

They can only find out the number of players bidding but in no way can get to know the name of the operator. This would ensure that no coordinated approach is followed by two operators.

One of the operators, however, pointed out that although the process is transparent, it can turn out to be a long drawn affair and the auction itself could take as much as a couple of weeks to complete before a price is discovered.