3G auction begins today, may go into 2nd round

Nine companies to bid for 3G spectrum; 11 vie for BWA.

The government is thinking of a second round of auction for third generation (3G) telecom spectrum, even as the 3G auction begins tomorrow.

It may go in for auction of another two slots for 3G after a year. A senior official of the Department of Telecommunications (DoT) told Business Standard that it was considering ‘refarming’ (reassigning) of the 900 MHz spectrum, being used by GSM service providers such as Bharti Airtel and Vodafone Essar. The idea was to use this in future for 3G mobile services.

Globally, the 900 MHz spectrum is used in offering 3G mobile services, as it is a high-efficiency band. The cost of deploying a network in this frequency is much less.

“Two more operators can be accommodated in the 3G space after another auction, if we are able to go ahead with refarming of the 900 MHz band,” the official said. The Telecom Regulatory Authority of India is already looking into the various issues in refarming spectrum.

In refarming, existing users are allotted a different frequency, while the existing bands are assigned to communication services that yield greater economic or social benefit.

However, an analyst said it would not be easy for the government to refarm the spectrum, as operators are already operating on that frequency. Their network would have to be upgraded or overhauled completely in some cases.

The auction, which would start tomorrow, is expected to take a few weeks to complete. DoT is expecting revenues of Rs 35,000-45,000 crore from the auction of 3G and Broadband Wireless Access (BWA) spectrum.

In 17 circles, three slots would be auctioned, while in the rest of the circles, four slots are available for auction. State-run telecom majors Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) have a slot between themselves in each of the 21 circles already.

The base price for pan-India 3G auction is Rs 3,500 crore, while for BWA it is Rs 1,750 crore. Two slots are available for auction in each circle for BWA.

There are nine final bidders for 3G — Bharti Airtel, Reliance Communications, Idea Cellular, Aircel, STel, Tata Teleservices, Videocon, Etisalat DB and Vodafone Essar. For BWA, the 11 contenders are Aircel, Augere, Bharti Airtel, Idea Cellular, Infotel Broadband, Qualcomm, Reliance Wimax, Spice Internet, Tata Communications, Tikona and Vodafone Essar.