Union telecom minister Kapil Sibal on Tuesday said third-generation (3G) services had failed to deliver, as the operators had paid far more than they could afford.
“3G has not delivered because they (telecom operators) paid such huge prices for the spectrum. There is no liquidity in the market for them to invest in the infrastructure,” he said here at the launch of broadband wireless access (BWA) services based on 4G (fourth-generation) technology by Bharti Airtel.
The government had earned Rs 67,700 crore from the sale of 3G spectrum towards the end of 2010-11, with the pan-India bid touching Rs 16,750 crore. Bharti paid Rs 12,295 crore, the highest among operators, for 3G spectrum in 13 circles, including Delhi and Mumbai. No operator got a pan-India footprint for 3G because of the high bid for spectrum.
Saying 3G services had not been as “successful” as 2G, the minister also emphasised the need for “low cost devices” for growth of the sector.
“We will give the environment to the industry to manufacture low-cost, quality smartphones. But it is the industry which has to deliver; this is (their) biggest challenge,” he said.
While this is the first time the government has said the prices for 3G spectrum were too high, the operators had slammed the auction-design. According to the format, the bidding remained open till demand and supply became equal in all the circles.
This, according to operators, created a situation of an artificial scarcity driving prices beyond reasonable levels.
“Were the prices of 3G spectrum the best thing that happened to the country? No. But that was because of the paucity of spectrum. We would urge the government to not artificially inflate prices of spectrum,” said Sanjay Kapoor, the CEO for India and South Asia in Bharti Airtel.
Meanwhile, the government is to roll out its new information technology (IT) and electronics manufacturing policy by April-end, while the telecom policy is likely to be announced by next month.
“We are announcing the telecom policy in May and the IT and electronics policy some time this month. The road map for the next 10-15 years will be clear as far as the government is concerned. Then, it is for the private players to carry it forward,” Sibal said.