There is a likelihood of only four nationwide private service providers for third-generation (3G) mobile telephony services due for implementation, with the Department of Telecommunication (DoT) recommending to a group of ministers on Friday that only four blocks of 3G spectrum should be put up for auction.
The presentation, which was made to the empowered group of ministers (EGoM), said that if more than four blocks are auctioned, there will not be enough spectrum available for further expansion of the services by the 3G operators.
3G services enable high-speed applications including broadband Internet services on mobile handsets, video on demand and mobile TV. The current 2G services mainly support voice applications. Currently, there are up to nine mobile service providers in a 2G service area.
DoT has argued that there are five serious bidders for 3G spectrum. If five or more blocks are auctioned, the government will not get more than the reserve price. In order to get the right price, demand should exceed supply, the presentation said.
Earlier, the finance and telecom ministries agreed to a reserve price of Rs 4,040 crore per block of 2x5 megahertz, implying Rs 16,160 crore revenue for the government from four blocks.
BSNL and MTNL, which have already been allotted spectrum without auction, will now have to pay the reserve price of Rs 4,040 crore. In all, the Centre would get a minimum of Rs 20,200 crore from the auction.