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High 3G bids cast shadow on 2G prices

india Updated: May 03, 2010 22:11 IST
HT Correspondent
HT Correspondent
Hindustan Times
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The successful, lucrative auction of wireless spectrum for 3G (third generation) telephony services has put the UPA government in a strange situation where the allotment of 2G spectrum to operators in the last round without an auction has come into fresh focus.

While 3G bids for the Mumbai zone alone has touched close to Rs 1,650 crore, the price at which the government issued pan- India licences for telecom services along with 4.4Mhz of 2G spectrum in 2008 has become a hot issue. Officials say the 3G prices appear to have set the benchmark for future.

In January 2008, the government allotted new licences for telecom players on a first-come, first-served basis and spectrum at the price determined in 2001.

While 2G spectrum is basically used for voice communications, 3G spectrum has the capability to carry high speed data services in addition to voice.

In January 2008, Mumbai licence (with 2G spectrum of 4.4 MHz) was allotted for Rs 203.7 crore. The bids for 3G spectrum for Mumbai alone touched Rs 1,617 crore on Saturday.

A close look at bidding clearly indicates that the bids are higher in the circles where there is a scarcity of 2G spectrum. For Delhi, the bids have already crossed nine times the price (Rs 170 crore) at which licences were issued in 2008.

In Delhi, Airtel and Vodafone hold 10 MHz of spectrum. However, they have reached saturation levels and have applied for more spectrum. Four new GSM mobile service providers - Tata Teleservices, Uninor, Local Loop and Videocon - have not yet received even the start-up spectrum of 4.4 MHz. Only Etisalat DB (formerly Swan) has received its start-up spectrum.

Communications Minister A. Raja, who has faced questions on the first-come-first-served policy of spectrum allocation, has said he only followed the policy that existed when he took charge, and that it was not possible to alter the rules midway.

He also argues that just one month prior to his joining the ministry, his predecessor Dayanidhi Maran had issued new licences to existing operators under the same rules.