Hefty bids for spectrum to run 3G (third-generation) mobile telephony services reached a new high of Rs 8,623 crore for a pan-India slot on Tuesday, but behind the zooming prices lurked a pattern that indicates that the airwaves may be used more for conventional voice than fancy applications like video-streaming.
The most aggressive bids are where there is a scarcity of 2G spectrum, while in the small Category C circles, prices have remained close to the reserve price set by the government.
For example, in Delhi the price quoted on Monday was Rs 1,209 crore, which is 278% above the reserve price of Rs 320 crore.
The government had initially estimated revenues of Rs 35,000 crore in all from various circles combined, but later, Communications Minister A Raja revised it to Rs 45,000 crore.
The government's early target is expected to be reached late on Wednesday, the 15th day of the auction, which is expected by experts to last a few more days.
In most of the circles, three 3G spectrum slots are up for grabs. State-controlled BSNL and MTNL have already been allotted spectrum but must match the highest bidders.
In Delhi, Airtel and Vodafone hold 10 MHz of spectrum. However, their usage has reached saturation levels, making them seek more spectrum. Four new GSM mobile service providers – Tata Teleservices, Uninor, Local Loop and Videocon – have not yet received even start up spectrum of 4.4 MHz. Only Etisalat DB (formerly Swan) has received start-up spectrum.
"The strategy would be to carry voice traffic through 3G spectrum initially," said the head of a pan-India service provider, adding non-voice traffic of 2G customers will be shifted to 3G spectrum later.
After Delhi and Mumbai, the quoted price increase was highest in terms of percentage for UP (West) circle, where the demand for 2G spectrum is high.