3G game stuck in poll and pricing muddle

With the announcement of elections expected any time, a major casualty of political uncertainty could be a delay in the auction of 3G spectrum to telecom operators, reports Manoj Gairola.

With the announcement of elections expected any time, a major casualty of political uncertainty could be a delay in the auction of 3G spectrum to telecom operators. The government has failed to set up a group of ministers (GoM) on fixing the reserve price for the spectrum, while telecom players are in no mood to entertain the Finance Ministry’s demand for higher spectrum charges.

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“Once code of conduct (for elections) is implemented, the government will not set up GoM,” said a Department of Telecommunications (DoT) official.”The issue becomes complicated as the TRAI (telecom regulator) has already recommended a reserve price and the Finance Ministry wants a higher price.”

The proposed GoM is also supposed to decide on the number of slots to be auctioned and the quantum of spectrum that each operator will get.

Communications Minister A. Raja’s statement on February 17 that the 3G process would be complete by March 31 seems a distant dream now—a far cry from the once expected 3G auction from January 16.

The process was postponed as the Finance M wanted more than the Rs 2020 crore for pan-India spectrum fixed by the DoT. The matter then went to the cabinet which decided on a GoM.

Last year, Raja said that the government would earn up to Rs 40,000 crore from the 3G auctions. However, budget estimates of 2009-10 put the figure at Rs. 20,000 crore.

Given that telecom operators are under pressure amid a difficult financial market, it also suits them that the 3G auction gets postponed.