Saturday, August 16, 2008

India - continuing disputes over 3G licensing

3G guidelines: DoT rebuts FinMin's charges

The ministry of communication on Thursday lambasted the finance ministry for questioning the procedure for 3G guidelines, saying the policy announcement was made after due consultations and there was no departure from the Cabinet decision.

"Since the spectrum pricing formula is auctioned, to which the ministry of finance is fully agreed, and the process, in which the ministry of finance is fully involved, we are consistent with the decision of the Cabinet," DoT said in a strong rebuttal to the issues raised by the finance ministry.

Responding to a communication from Finance Secretary D Subbarao on Wednesday, Telecom Secretary Siddartha Behura shot off a strongly worded letter on Thursday, saying: "It is therefore surprising that the ministry of finance has now decided to express its reservations on procedural aspects."

Asked about the issues raised by the finance ministry, Telecom Minister A Raja on Thursday dismissed any possibility of delay in 3G auction, saying: "As we promised, 3G auction will take place within the scheduled time. . . There will not be any deviation from the announced guidelines."

Charging that the ministry of finance had not been consulted on DoT guidelines on auction and allotment of spectrum for 3G and WiMax telecom services, Subbarao had said: "The issue of guidelines without any consultations with the ministry of finance, either within the forum of telecom commission or outside, is inappropriate and contrary to the Cabinet decision."

Telecom Minister Raja also said that if necessary secretary (telecom) will be directed to consult with the ministry of finance on the relevant issues.

Behura said in his letter that as announced an inter-ministerial committee has already been set up to oversee the spectrum auctioning process in which finance ministry has nominated its representative also.

"In addition, the chairman of the committee is member (finance), Telecom Commission. Any concern of ministry of finance can be considered by this Committee and action taken thereof," Behura said in the letter.

Unveiling the 3G policy earlier this month, Raja had said up to 10 players would be allowed in a service area, including foreign players, and the government would garner up to Rs 40,000 crore (Rs 400 billion) from the auctioning of spectrum for 3G services.

Government has set a base price of Rs 2,020 crore (Rs 20.2 billion) for each bid for a pan-India licence.

"The reserve price recommended by the Telecom Regulatory Authority of India has been doubled and Trai's concurrence also obtained. It is needless to say that there is no method of fixing reserve price for spectrum and the doubling of reserve price as indicated by Trai is only the beginning of price discovery through auction," Behura said in his letter to Subbarao.

Asked whether the process of implementing the 3G policy could be delayed, Raja asserted that "as far as time-frame is concerned, there will be no deviation from what we announced on August 1, 2008".

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