Friday, January 09, 2009

India - Cabinet Committee to decide on spectrum fees

CCEA to decide 3G spectrum pricing

The inter-ministerial panel on 3G spectrum pricing is divided on a finance ministry proposal to double the reserve price to Rs 4,040 crore (Rs 40.4 billion), forcing department of telecommunication to take the matter to the Cabinet Committee on Economic Affairs.

According to sources, the Department of Industrial Policy and Promotion and Ministry of IT have supported the reserve price of Rs 2,020 crore (Rs 20.2 billion) as was originally recommended by DoT.

Last week, the finance ministry had asked the DoT to double the reserve price for pan-India 3G spectrum.

In a note sent to telecom secretary Siddartha Behura, finance ministry had said, "The reserve price may be increased from Rs 2,020 crore to Rs 4,040 crore for a pan-India allocation of two blocks of five MHz of 3G spectrum."

Recently, DoT had issued revised schedule for auctioning the 3G spectrum to January 30. As most of the domestic players were getting ready to participate in the bidding process, the inter-ministerial differences now could delay the process, sources said.

Asked whether DoT may extend the auction date further, sources said it would depend on the CCEA's decision. In case the reserve price is finalised by the Cabinet by next week, the government would go ahead with the schedule.

Sources in the DoT said that the note for the CCEA would be finalised in a day or two incorporating the views given by all the ministries and is hoping to take up the matter in the meeting next week.

Asked whether DoT has rejected finance ministry's suggestion of doubling the reserve price, sources said there was no question of rejecting or accepting the view as CCEA would be taking the final decision.

Similarly, on the reserve price for spectrum for wireless broadband services (known as WiMAX) also the CCEA would decide on the prices.

DoT is also likely to present the availability of spectrum for 3G service for all the circles to the CCEA so that a rational decision could be taken on the number of slots to be allocated.

DoT was of the opinion to allow maximum four operators in every circle in the first phase which was objected to by the finance ministry.

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