India: 3G auctions are top priority for the incoming minister

[times of india] The Department of Telecom (DoT) has made 3G auctions a top priority item for the telecom ministry as soon as the new telecom minister
takes office by next week.

A senior DoT official told ToI that this matter will be discussed with the new minister immediately on his taking charge. "3G auctions will definitely be held this year and sooner rather than later", he said.

Confirming this, DoT secretary Siddharth Behura told ToI, "3G auctions also carry the all round support of policy makers, including the finance ministry which needs to bridge the fiscal deficit, one of the biggest drawbacks in India's balance sheet".

Since the government can't raise taxes sharply during the slowdown or cut expenditures it is highly likely that the finance ministry will push for an early and global 3G auction to be held within the next few months. The interim budget has already factored in revenues of Rs 20,000 crore from 3G auctions, just half telecom minister A Raja's projections of Rs 40,000 crore in August 2008.

Average pan-India 3G spectrum is expected to rake in over Rs 4,000 crore. The government plans to auction 2x5 MHz of spectrum in varying proportions except Rajasthan and North East.

This time, 3G auctions also carry wide-ranging support from the industry. T V Ramachandran, director general, COAI, said, "3G auctions will definitely take place this year. It is a strong way of alleviating the spectrum crunch faced by GSM operators".

"It is clear that 3G will be a priority for the new government as the auction framework is already in place and there is increasing interest from the mass market with 3G phones at less than $100/set hitting the market by 2010," said Manoj Kohli, CEO & Jt MD, Bharti Airtel. At present only 6% of mobile phones in India are 3G capable.

3G will also contribute significantly to mobile value-added services (VAS), which has been growing at nearly 40% every year as against the overall annual telecom revenue growth of 20%. This will prop up the rapidly declining average revenues per user (Arpu) of telcos.

"It is critical for operators that 3G auctions are held quickly as with mobile number portability and new operators, better quality 3G networks offering both better voice quality and VAS will be the only differentiator to prevent high end customers from switching to competing networks", says Kunal Bajaj, MD of consulting firm BDA India.

3G is an attractive policy move even for rural development by being a strong potential catalyst for e-Education, remote health care and m-Banking. RBI is currently reviewing the regulations for m-Banking, especially keeping in mind the needs of rural India.

The success of the 3G auctions will depend upon the speed, transparency of process as well as the government's ability to put out non-discriminatory auction terms for the existing 14 and potential new global operators.

Earlier in the year, the government released an information memorandum, appointed auctioneers and held pre-bid conferences in the run up to the proposed 3G auction in January 2009.

However, since neither industry nor the political environment favoured 3G auctions, India had to miss its date with what is perhaps the most high profile auction of a scarce national resource in this decade.

For telecom minister, 3G top priority