India - PMO wants DoT to complete 3G auctions by Mar 31

[economic times] The Prime Minister’s Office (PMO) is unhappy with the delay in the multi-billion-dollar 3G spectrum auction. It has asked the Telecom
Commission, the apex policy-making wing of the Department of Telecommunications (DoT), to take all necessary steps to conclude the auction of 3G airwaves by March 31, 2010. It also wants DoT to ensure that such 3G spectrum is made available to four private service providers in all 22 circles, in addition to the slot reserved for state-owned BSNL and MTNL (only Delhi and Mumbai).

“The PMO is unhappy about the uncertainty in the 3G spectrum auction, especially since the nine-member empowered group of ministers (EGoM) headed by finance minister Pranab Mukherjee has already fixed a definite timeline for concluding allotment of 3G airwaves by September in a specified number of slots per circle. Which is why it has written to DoT to speed up the process and conclude the auction by March 31, 2010, in step with the spectrum auction-cum-allotment timeline approved by EGoM,” a senior government official familiar with the matter told ET.

“The PMO has also sought a detailed explanation from DoT about why the 3G spectrum auction has been delayed, especially when the EGoM has called for the auction in financial year 2009-10,” he added. There is also a view in sections of the government that the Union communications ministry’s recent decision to postpone the 3G spectrum auction on the spectrum non-availability ground is not convincing, especially since the same ministry had not hesitated in the past to distribute 2G licences (that came bundled with 4.4 MHz of 2G airwaves) back in January 2008 by inserting a clause that “such spectrum would be made available when available”. Ironically, this 2G spectrum was also distributed at 2001 prices in calendar 2008 without any indexation despite a finance ministry advice in November 2007 calling for an indexation to the 2001 pan-India spectrum price by factoring in inflation, cost of money and relevant opportunity costs. A decision that many in the government and telecom industry circles believe robbed the Centre of nearly Rs 60,000 crore of potential revenue.

Significantly, the PMO communiqué also comes on the heels of the Union law ministry’s suggestion to drop the crucial compensation clause that originally required the government to refund the bid money (with interest) to the winner in the event 3G airwaves could not be allotted by the September 2010 deadline. “While the decision to drop the compensation clause is to pre-empt any possible losses for the government, there is a view that the government can easily allot 3G spectrum to five service providers (including one slot reserved for either BSNL or MTNL) since the defence ministry is slated to release the requisite airwaves by then.

The ball is now clearly in DoT’s court since it has been asked by the PMO to compress the timetable to conclude the spectrum auction in this fiscal in keeping with the timelines fixed by the EGoM. More so, since the finance ministry is also insistent on maximising the government revenue from the auction to contain the fiscal deficit. While presenting his last budget, finance minister Pranab Mukherjee had indicated that the 3G spectrum auction would generate some Rs 35,000 crore for the central exchequer.

With less than a week to go before he presents his next Union Budget, both the finance ministry and the PMO are keen to get some clarity on 3G spectrum auctions road map from DoT.

PMO wants DoT to complete 3G auctions by Mar 31