Developing Telecoms | 3G bidders in India to be limited to four?

17 May 2012

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3G bidders in India to be limited to four?

Tuesday, 25 August 2009 10:16

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According to the Times of India, rumours are circulating that the group of Indian Ministers with responsibility for allocating 3G spectrum will be confining the bids to just four new players.

Limiting 3G spectrum auctions to just four blocks of 5 MHz each within the 2.1 GHz band is a rumour gaining ground among Indian telecoms observers. The belief is that the Indian government’s Empowered Group of Ministers (EGoM) has arrived at this conclusion after discussing three choices.

The three choices were: four slots per telecoms circle; an unrestricted auction of all 3G spectrum; or a compromise whereby the first two choices were combined into an auction of more than four circles but with a prohibition on any one company acquiring all of the spectrum. If the rumours are true the four new entrants will be rivals to the existing BSNL/MTNL operations.

Whichever decision is taken can only have major implications - positive or negative - for 3G in India. The Times of India also raises the question of whether the rumoured option will have impact on 4G policy. The EGoM was first briefed on the issue on July 31 and is expected to meet again; a definitive statement may well be released by the end of this month. The actual auctions will take probably take place this December or January 2010. Any such decision has to be acceptable to ministers with either financial or telecom responsibilities.

Reasons for the popularity of the rumour are that:

four is a logical number because in the words of a government official, “auctions are only meaningful when demand exceeds supply by a reasonable number...Since we expect just five or six serious bidders, limiting the auction to four blocks is an ideal way to clear the reserve price”;
if adopted, government revenue will be maximised not only because the immediate 3G auction but also because the model can be adopted for later auctions;
bidders will gain an understanding of the scheduling and availability of future spectrum which will enable them to plan their bids accordingly;
any more than four blocks will fragment the spectrum and hinder the deployment of 4G technology, which needs 10MHz minimum.

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