DoT's 3G signal allows telcos to bid for 2 blocks

DoT's 3G signal allows telcos to bid for 2 blocks

By SiliconIndia   |   Friday, 21 March 2008, 11:15 Hrs
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New Delhi: Rejecting telecom regulator TRAI's recommendation to allow each GSM operator to bid only for five MHz of 3G spectrum, the department of telecom (DoT) has said that all players can bid for up to 10 MHz of 3G spectrum (two blocks). The new move will allow foreign players and new domestic companies to offer third generation (3G) mobile services in India.

New players need a minimum of 10 MHz to launch third generation services as they also require additional start-up spectrum, while existing telcos need only five MHz to migrate to 3G.

DoT in its 'draft' 3G policy has in principle agreed to the TRAI recommendation that 3G spectrum be auctioned in blocks of 5 MHz each, but added that each player can bid for a maximum of 'two blocks'. Put simply, if an operator were to bid for two blocks of 5 MHz, the player will get 10 MHz of third-generation spectrum. However, existing GSM operators which only need five MHz of 3G spectrum to migrate to the high-end or 3G service can bid for only one block. But TRAI in its 3G recommendations had said that only existing telcos be allowed to bid for 3G spectrum.

Indian telcos, both CDMA and GSM players, are bitterly opposed to the entry of foreign players in 3G and they have even written this to DoT threatening legal action if new players are allowed to participate in the auction.

The draft policy has also made major changes to the base price for 3G spectrum bids. TRAI had recommended that the base price be Rs 80 crore for Delhi, Mumbai and other category 'A' circles; Rs 40 crore for Chennai, Kolkata and category 'B' circles; and Rs 15 crore for category 'C' circles. However, the DoT has said that Chennai will have the highest base price at Rs 233 crore, followed by Karnataka at Rs 206 crore and Mumbai at Rs 203 crore, while the fee for Delhi has been pegged at Rs 170.7 crore.

Confronting TRAI policy, the DoT has also taken steps to safeguard the interests of state-owned telcos BSNL and MTNL. The proposed policy allows both PSUs to bid for 3G spectrum, but adds, "If they win one of the spectrum blocks, they would get spectrum based on their bidding price otherwise, one block of spectrum would be given to them at a price equal to the highest bid."

As 3G spectrum can be used both for voice and high-speed data applications, many foreign operators are learnt to be considering this route to enter the traditional voice and SMS segment, which is currently offered in 2G spectrum.

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