DoT's spectrum auction to give an edge to wimax bidders

By SiliconIndia   |   Wednesday, 26 November 2008, 08:06 Hrs   |    3 Comments
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New Delhi: The third generation (3G) spectrum allocation and the wireless broadband access spectrum will be held in two phases, with broadband auction to begin from January 16th, 2009 and the second phase for 3G to begin from February 9th, 2009. As per government officials, by auctioning wimax first, it would get better valuation for its spectrum.

The Department of Telecom (DOT) while withholding its earlier decision of conducting the auction simultaneously, also plans to underline revenue share of one percent for all wimax spectrum winners. Even 3G spectrum winners will have to pay two percent additional revenue share if they have more than 8 Mhz of 2G spectrum and one percent if they have less. However, the wimax player has an edge over the other spectrum winners as they have been allowed to pay spectrum charges after one year of getting the radio waves while 3G operators will have to start paying retrospectively starting January 2009. Infact, the 3G players have to shed 2, 020 crore for pan-India spectrum, while the Wimax bidders will pay 1,010 crore. Hence, some domestic players may not opt for 3G as DOT has already given its green signal to the use of wimax both in data and voice services.

A huge number of operators including Reliance Communications, Tata Teleservices and Aircel are looking at deploying wimax technology in a big way. Moreover, with the auction being done sequentially, some of the operators may now have the option to skip the 3G auction altogether and participate in wimax auction only. DoT is planning to auction 5 blocks of spectrum for 3G and 4 blocks for wimax-based broadband services in each circle.

The DoT has also outlined policies that forbids any anti-competitive activity like has barred bidders from entering into any arrangements with suppliers of equipment or software that would restrict the company's ability to supply similar equipment to other operators. Moreover, DoT will not allow two bidders to have the same promoter owning more than 10 per cent stake. If two bidders have common ownership greater than 10 percent, then one of them must withdraw by the last date of submitting the application or both will be disqualified.

Through these online auction the government expects to garner 30, 000 crore.

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