India on Friday joined the elite list of countries to announce a policy for third generation mobile service that will enable customers to enjoy voice, video, data and downloading facilities on their mobile phones.
Telecom Minister A Raja, unveiling the much-awaited 3G policy that would allow up to 10 players in a service area including foreign companies, said that the government expects up to Rs 40,000 crore (Rs 400 billion) from the auctioning of spectrum for 3G services.
India has 60 Mhz of 3G spectrum available. The auction will take place in the 2.1 Ghz band.
Government has set a base price of Rs 2,020 crore (Rs 20.20 billion) for each bid for a pan-India license. Initially, there will be three to five operators to sell the 3G services, including state run BSNL and MTNL.
The PSUs have an edge to start the 3G services earlier than others as they do not have to bid for the spectrum as they only have to match the highest bid in their respective circles. BSNL CMD Kuldeep Goyal said the PSUs should be able start the 3G service in six months. MTNL shares soared 3.76 per cent to Rs 107.70 on the priority treatment.
One block shall be allocated to MTNL in Delhi and Mumbai/Metro service areas and BSNL in other areas.
He said an external agency would be appointed in the next 15 days to oversee the e-auctioning process and by December he expects the mobile operators to roll out 3G services.
As per the guideline, any licensed telecom operator can bid for 3G spectrum and the radio waves will be auctioned in 5-10 blocks depending on the availability. Each successful bidder will be allocated only one block in a service area.
As per the guidelines, spectrum will be auctioned in the 450 Mhz, 800 Mhz band for EVDO (for CDMA players) and in 1900 band when it is available.
According to the reserve price for 3G spectrum fixed by the government, 2x5 Mhz block of spectrum for Mumbai, Delhi and category-A cities would cost Rs 160 crore (Rs 1.60 billion), for Kolkata and category-B Rs 80 crore (Rs 800 million)and category-C Rs 30 crore (Rs 300 million).
India, which has 287 million wireless subscribers, saw its mobile user base grow 25 times in the last five years making it the second largest wireless market in the world after China.
There are strict roll out obligations for 3G operators to discourage hoarding of spectrum. If the licensee does not achieve the roll out obligations, even after being given one year to do so, would have to make a payment of 2.5 per cent of its successful auction bid per quarter. And after that also if it does not roll out service, then its spectrum will be withdrawn.
