2G auction: Low demand hints at early conclusion

The first day of 2G spectrum auctions was a low-key affair and went on for seven rounds until it was closed for the day. The auctions will not be held on Tuesday due to a Diwali holiday and again start on Wednesday.

In a day, the auctions are conducted for 10 hours starting from 9.00 am in the morning and closes by 7.00 pm in the evening. Each round is of over an hour.

Even as the winners of 2G auctions will be announced once the bidding is complete but the low demand for spectrum in 1,800 Mhz confirms one thing and that is early conslusion of the auction process.

The winners will be announced by the government later but there are provisional winners declared in each round and they are the first and second bidders in each round. First and second bidders are the first two bidders who press the button and indicate their willingness to bid in every round.

These two bidders may then bid in the second round at the higher price or they may choose to excuse themselves.

The companies are bidding for 176 blocks of 1.25 Mhz for sale in each of 22 circles, with 8 blocks in each circle. If demand goes up to eight blocks or more for a circle, it is considered excess demand.

The excess demand impacts the price of spectrum. If a circle sees a demand for 8 blocks by new players, the base price raises by 1 per cent. If the demand is for 9 blocks too, the increase is 1 per cent. The base price increases by 2 per cent, if the demand is for 10 blocks and by 3 per cent, if the demand increases to 11 circles.

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