Greenhorns may not get to bid for 3G spectrum

New Delhi, July 4: Potential players that do not have experience in operating Telecom services may not be allowed to participate in the bids for 3G spectrum. This will disqualify two unified access service licence (UASL) holders — Unitech and Datacom — from participating in the auction. Companies such as DLF and Parsvnath that have shown interest in telecom services too will not be eligible.

Communications and IT minister A Raja today said that guidelines for 3G services would be announced within a week. The Department of Telecommunications (DoT) is awaiting inputs from the finance ministry, after which the guidelines will be sent to the telecom commission for approval. It has taken a view from the law ministry.

According to Government officials, foreign companies will be allowed to participate in the bidding process even if they do not have licences to provide services. They can be issued UASL once they are successful in bidding. The licences will be for 20 years similar to the existing ones. Current foreign investment guidelines that prescribe a cap of 74 per cent foreign equity in a telecom service provider will be followed in case of 3G services.

The officials said auction would be for five blocks of spectrum of 2x5 MHz each in each telecom circle in the 2.1 GHz band. Telecom analysts, however, said this might not be sufficient for providing good quality services.

It is not yet clear whether DoT will issue a new category of licence for foreign companies winning 3G spectrum. One view is if the new operators are issued the UASL licences then the existing applicants for 3G services may consider this as a backdoor entry of a new player. Presently, there are about 342 applications for UASL licence in different circles. The licences are issued on a first-come first-serve basis. This seniority on the basis of date of application is also followed for issuing start up spectrum for 2G services.

The UASL guidelines will make the winners of 3G spectrum in the auction eligible for 2G spectrum. Under existing system UASL holders are entitled for a start-up spectrum of 4.4 MHz in 2G band. Therefore, if the new entrants are issued 2G spectrum on priority basis, then the existing applicants will raise hue and cry and may go to court. Therefore, DoT will have to bring clarity on this issue before issuing any licence.

Even if the new entrants are not issued 2G spectrum on priority, it will allow new players for 2G spectrum and there is not just enough spectrum needed for the growth of even the existing players, according to the Telecom Regulatory Authority of India (TRAI).

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