3G spectrum decision likely this week

After forcing the defence services to cough up 15 MHz of spectrum, the government is likely to form a group of ministers (GoM) this week to consider the details of the much-delayed global auction of third-generation wireless space.

Promising third-generation (3G) services by the end of this fiscal year, telecommunications minister A Raja said that among other things, the GoM would finalise a base price for the auction and the number of slots a firm can bid for.

However, the government's estimates of what the auction will fetch have dropped sharply to just Rs20,000 crore. Raja had earlier suggested that the government could get as much as Rs30,000 crore from the auction.

When announcing the auction of 3G and fourth-generation radio waves, the ministry had set a base price of Rs202 crore ($408 million) for pan-India 3G spectrum. The finance ministry later suggested doubling that.

The auctions were supposed to take place in January, but have been postponed after some of the operators expressed concerns about raising funds in a slowing economy.

The total income from collecting telecom licence fees, entry fees and spectrum charges from the operators for the year 2009-10 is estimated at Rs33,335 crore compared with the revised estimate of Rs13,174 crore during 2008-09.

Meanwhile, the finance ministry has made an allocation of only Rs23.5 crore towards rolling out an optic fibre cable network for the defence forces, despite the Department of Telecommunications putting the total requirement at nearly Rs10,000 crore for the project. Last year's budget had provided Rs 500 crore for this project.

Rural telecom under-funded
While the universal services obligation fund has collected nearly Rs20,000 crore for rolling out telecom services in rural areas, the finance ministry has allocated only Rs1,800 crore for 2009-10. This is Rs200 crore higher than what was allocated last year, but the industry had asked for more to support rural rollout of services by private operators.