3G spectrum: Telcos ask DoT to end sops to BSNL and MTNL

Private telecom companies have asked the government not to give any further concessions to state-run Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd over private firms in the ongoing auction of third generation (3G) and broadband wireless (BWA) services.
 
The Cellular Operators Association of India, a body representing GSM-based telecom companies, has demanded that the telecom department adhere to 3G auction norms, which stipulate that state-owned telecom companies match the bid amount during the sale process and also make payments within 10 calendar days of the close of auctions.

The two state-run companies are not participating in the auction for airwaves that allow high-speed voice and data transfer and multimedia services. They were allotted the spectrum some 18 months ago on the condition that they will have to match the winning price of the auction. The two operators have asked DoT to allow them to pay in installments or defer the payment.

Reports earlier had hinted that the government might refund a significant portion of what BSNL will pay for both third generation and broadband wireless spectrum to help it stabilise its financials. If the refund option is found unviable, the government may permit BSNL to defer payment for these airwaves until it completes its restructuring process. This will give BSNL a 24-month window to pay for the airwaves, unlike private operators who have a ten-day period to pay the bid amount.

The bid price for a pan-India 3G licence touched Rs11,045 crore on Wednesday, up 216 per cent from the base price, after 22 days of bidding. Thus, BSNL and MTNL may have to fork out a huge amount under the original conditions where they have to match the winning bid. This will be the more difficult for them as despite the head start, the two companies have failed to build up a sizeable subscriber base on either of the technological platforms.

In a letter to DoT secretary P J Thomas, the COAI has said that any "delay in payment on the part of BSNL and MTNL would result in a non-level playing field with the other service providers, and hence if extension is granted to the PSUs, the same should be grated on equal terms to private sector service providers as well."

The centre has provided a slew of concessions to BSNL in the past. The company received 100 per cent reimbursement of licence fees from 2001-02 to 2003-04 as compensation for providing telecom services in rural markets. Though the reimbursements were gradually reduced and stopped, between 2001 and 2005, BSNL received licence fee refunds in excess of Rs8,600 crore.