Finance ministry, DoT bury hatchet in 3G spectrum auction

After a long wait, the doubts about the auction of 3G spectrum was cleared yesterday after the finance ministry and the department of telecommunications (DoT) agreed on the minimum reserve price for the auctions.

Communications and IT minister A Raja met finance minister Pranab Mukherjee yesterday while the officials of the two sides met in the evening.

The two have agreed on a reserve price of Rs3,510 crore, which is higher than Rs2,020 crore proposed by DoT earlier and lower than Rs4,040 crore suggested by the finance ministry.
"In connection with the 3G and WiMAX (a telecommunications technology providing wireless data, voice and video over long distances) auctions, we assured (the finance minister) of an early rollout, an early auction and more revenue for the government," Raja told reporters after meeting Mukherjee.

''Base price will be differentiated according to (telecom) circle, depending on the commercial viability of the services there,'' Raja told reporters.

Another significant development is that a 2-per cent administrative charge, proposed by the Telecom Regulatory Authority of India (TRAI), on the successful bidders annually has been dropped. (See: DoT and telcos unhappy with administration charges for 3G).

The talks begin last week to sort out the differences over the 3G spectrum, the airwaves that enable faster data download and video streaming on mobile phones, auction reserve price between DoT and the finance ministry.

On 15 June, following an the advisory issued by the ministry of finance, DoT has hiked the reserve auction price for 3G spectrum to Rs3,540 crore. The DoT has reportedly doubled the reserve price for the A-category circles that include Delhi and Mumbai while retaining the earlier proposed price for 'tier III' cities. (See: Government fiddles with 3G auction price again).

There is a good possibility, if everything works out as per schedule drawn by the department, that the auction could kick off in September-end or early October, the minister said, adding that the auction would definitely find mention in the coming Budget which is scheduled on 6 July.

Raja said, ''We have made a detailed presentation in terms of the amount of spectrum available and various ways of how to fix the base price. We have also discussed whether we should price it uniformly or whether it should be differentiated according to the commercial viability of the circles.''

The matter would now be discussed in consultation with prime minister Manmohan Singh. The final decision will, however, rest in the hands of the Cabinet Committee on Economic Affairs (CCEA) that had earlier referred the issue to a Group of Ministers (GoM).

The 3G auction process has already been delayed thrice from its initial schedule due to inter-ministerial disagreements over issues like the reserve price and the number of blocks to be auctioned. (See: DoT defers 3G spectrum auction).

DoT plans to auction frequency for 20 of India's 22 telecom service areas.