Even as the Department of Telecommunications and the finance ministry have failed yet again to reach a consensus on the reserve price for 3G auction, Communications Minister A Raja today assured that the auction would definitely find mention in the coming General Budget. After meeting Finance Minister Pranab Mukherjee today, Raja said no decision had been taken on the base price and further discussions were on.
Raja said the final base reserve price and number of licences to be auctioned would be announced in the Budget to be presented in early July.
The DoT today gave a detailed presentation to the finance ministry on various aspects of the auction as well as the options present before the two ministries. 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," he added.
Raja said 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 that had earlier referred the issue to a Group of Ministers, which was unable to meet due to the general elections. The DoT has suggested that the matter be put once again before the CCEA for a decision.
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. The telecom minister on Tuesday said the auctions could draw around Rs 25,000 crore (Rs 250 billion) for the exchequer.
The delay in 3G auction may also lead to a delay in the expansion plans of various incumbent telecom operators since the government has recommended to put on hold the implementation of the spectrum committee's report till after the 3G auction. The spectrum committee had suggested auction beyond 6.2 MHz for existing 2G services to determine its price.
The spectrum committee, headed by DoT additional secretary Subodh Kumar, had suggested that the pricing of 2G spectrum should be related to the auction price of 3G. According to government sources, given the linkage between the two auctions, it be appropriate to consider the recommendations of the committee after 3G auction.
At present, telcos are allocated extra spectrum beyond 6.2 MHz on the basis of subscriber norms and the DoT charges fixed spectrum fee based on quantity held by a respective operator. The operators do not pay a one-time fee to acquire extra spectrum beyond 6.2 Mhz.
Earlier, the DoT had obtained the price of spectrum for those having it beyond 6.2 MHz at Rs 267 crore (Rs 2.67 billion) per MHz plus indexing it by PLR from the date of assignment of spectrum. However due to strong opposition from some stakeholders this could not be implemented.
After a judgement by the Telecom Disputes Settlement and Appellate Tribunal in March this year, the DoT had put on hold the allocation of spectrum to telecom operators like Bharti Airtel, Vodafone, Reliance Communications, Idea Cellular and Aircel, which have applied for extra 2G spectrum various circles.
The tribunal had directed the DoT to review the subscriber based allotment of extra spectrum and appropriately revise the figures within one month of the receipt of the report of the Committee constituted by the DoT in June 2008.
