Auction of 3G spectrum kicks off Friday

The much-awaited, first-ever auction of radio frequency spectrum for third generation (3G) telephony in India will kick off Friday with top telecom firms such as Bharti Airtel and Reliance Communications bidding for airwaves in all 22 service areas.

3G telecom services will allow faster connectivity than what is available now and enable applications such as internet TV, video-on-demand, audio-video calls and high-speed data exchange.

As many as nine telecom companies — Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications — will take part in the auction process which will be held from 9 a.m. to 7.30 p.m. on all days, except Sundays and national holidays.

While Bharti Airtel, Reliance Communications, Vodafone Essar, Tata Teleservices, Idea Cellular and Aircel, will bid for all-India spectrum, Videocon, S Tel and Etisalat will bid for only selective circles.

According to the Notice Inviting Applications (NIA) issued in February, of the 22 telecom circles, five states – Punjab, Bihar, West Bengal, Himachal Pradesh and Jammu and Kashmir – will have four private players for the auction.

Other circles, including the four metros of Delhi, Mumbai, Kolkata and Chennai, will have three private players.

The number of slots up for grab excludes those allotted to state-run Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, which were allotted licences last year and have since started offering 3G services in their operating circles. But they will have to match the price paid by the highest bidder in their zones.

The government has set Rs.3,500 crore as the base price for one 3G slot.

According to the auction format provided by Department of Telecommunications (DoT), it will be a simultaneous online auction of 22 service areas over a secure website on internet.

Once bidders access their bidder specific website, they will be required to enter login credentials. They cannot have more than one computer logged in at any one time.

The auction will have multiple rounds and at the end of each round, provisional winners will be declared.

The auction will end when demand is equal to the number of slots available in each service area.

According to a senior DoT official, it is difficult to set a timeframe for the 3G bidding.

“It may take a week or a couple of weeks or possibly more,” the official said.

The bid data will be made public after the auction is completed. The winning firms will have to deposit the money within 10 days after the auction.

The successful bidders would be allowed to offer 3G services on a commercial basis from September 1.

For broadband services, the auction will begin two days after the process concludes for 3G spectrum.

As many as 11 companies — Bharti Airtel, Idea Cellular, Aircel, Augere Mauritius Limited, Infotel Broadband Services, Qualcomm, Reliance WiMax, Spice Internet Service Provider, Tata Communications Internet Services, Tikona Digital Networks and Vodafone Essar — will bid for broadband wireless access (BWA) services.

The government has set Rs.1,750 crore as the base price for a BWA slot.

It hopes to garner Rs.35,000 crore ($7.87 billion) from these auctions.

The DoT says the aim of the auctions is to award spectrum transparently and fairly to generate revenue for the public purse, ensuring effective competition and getting a market-determined price for the spectrum.

Global investment bank Rothschild and telecom auction services provider dot.econ are advising the government on the auctions.