India Sets 3G Spectrum Price

Finally the 3G auction process moves along after innumerable delays ! Challenges however are :

* Availability of just 5x2 MHz per operator per circle without any clear road map for award of additional frequency or any availability of the same

* 4 slots of 5x2 MHz, beyond the single license already been given to the public sector incumbent, wont necessarily be available in all circles at the time of auction due to some portion of the spectrum being with Defence which has asked for commissioning of an alternate fiber based communications network to migrate to

* For bidders without an existing 2G license the terms remain unclear as last time round they were required to pay the amount for a 2G license without necessarily being awarded frequency for the same

August 28, 2009 | Ray Le Maistre, Light Reading

India's carriers are, at last, preparing for the long-delayed auction of 3G and WiMax spectrum following a critical pricing decision by the Indian government, which has set the base prices for the country's 3G and WiMax spectrum.

The starting price for each slot of 3G spectrum is 35 billion Indian Rupees (US$716.4 million), lower than the INR40.4 billion ($827 million) price previously signaled by the government but higher than the original INR20.2 billion ($413.5 million) price suggested.

Five blocks of pan-India 3G spectrum are available, but one has already been allocated and divided up between state-owned carriers Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) , which have already launched their initial 3G services.

MTNL operates in the metro service areas, or "circles," of New Delhi and Mumbai, while BSNL operates in the other 20 circles. Both will pay for their spectrum once the auction is complete, with the price being equal to the highest bid at the end of the auction process.

That leaves four blocks for the auction, which is now set to take place before the end of November. Bids are expected from the likes of Bharti Airtel Ltd., Reliance Communications Ltd. , Vodafone Essar , IDEA Cellular Ltd. , Tata Teleservices Ltd. , Aircel Ltd. , Sistema Shyam TeleServices Ltd. , Unitech Wireless, and others.

The base price for each of the three available blocks of WiMax spectrum, which will be auctioned separately, has been set at INR17.5 billion ($358 million).

Local media reports, such as this one from the Economic Times, quote telecom minister A Raja as saying the government expects to raise INR250 billion ($5.11 billion) from the spectrum sales.

The 3G auction had been set to take place early this year, but was subject to repeated delays that have allowed BSNL and MTNL to steal a march on their privately owned rivals. (