The entry of 3G and WiMAX services in India received big boost as the GoM were able to reach a consensus on the base price for 3G as well as BWA spectrum. The 3G base price is now set at Rs 3500 crore while the BWA (WiMAX) spectrum will be available for a minimum of Rs 1750 crore i.e. at 50 % of the base price of 3G.
The issue of base price was one of the major points of difference between the Finance Ministry and the Ministry of Communications. While the earlier draft had fixed base price for 3G spectrum at Rs 2020 crore and WiMAX spectrum at Rs 1010 crore, the Finance Ministry had suggested doubling of the base price to which the DoT was reluctant.
With the new reserve prices, the government expects to generate Rs 25,000 crore in revenues from the spectrum auctioning. "I do feel that the Government of India, putting together 3G and WiMAX, will easily get Rs 25,000 crore," said union Minister for Communications, A Raja.
Furthermore five blocks of spectrum will be auctioned for 3G services. With BSNL and MTNL already assured of one block, this effectively means that the private operators will have to battle it out for the remaining 4 slots. The operator community had requested for all spectrum to be auctioned. But the government seems to be sticking to its stance of maintain a healthy demand-supply equation in order to generate good revenues from the auctioning.
The industry however appeared to be largely disappointed with the new development.
AUSPI said that the reserve price should not have been increased beyond Rs 2,200 crore, Mr. S C Khanna who is the Secretary of AUSPI said that with the high reserve price there is a possibility that 3G services in India will meet the same fate as in Europe where 3G penetration is only 20 %.
COAI’s T.V Ramachandran also echoed Khanna’s concerns as he said that the industry body was disappointed with the base price as well as the disparity between the base price for 3G and BWA spectrum.
Making an exception to this disappointment was market leader Bharti Airtel. “We welcome the Government’s decision to expeditiously complete the planned auction of 3G spectrum. We believe 3G will drive the wireless broadband revolution in both urban and rural India, contributing to inclusive growth. Bharti Airtel looks forward to participating in the auction,” said Mr Manoj Kohli, CEO and Joint MD, Bharti Airtel.