Ending all confusion over the pricing of spectrum for 3G services, the empowered Group of Ministers (e-GOM) on Thursday finalised Rs. 3,500 crore as reserve price for auction of radio waves for next generation mobile services.
The e-GOM, headed by Union Finance Minister Pranab Mukherjee, also decided to allow a maximum of five 3G operators per telecom circle, including a government-owned telecom company (BSNL and MTNL). The e-GOM fixed Rs. 1,750 crore as base price for pan-India WiMAX spectrum for wireless Internet and decided to sell only three slots initially.
Talking to journalists after attending the e-GOM meeting here, Communications and Information Technology Minister A. Raja said spectrum auction for both 3G and WiMAX services would be completed within 90 days, paving the way for faster and more efficient mobile and Internet services.
Talking about revenue generation from the entire auction process, Mr. Raja said the government was likely to earn over Rs. 25,000 crore. He, however, said as only four private operators would be allowed to offer 3G services per circle, the auction price could still go higher and lead to more revenue generation.
The Minister also clarified that both BSNL and MTNL, which were already offering 3G services, would have to match the price quoted by successful bidders in each circle.
Significantly, in the budget for 2009-10, Mr. Mukherjee had estimated revenue generation of Rs. 35,000 crore from the auction process.
The e-GOM, which was also attended by Union Home Minister P. Chidambaram, Agriculture Minister Sharad Pawar, Information and Broadcasting Minister Ambika Soni and Planning Commission Deputy Chairman Montek Singh Ahluwalia, decided to auction only three slots of spectrum for WiMAX services in the first phase.
The issue of 3G spectrum auction had been hanging fire as the Finance Ministry and Department of Telecom failed to arrive at a consensus on the base price.
While the DoT had suggested Rs. 2,020 crore as reserve price for 3G spectrum and Rs. 1,010 crore for WiMAX, the Finance Ministry insisted on Rs. 4,040 crore for 3G and Rs. 2,020 crore for WiMAX, leading to the impasse and delay in rollout of both the services by private players.