The Indian government has finally announced the 3G and WiMax (wireless broadband access) auction date. The country’s Department of Telecommunications (DoT) will commence the auction process for 3G WCDMA spectrum (radio bandwidth) on Dec 7, 2009 and for WiMax on Dec 9, 2009. This ends months of speculation regarding the timing of the spectrum issue.
The impending spectrum auction, which was initially scheduled to take place in late 2008/early 2009, was delayed due to disputes between the government and DoT regarding the spectrum pricing structure.
To expedite the spectrum auction process, DoT finally increased the starting bidding price for 3G auction to INR35 billion (US$716 million) per operator from the initially set price of INR20.2 billion (US$415 million). Moreover, floor bidding price for WiMax spectrum auction is set at INR17.5 billion (US$360 million). The 3G and WiMax auctions are expected to fetch more than INR 250 billion (US$5 billion).
DoT announced in August 2009 that it will issue four 3G and three WiMAX spectrum slots nationwide. A pre-bid conference is scheduled on Oct 12, 2009, where the details of the auctions will be presented. Bid applications will be accepted from qualified bidders from Oct 26, 2009 with the deadline for submitting applications being Nov 13, 2009.
A mock auction will be held on Dec 3 and Dec 4, 2009 before the real auction begins. Winning bidders have to pay deposits within five days of the closure of the auctions and the balance will be due after 15 days.
The leading participants in the upcoming bidding war wiil be the leading privately held telecom operators Bharti Airtel, Reliance Communications, Idea Cellular, Tata Teleservices and Vodafone Essar, the Indian subsidiary of Vodafone Group (VOD). The limited number of available license slots for auction is expected to increase the bidding price.
The Indian government has already alloted 3G licenses to the state-owned mobile operators Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd who have launched their 3G services in the selected markets in early 2009. However, these operators have only been able to attract modest users till date.
In addition to the Indian operators, the government is allowing international carriers to participate in the auctions, a move that will intensify competition in the Indian wireless market which is the second-largest in the world (after China) with approximately 442 million subscribers.
Foreign operators such as Telenor SA, NTT DoCoMo Inc (DCM) and Emirates Telecommunications are expected to bid for the 3G licenses. Moreover, leading international carriers such as AT&T (T), Deutsche Telekom (DT) and France Telecom (FTE) are also likely to utilize this opportunity to carve a niche in the lucrative Indian 3G market. However, they need to secure operating licenses to meet the pre-qualification criteria.
India’s 3G subscriber base is forecasted to reach 50 million by 2012. The upcoming spectrum auction will further boost mobile-phone demand in the country driven by wider access to advanced data applications enabled by the 3G technology.
The 3G spectrum auction will also foster sizable investment in the telecom sector for the commercial deployment of 3G services across the country. Moreover, nationwide 3G service roll-out is expected to cement the wide gap between urban and rural regions in terms of mobile penetration
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