The Indian government opened the bid for the upcoming 3G spectrum (radio bandwidth) auction in the country. The floor price for the 3G auction is set at INR35 billion (US$716 million) per operator, which may yield more than INR 250 billion (US$5 billion) from the spectrum sale. Additionally, the government also set INR17.5 billion (US$360 million) as the bid for the WiMAX (a high-speed mobile technology) spectrum auction.
The impending spectrum auction, which was initially scheduled to take place in late 2008, was delayed due to disputes between the government and the telecom regulator regarding the spectrum pricing structure. In order to expedite the 3G license auction process, the country’s telecom department finally decided to increase the starting bid from the initially set price of INR20.2 billion (US$415 million).
India’s telecom department is planning to issue four 3G and three WiMAX spectrum slots nationwide. The auction process is expected to complete within three months. The government already allotted 3G licenses to the state-owned mobile operators Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd. who have launched their respectively 3G services in the selected markets in early 2009. However, these operators have only been able to attract modest users till date.  
The leading participants in the upcoming bidding war will be the incumbent privately held telecom operators Bharti Airtel, Reliance Communications, Idea Cellular and Vodafone Essar, the Indian subsidiary of Vodafone Group (VOD). The limited number of available license slots for auction is expected to increase the bid. 
Apart from the Indian telecom companies, the government is allowing new market entrants and overseas telecom operators to participate in the auction, a move that will intensify competition in the Indian mobile market. 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) and Deutsche Telekom (DT) are currently evaluating the opportunity to carve a niche in the Indian 3G market.  
India is the second largest wireless market in the world (after China) with approximately 442 million cellular subscribers at the end of July 2009. Despite the economic headwinds, the country’s mobile subscriber base continues to grow at a healthy pace, with more than 10 million new users added every month. Availability of cheap mobile handsets, low call costs and the expansion of network coverage have largely contributed to this growth. India’s 3G subscriber base is forecasted to reach 50 million by 2012.
The upcoming spectrum auction will further boost mobile-phone demand in India driven by wider access to advanced data applications enabled by the 3G technology. This will help operators to lure subscribers by offering premium applications on high-speed network, thereby creating opportunity to boost data revenue growth. 
Additionally, 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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