DoT proposes tough rollout obligations for 3G services

TELECOM TANGLE

The government has proposed stiff network rollout obligations for next generation (3G) mobile service providers, failing which they will have to pay a hefty penalty for hoarding spectrum or the radio frequency.

"If operators do not achieve their rollout obligations, they would be given one year within which to fulfil their rollout obligations. Within this one year, the operators would be fined a spectrum cess of 2.5 per cent of their winning auction per quarter," Department of Telecom (DoT) said in its proposed guidelines for auction and allotment of spectrum for 3G services.

"If operators do not complete their rollout obligations even within the one year grace period, their spectrum assignment would be cancelled and the spectrum would be allocated via an auction to a new operator," the DoT said.

Moreover, no entity related to the defaulting operator would be permitted to participate in the subsequent auction.

The operators would be allocated spectrum in 2.1 GHz band through auction. The successful bidder would get a unified access service licence (UASL) for 3G services (by paying the required entry fee) and the operators would not be eligible for 2G spectrum on this licence, the proposed guidelines said.

The bidders/ service providers can make bids for spectrum up to a maximum of two blocks of 2x5 MHz each in 2.1 GHz band for various telecom service areas. All the existing UASL holders, cellular mobile and basic service licensees can bid for 3G spectrum along with new players.

On the mergers and acquisitions, the DoT is of the view that no merger would be allowed, if the number of operators in a service area comes down to below four.

This is to ensure adequate competition, the DoT said.

The two telecom PSUs "" BSNL and MTNL "" would also be allowed to take part in the auction/bidding process.

"If they win one of the spectrum blocks due to their bids, they would get the spectrum based on their bidding. Otherwise, one block of spectrum would be given to them at a price equal to the highest bid," the draft guidelines said.

CDMA operators like Reliance Communication and Tata Teleservices can get one carrier of 2x1.25 MHz in 800 MHz band on payment of pro-rata (25 per cent) amount of the highest bid for 2.1 GHz carrier meant for GSM players.

According to the calculations, minimum entry fee is the highest for Tamil Nadu, including Chennai circle, at Rs 233 crore followed by Karnataka at Rs 206 crore and Mumbai at Rs 203 crore, the guidelines said. The entry fee for Delhi has been pegged at Rs 170.7 crore.