Raja may opt for global 3G auction

Focus on spectrum, telecom rivalries hotting up.

New Communications Minister A Raja is likely to opt for a global auction of third generation technology (3G) licences, a move that will allow virtually any global operator to bid for offering this service in India.

The telecom department is also likely to consider levying a one-time fee on existing operators for the additional second generation (2G) spectrum they have been allotted over the years.

According to sources familiar with the developments, the global auction is aimed at attracting more foreign companies and sizeable investments to the market.

An auction will also fetch billions of dollars in the form of licence fees, especially now that India allows 74 per cent foreign direct investment in telecom services, which was not the case when the current set of mobile licences were awarded.

On the issue of additional fees for existing operators, the sources added that when global system for mobile (GSM) communication licences were issued in the mid- and late-'90s, the government had charged a one-time fee and allowed operators to use 4.4 MHz of spectrum (radio frequencies that make wireless communication possible and, therefore, the most valuable resource for mobile networks).

Operators have been allotted additional spectrum from time to time because of the huge growth in subscriber numbers since then. This was subject to operators fulfilling certain criteria like minimum number of subscribers as well as paying a spectrum use fee as a percentage of revenues.

Both measures "" a global auction of 3G licences and an additional levy on existing 2G operators "" will need discussion and agreement with the regulator, the Telecom Regulatory Authority of India. The sources added that the ministry was keen to take the regulator on board on all such issues.

Most Indian mobile operators have seen a steady rise in users and revenue flows. Valuations, in which spectrum is a crucial component, are also at high levels, as witnessed in Vodafone's acquisition of Hutch-Essar.

The sources added that Raja, who has already pushed for a review of state-owned Bharat Sanchar Nigam Ltd's mammoth 45-million line GSM equipment agreement with Swedish company Ericsson, was keen that the department of telecommunication resolves the complex spectrum question internally in three or four months, without referring to the Group of Ministers headed by Defence Minister AK Antony.

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