India 3G Spectrum Auction Guidelines

Just minutes ago the Department of Telecom has released guidelines for 3G spectrum auction and allocation, Key points to be noted are as follows, [Our comments appear in Italics]

• Spectrum in 2.1 GHz band earmarked for 3G Telecom services
• 3G Eligibility: Any person [including foreign entities, subject to FDI regulations in Telecom] holding Unified Access Service License. If you don’t hold one, you can buy it for Rs 1,650 crore. [ There is some hope for new Telcos now as foreign Telcos wanting to get a pie of Indian market may look for tie-ups as this will also help them clear the FDI hurdle. ]
• To be auctioned in 2×5 Mhz blocks. No of blocks available in a given Circle is yet to be determined, will vary between 5 to 10.
• EVDO services will get spectrum in 450MHz and 800MHz. CDMA players favored subject to fulfilling prices for the highest winning bid. Priority / Seniority to be decided by No of subscribers in telecom service area [Favors, Reliance communications and Tata Indicom]
• Electronic auction of spectrum will be held for every service area. Reserved prices for Spectrum are Mumbai, Delhi and Category – A Service Area Rs 160 crore . Chennai, Kolkata and Category – B Service Area – Rs 80 crore and Category – C Service Area Rs 40 crore. [ 3G Spectrum reserve prices have doubled since TRAI’s recommendation in 2006.]
• MTN / BSNL favored by giving them a back door entry provided they match the winning bid.
• 3G license is for a period of 20 years
• Roll out Obligations: Operators have to cover 90% of service Area within 5 years from the date of allotment in Metro circles. 50% of District Headquarters / Cities in Category A, B and C with 15% of rural coverage.
• Operators have to shell out 1% of Gross Revenues as Spectrum Fees every year starting from the second year.

Trading / Spectrum sharing guidelines yet to be issued. More analysis and comments will follow soon.