Tuesday, January 13, 2009

Will the 3G spectrum be auctioned by the current Government?

3G spectrum auction in India has had many false starts in the last 3 years. The non-availability of spectrum for 3G (defence had to vacate the spectrum before it could be issued to operators) ensured that India remains the only large economy without 3G licenses. China issued the licenses last week after its own troubles with its proprietary technology.

Till a few days back, it was almost certain that the 3G auctions would take place in India in Jan'09. However, due to difference in opinion on the base price for auctions, between the Finance Ministry and DoT, it is unlikely that the auctions can be held before Feb'09. Any further delay would mean that the auction would be postponed indefinitely till the new Government is installed at the center as the moral code of conduct will come into play after the announcement of general elections.

I do not think anybody is going to shed tears on the postponement. The operators themselves are not interested in the auctions right now due to credit crunch and in this economic situation, they do not want another uncertainty. The low spectrum availability would have ensured that there would have been a few operators who would have been first among equals. The Government is also not sure of the money that they can rake in from the auctions. Apart from the top end users, there are very few consumers who have interest in 3G or even know about 3G. All in all, I would not be surprised if the auctions are indeed postponed till the later part of the year. By that time the entire debate on 3G vs 4G (LTE) would make a comeback.

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