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FCC auction prompts India to raise 3G reserve price

11 апреля 2008

Indian authorities keen on increase after U.S. spectrum auction 73 raised $19.6 billion, local press reports; national 3G licence could cost over $500 million.

India's Department of Telecom (DoT) is mulling whether to raise the reserve price for 3G spectrum in its upcoming airwaves auction, reports the Economic Times Thursday.

Despite the DoT's approval of the base price of 10.35 billion rupees (approximately $260 million) for a 5-MHz chunk of nationwide spectrum, a section within the DoT and the Telecom Commission claims this is too little to pay for a pan-Indian 3G licence, after the U.S. Federal Communication's Commission's last spectrum auction raised $19.6 billion. 

"The just concluded auction 73 by the FCC in the
U.S. tends to suggest that a proposed reserve price of INR1,035 crore for 5 megahertz of 3G spectrum is way too low," said a senior government official.

"Even [the] DoT in its draft guidelines of the upcoming 3G spectrum auction has conceded that the recommended reserve price is on the lower side and may be reviewed," the official said.

However, there are factors unique to the FCC's recently concluded auction that explain why it raised such a huge amount of money.

For instance, the spectrum being auctioned was in the 700-MHz band, which is able to travel long distances and penetrate buildings more easily than higher frequency airwaves.
India is auctioning spectrum in the 2.1-GHz band.

Still, the number of companies vying to play a part in
India's 3G space has got the DoT thinking.

"In a circle with seven operators keen to bid for 3G spectrum blocks in the 2.1-GHz band, the reserve price ought to be at least INR100 crore (INR1 billion) per 5-MHz block of spectrum," said an internal note published by the Economic Times.

Therefore, should the base price for 3G licences be adjusted to INR1 billion per telecoms circle, a licence covering all of India's 22 circles would cost a minimum of INR22 billion (approximately $550 million).

Also, new entrants to
India's mobile market are able to bid for up to two 5-MHz blocks of 3G spectrum, meaning the base price could potentially double to over $1 billion for a nationwide licence.

The DoT in March confirmed that
India will hold a global 3G auction, opening the country's mobile market to foreign operators and new entrants.

The decision overruled the Telecoms Regulatory Authority of India (TRAI) which argued that only existing players should be allocated 3G spectrum.

Источник: Total Telecom

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