3G spectrum Auction in January

The United States is asking India with lots of questions on key policy issues in the telecom sector as the
country gears up to auction 3G mobile phone spectrum, which will allow services such as high
-speed internet and video-conferencing etc...Among the queries raised by the US Telecommunications
Sub-committee is whether India will change rules to allow foreign companies to bid for 3G
spectrum as 100% foreign entities. The panel also wants to know how much time foreign players
will get to find an Indian partner if their bids are successful.

India will auction 3G spectrum in January. US telecom firms such as AT&T and Verizon, which
have been trying to enter India for the past two years, are not present in the world’s
second-largest market for wireless services with more than 300 million subscribers. The
American contention is that the current 3G policy does not favour the entry of new foreign
players.Existing regulations don’t allow foreign telecom companies to hold over 74% in their
Indian ventures. So, a 100% foreign-owned entity entering the Indian telecom market must
find an Indian partner to hold a 26% stake in the joint venture.

Cost of Telecom spectrum is 10 times more than usual

The cost of getting telecom spectrum from the defence forces has risen upto 10 times significantly from the estimates worked out more than two years ago.The Department Of Telecommunications (DoT) must foot a bill of around Rs14,000 cr to set up an alternate optic fibre communications network for the defence forces, up from the initial estimate of Rs1,200 cr that was subsequently revised to Rs 5,000 crore.

Spectrum is a scarce natural resource essential for providing quality mobile telephony service.The group of ministers (GoM), which was constituted in 2007 for vacation of defence spectrum, is expected to meet this week to find a solution to the long-pending issue. DoT is expecting 30 MHz of 3G spectrum and 20 MHz of 2G spectrum from the defence.The increase in cost for getting the unused spectrum vacated from the defence forces may act as a major roadblock for the entire telecom sector, and introduction of 3G (third generation) services in particular. According to a government announcement, the auction process for starting 3G telecom services in India is likely to begin by the end of this year 2008.