EGoM to take a final call on 3G payment schedule today

NEW DELHI: The nine-member empowered group of ministers (EGoM) headed by finance minister Pranab Mukherjee will meet in Delhi on Thursday to take a final call on the payment timeline for the third generation (3G) spectrum auctions, as there is no consensus between finance and telecom ministries on this issue. While the finance ministry is insisting on an immediate full payment by the winning bidders in the 3G auction, the department of telecom (DoT) wants telcos to make only part payment and the balance amount at the time of allotment of spectrum.

On December 21, after the last meeting of the inter-ministerial panel on the issue, telecom minister A Raja had told ET that the government would auction four slots of 3G spectrum (excluding the one slot reserved for BSNL/MTNL), while also adding that telcos would be required to pay only a quarter of the bid amount this fiscal and the rest when the spectrum is allotted in August 2010.

According to DoT sources, EGoM may also reconsider its decision last month to auction four 3G slots for private operators, but this could not be independently verified by ET. This is because, the uncertainty regarding the vacation of 3G spectrum by the armed forces is yet to be sorted, the government official said.

“The DoT, hence, wants to restrict the airwaves sale to the frequencies it currently holds, as the armed forces may not meet their commitment to vacate additional radio frequencies between June and August, 2010” Currently, the DoT has sufficient 3G airwaves to accommodate three players in most circles, while in some zones, it has radio frequencies only for two players. The armed forces has said it will free up to 5 MHz of 3G spectrum, equivalent to one slot, in July and a similar amount in August 2010, a commitment which the DoT fears that the defence ministry may not keep.

A top DoT official said the communications ministry has been unable to issue the notice inviting applications (NIA) for the auction of 3G airwaves, as this issue of payment schedule was yet to be settled. After the EGoM meet on Thursday, the DoT plans to issue NIA on January 10. The NIA will be a legally a binding document providing all details regarding the sale of airwaves including the exact availability of 3G spectrum in each circle. It will also detail the payment format and time frame.

The DoT also plans to ask companies to submit applications by January 25, following which it proposes to hold mock auction on February 9 and the actual sale of airwaves three days later (February 12). Telcos will have to pay the bid amount by March 10, as per an internal DoT note.

3G services were originally scheduled to be launched in India in 2007, but have been repeatedly delayed amid troubles over freeing up spectrum and setting bid prices. First launched in Japan in May 2001, the services are available in over 90 countries. Europe unveiled its first fourth-generation (4G) network earlier this month.