Dot Against Administration Charges For 3G - Dec 17, 2008

The government is still in doubt, a month before the 3G spectrum auctions, on the number of players to be allowed in a circle as well as the charges to be levied on 3G companies. This difficulty arises as the spectrum availability is different in all 22 telecom circles in the country. The government is also not sure about getting spectrum vacated from another long pending issue, defence services.

The Department of Telecommunications favors release of spectrum in phases and that could mean a second auction at a later date. Therefore, basically those being asked to put in bids right now won''t know if other players could come in subsequently to give them competition. And so the bids in this first round could be much lower than what the government expects. The DoT officials are in a dilemma because these issues need to be resolved before the date of auction. Moreover, DoT officials are worried that high recurring fees can diminish the auction. The DoT''s problem is that the telecom regulator has recommended an administrative charge equal to 2 per cent of the highest bid as an annual fee to be paid by telecom operators for 3G services. The DoT is concerned that bidders will factor in this proposed annual charge and lower their bids by the same amount.