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India’s 3G Auction: “You’re Dealing The Cards On 8th, But We Can’t Play Blind”

A somewhat limited turnout for the pre-bid conference held by India’s Department of Telecom for offering clarifications prior to India’s much-awaited, much-delayed 3G Auctions. Issues were raised vehemently throughout the day, with TV Ramachandran of the GSM carrier body COAI, asking twice as many questions (well, almost) as the rest of the attendees. Referring to the notice detailing the 3G auction plans which is expected to be released on the 8th of December, Ramachandran pointed out that there are issues that haven’t yet been resolved: “On the 8th you’re dealing the cards, but we can’t play blind”, he said, adding that “Suppose the government comes out with a new policy on mergers and acquisitions. The game changes and what do we do them?”


The TRAI is believed to be preparing to release recommendations on M&A on the 18th of December. At the conference, carriers raised issues about lack of clarity in 2G spectrum policy, different number slots of spectrum being auctioned in different circles, the governments outlook on competing, more advanced technology like LTE, as well as issues with the auction process. At the same time, carriers expect the auction to go through this year, because they believe that fiscal compulsion and the need to raise funds is forcing the governments hand. Also overheard: “This is action replay of last years pre-bid conference. We don’t want to meet at the same place for same thing next year.” Issues raised at the pre-bid conference:

— The Queue For 2G Spectrum, Slots & Hoarding: Incumbent carriers, some of whom are in queue for receiving 2G spectrum as it becomes available, raised the issue of bundling of 2G spectrum with licenses. Companies which win the 3G spectrum auction can apply for a license, and at present, spectrum in the 4.4 MHz band is being bundled along with the Universal Access Service (UAS) license. So do the 3G auction winners get the 2G spectrum as well, and then what about those in queue? Ashok Sood of Unitech Wireless (Uninor) pushed for a clarification on the priority, since Uninor is waiting for start-up spectrum in Delhi. The government representatives declined to commit, saying that they cannot anticipate government policy. Ramachandran pushed for a clarification, rightly saying that this will have an impact on the 3G auction bid. Another exec said that in Hong Kong, they spent 4 months ironing out the policy issues, and the Indian government has had one year.


Several carrier representatives repeatedly raised the point that the auction should not be allowed before there is clarity and transparency on the 2G policy, because it will impact the auction and future plans, adding that in other countries, these issues are first sorted out prior to an auction.

— Another Auction, More Slots, Else No Pan-India 3G operator: It’s worth noting that only the spectrum that is available is being auctioned: for example, in Rajasthan and the North East, spectrum just isn’t being auctioned. This means that post these auctions, there will be no pan-India 3G telecom operator. The government representatives said that if more spectrum is put up for auction after 12 months, then steps will be taken, in the reserve price, to keep the interests of those carriers who win this 3G auction, in mind. Government representatives said that there will be another auction after this, but declined to put a timeline to it.

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The overbearing demand from all carriers, however, what to auction 4 slots of spectrum per circle, instead of only

what is available. Calling the present format an unbalanced auction, Ramachandran said that it’s all right to have a waiting list, with some operators having to wait until spectrum is made available, but they would rather bid now and wait for allocation, rather than wait for another auction later. Both Bharti Airtel and the CDMA body AUSPI agreed. During the discussion following a description of the rather complicated auction process, carriers repeated this demand saying that the auction design ensures that if, for example, in West Bengal there are only two slots available, the bids will continue indefinitely because no carrier wants to blink first, and as a consequence, the bids for other circles will also have to continuously be made in order to keep ‘activity points’ up.

3gauction-example—  GSM vs CDMA: Ramachandran raised a pertinent question about why auction rules are different for different slots of spectrum: why aren’t GSM operators allowed to bid for 800MHz spectrum, while CDMA operators are allowed a free run? Later on, issues were also raised about incumbent CDMA operators running wireless broadband services, getting a head start.

— The Auction Process: during the discussion on the auction process, for choosing between equal bids, three additional criterion were mentioned: among them were the activity tracker, which measures the bids across all circles, and a random criterion. Carriers were against the random selection process, but a more pertinent point was made about the activity tracker – it is unfair towards smaller or regional bidders for spectrum. What happens in, for the BWA spectrum auction, an ISP only wants to bid for a specific area? Given the complexity of the auction, requests were made by carriers for the mock auction to be held a few days sooner, so that they can adequately plan their strategy for the bidding process. Requests were also made for a separate tutorial. The auction is likely to last a long time, and since key decision makers can’t be kept locked up in a room for a couple of days, requests were made to allow multiple locations, some only read-only.

As mentioned earlier, there is an issue that if only two slots of spectrum are being auctioned, it’s unlikely that any of the larger carriers will blink first: so the auction can go on indefinitely, and given the activity tracker criterion, will raise bids for other slots as well. The auction process appears to be designed in a manner to maximise revenue for the government in each circle, even if some circles don’t warrant a high bid. We do need more clarity on the auction process though.

— Broadband: questions around Broadband Wireless Access were few, but a clarification came through that BWA spectrum can be used for voice if, and only if, the license allows it. BWA winners can take a UAS or an ISP Category A license, so it should be interesting if a winner of the BWA spectrum decides to bid for the UAS license which allows voice.

Questions were also raised about whether 5MHz of spectrum is enough? Most carriers believe that the 5MHz of spectrum that is being auctioned will not be enough, if adoption of data services explodes. Mobile broadband will not be a reality with just 5MHz of spectrum, and the pipes will choke; thus a request was made for some preference for those operators who win this auction, for the next one.

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— Issues With Impact Of Future Technological Advancements like LTE: Carriers had questions around advanced technological deployments, for example that of Long Term Evolution (LTE), which is expected to be deployed in China and Thailand next year, and whether that will be held off so that carriers who bid in India for 3G get time to recover their investment. Questions were also raised around whether there is any restriction on technology – since LTE can be used on the 2.3MHz band. Similarly, issues were raised about 900MHz already given to some telecom operators potentially being used for 3G, since 4-5 countries have already activated the same, which was countered by issues raised around 800 MHz being used by CDMA operators for EVDO services. Idea Cellular’s Rajat Mukarji, however, spoke against refarming of spectrum, saying the UAS license allows telcos use whichever technology they want on available spectrum.

— MVNOs? Some carriers put forth the case for mandating MVNOs and intra-circle roaming for 3G winners, since this will help those operators who don’t win spectrum in the auction.

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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