DoT seeks legal opinion on 3G price

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New Delhi: The department of telecommunications (DoT) has sought legal opinion on whether it can further double the reserve price which telecom companies would have to pay for 3G spectrum, as proposed by the finance ministry, without referring the matter to the Telecom Regulatory Authority of India (Trai).

In case the legal opinion does favour a reference back to the Trai, it is bound to further delay the 3G auction process, which has already been marked by several delays. Meanwhile the DoT would also be seeking the view of the cabinet committee on economic affairs (CCEA) on administrative charge of 2% and the issue of doubling the reserve price. According to the current time table of 3G auction, the auction process must begin by January 16 and end by January 30, a date which seems unlikely.

The finance ministry had a fortnight ago asked the DoT to double the reserve price for pan-India 3G auction to Rs 4,040 crore from the current Rs 2,020 crore. It had also asked broadband wireless access (BWA) reserve price to be doubled to Rs 2,000 crore.

However, the current Rs 2,020 crore reserve was also increased by the DoT than what was earlier recommended by the Trai. The Trai had suggested a reserve price of Rs 80 crore for metro and A circles, Rs 40 crore for B circles and Rs 15 crore for C circles. The DoT increased it to Rs 160 crore, Rs 80 crore and Rs 30 crore respectively.

An internal view of the DoT is that Trai’s recommendation wouldn’t be required since while suggesting the allocation and the pricing of the 3G spectrum and the BWA services, Trai’s earlier recommendation of reserve price was doubled by DoT and a reference was then made to Trai on the same. Trai subsequently agreed to the new reserve price and thereafter the guidelines for the auction and allotment of the 3G spectrum and BWA services were issued in August.

If the current reserve price remains constant then a player bidding for pan-India 3G and BWA would have paid Rs 3,020 crore. If the reserve price is hiked as per finance ministry’s proposal then the same goes up to Rs 6,040 crore.

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