Spectrum auctions slated to begin on 23 Jan: 10 things you should know

Will the upcoming spectrum auctions, which are slated to start on January 23, be more successful than the previous two rounds which were duds? The Department of Telecom (DoT) last night issued Notice Inviting Applications (NIA) for the auctions with details of auction timeline, spectrum availability, conditions for existing telcos and new entrants etc. The Government proposes to auction 1800 mhz and 900 mhz spectrum bands. Here are ten things to know about the upcoming auctions:

1. The Government wants to raise Rs 40,874.5 crore from spectrum revenue, as per its Budget calculations. This includes upfront money from the auction and various fees levied on airwaves used for commercial mobile communications. But it is offering a deferred payment option to bidders and this kind of revenue may not be generated

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2. Successful bidders can pay in installments. In the 1800 Mhz band, they have the option to pay 33% upfront while for the 900 Mhz band, upfront payment is 25%. They get a two year moratorium payment of balance amount of one time charges for the spectrum, which shall be recovered in 10 equal annual instalments.

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3. A PTI story says that in case all spectrum gets sold and companies opt for deferred payment mode, then the government will be able to get about Rs 15,200 crore this fiscal from direct sale of airwaves. This is almost a third of the targeted amount.

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4. Total spectrum being put up for auction in 1800 mhz band is 403.2 mhz acros all 22 telecom service areas; in 900 mhz band the quantum is 46 mhz in Delhi, Mumbai and Kolkata.

5. DoT has stuck to its mulish stance that only those bidders who come forward aggressively will be given contiguous spectrum. As per the NIA, contiguous spectrum will be allotted only to those bidders who have won a minimum of 5 mhz spectrum. Put simply, non-contiguous spectrum means it is split into several chunks and is not a continuous block of 5 mhz. Non-contiguous spectrum is of no use to telecom service providers who might want to offer data services on 1800 mhz spectrum band, though it works just fine for voice services.

6. The last date for submission of applications by interested companies is January 4th. DoT will hold a pre-bid conference on December 20th and the last date for companies to seek clarifications on rules stated in NIA is December 28th, the notice said. Auctions begin on January 23rd

7. The NIA has not given any information on new merger & acquisition norms which have already been approved by an Empowered Group of Ministers. This could hinder bidders from getting a clear picture on how much spectrum to bid for in which service area

8. No clarity has likewise been offered on norms for either spectrum trading or spectrum sharingthough both activities are now allowed in principle.

9. The maximum amount of 1800 mhz spectrum available in the auctions is in Tamil Nadu circle at 30.2 mhz followed by Kerala and Orissa which offer 28 mhz each.

10. New companies will have to bid for minimum of 25 blocks of airwaves or 5 mhz in 1800 mhz band. Existing players will be required to bid a minimum of three blocks of airwaves in this band. A company will be treated as new entrant in a service area where it does not hold spectrum. Bharti Airtel, Vodafone and Loop Mobile will also be new entrants in 900 Mhz band in some circles.