On 25^th February DoT published its Notice Inviting Application for 3 G Spectrum and BWA Auction (click here).  While going through the Notice it can be observered that DoT deliberately sought to ignore few issues which have been the part of public discussion regarding allocation of 3 G spectrum.  After being forced by the PMO (Economic Times Click here), an attitude of hurriedness in conducting the auction can be observered through the manner in which the Notice has been drafted, also the existing framework  fails to address the purpose of allocating spectrum through auction. Since the auction might remain a desirable and transparent method of allocation, but the immediate steps after the allocation tends to raise questions regarding bias towards the incumbent licensee.

Though DoT has assured to introduce certain changes in its policies based on TRAI‘s recommendations on ““Overall Spectrum Management and review of license terms and conditions” ( at present TRAI is carrying out a consultation with the stakeholders on this). But despite such assurances DoT through its notice has failed to address the issue adding to the woes of new entrants. Due to the backhaul in granting licenses and start-up spectrum there is already a Delhi HC decision directing DoT to award UAS licenses to the applicants who have applied for licenses before October, 1, 2007 who have not yet been awarded licenses, prior to any potential new entrants. Though DoT is contesting this decision at Sc but despite any such assurances it would expose the new entrants to the risk of running losses. As it will not be feasible for any successful bidder who is also a newly entrant to acquire UASL within specific time period and a condition of compulsory requirement of UASL licenses in the Notice.

Despite such a serious implication on the subsequent allocation of 3 G spectrum due to mismanagement and backhaul of spectrum allocation during 2 G allocation, DoT failed to impose an obligation upon itself to allocate 3 G spectrum by the proposed deadline September 20, 2010.  As reported earlier there was a clause which obliged the Government will refund the bid amount in case the auctioned spectrum was not allocated by the deadline but due to the uncertainty in availability of spectrum from Defense forces and subsequent litigation seeking compensation (Click here) . DoT removed this clause from NIA based on Law Ministry’s recommendation. But removal of this clause might hamper the investor sentiments and many of foreign have decided to opt out owing to this uncertainty.

In a previous post about  TDSAT’s decision where the approach adopted by DoT and TRAI in allocating ISPs 2.5 GHz to 2.69 GHz bandwidth exclusively for ISP usage has been  critiqued as the it differs from the ITU prescribed bandwidth. In NIA similar approach has been adopted where clause 2.4 of the notice “ The Successful Bidder shall provide details of the technology proposed to be deployed for operation of its services prior to launch of commercial operations. The technology should be based on standards approved by ITU/ TEC or any other International Standards Organization/ Body/ Industry”. But despite mentioning the ITU prescribed standard the DoT has ignored a the ITU’s standard, as the prescribe bandwidth of auction ranges from 2.3GHz band.

Also the DoT website has provided a separate page where DoT has tried to address important queries raised by the stakeholders during various discussions with DoT ( Click here). While going through those queries and its answers it seemed that government is biased towards state owned MTNL/BSNL i.e.

In query number 32 a query was raised that worldwide, spectrum in 2.5GHz band has gained larger acceptance and has more evolved ecosystem compared with 2.3Ghz, though both are well suited for BWA services. But given that current auction is limited to 2.3Ghz only, it is unlikely that a fair value would be derived for 2.5 GHz in this auction. What rationale is being used for payment of BWA spectrum by MTNL and BSNL,who happen to already own spectrum in 2.5Ghz by comparing with what may be derived for spectrum in 2.3 GHz? Ideally they should pay more for spectrum obtained in 2.5GHz!

But given that current auction is limited to 2.3 GHz only, it is unlikely that a fair value would be derived for 2.5 GHz in this auction. What rationale is being used for payment of BWA spectrum by MTNL and BSNL, who happen to already own spectrum in 2.5Ghz by comparing with what may be derived for spectrum in 2.3 GHz? Ideally they should pay more for spectrum obtained in 2.5GHz!

The Government instead justifying its decision or explaining rationale behind such decision, described the determination price issue as its sole discretion. Now the purpose of allocation is meant for discriminating between private and Public sector companies and even if there are certain kind of benefits accrued to BSNL/MTNL in pursuance of their objective of serving rural population there should be certain justification associated with it.

In another query, number 244 DoT was asked to confirm that the amount paid by BSNL/MTNL for 3G & BWA spectrum will not be funded from the USO fund? In reply to this DoT emphasized that this decision is within the purview of BSNL/MTNL. Now USO ( Universal Service Obligation) is a fund dedicated to devlop infrastructure for rural communications therefore it is unjustified on the part of BSNL/MTNL to use those for profit purpose. The DoT cannot determine the mode of funding for BSNL/MTNLS but at least it has a role to play and dissuade BSNL/MTNL from any such attempts.