According to the Economic Times, the Department of Telecom (DoT) will opt for a ‘controlled ascending’ auction rather than a direct auction for allocating 3G spectrum. The method was first developed for the US Federal Communications Commission’s (FCC) spectrum auctions in 1994 and has been used for all subsequent spectrum auctions by the FCC.
According to the DoT, a straight auction could lead to a situation similar to that in the mid-1990s, when many players could not cover their high bids. According to unnamed sources, the 3G spectrum auction will be conducted individually for each of the country’s 23 telecom circles. The DoT committee is studying TRAI’s recommendations that the base price for the auction of 3G spectrum be INR1.6 billion (USD40 million) for Delhi, Mumbai and other Category A circles; INR800 million (USD20 million) for Chennai, Kolkata and Category B circles; and INR300 million (USD7.5 million) for Category C circles. The committee had also recommended that in the first phase, only two GSM players be granted spectrum in the 2100MHz space, and the third slot be reserved for one or other of the state-owned players, BSNL and MTNL.