India announces 3G mobile auction

Allows foreign mobile operators to bid

NEW DELHI -- The world’s second largest mobile market can look forward to 3G mobile services, following the government’s announcement Friday to hold an international auction for telecom players.

The official announcement was made by Communications and Information Technology Minister Andimuthu Raja in New Delhi. India will be carved into 22 territories, and telecom players will bid for 3G and Broadband Wireless Access services in these areas in an auction expected to be held in October. That auction is estimated to net the government up to $10 billion, with the minimum price for a pan-India license set at $472 million. Five telecom players per circle will be allowed but Raja said that number “can go up to 10 when more spectrum becomes available.”

However, given the current shortage of spectrum in two prime markets, New Delhi and Mumbai, only two private operators, alongside a state-owned telecom firm, would get licenses for these cities where the minimum price is set at $40 million per city.

While some observers are concerned at the high bid prices, overall, the 3G policy has been welcomed, given it was embroiled in long running debates between the government and industry, delaying the launch of services. New Delhi-based industry body Federation of Indian Chambers of Commerce and Industry (FICCI) called the policy “a positive step” and will “provide help for building a green-field, pan-India state-of-the-art communications infrastructure,” it said in a statement.