Finance ministry wants 3G policy put on hold

NEW DELHI/KOLKATA: In a move that may delay the rollout of 3G services in the country, the finance ministry has asked the Department of Telecom (DoT) to put the 3G policy on hold as it was not consulted on the financial implications of the guidelines. The finance ministry has said DoT has contravened an earlier Cabinet decision, which had stipulated that spectrum pricing would be mutually finalised between both the ministries.

Earlier this month, communications minister A Raja lifted the curtain on the 3G policy, which would enable telecom operators to offer high-end services such as video conferencing, faster downloads of music and movies, interactive gaming and high-speed internet. Mr Raja had announced a reserve price of Rs 2,020 crore for auction of pan-India 3G spectrum for GSM operators and about Rs 505 crore for pan-India WiMAX radio frequencies. As per the current schedule, the auction for 3G spectrum will be held within the next three months, spectrum allotted by the year-end and services launched by mid-2009.

The finance ministry has taken the line that DoT has breached protocol as it arrived at these figures (the reserve prices) without consulting it. Finance secretary D Subbarao, in a strongly-worded letter to the communications ministry on Wednesday, said: “The guidelines issued on August 1, 2008 by the Department of Telecommunications (DoT) on auction and allotment of spectrum of 3G and broadband wireless access (BWA, also known as WiMAX) telecom services, contain clauses with financial implications such as determination of the spectrum acquisition price and reserve price for auction, fixation of spectrum usage charges and penalties for hoarding of spectrum. However, the ministry of finance (MoF) has not been consulted in the matter.”

In a bid to drive home the seriousness of the issue, the finance secretary has told DoT that as per the Transaction of Business (TOB) Rules, it is mandatory to have consultations with the finance ministry “as a pre-condition to all issues which have financial implications”.

Mr Subbarao also added that the Union Cabinet, in its meeting on October 31, 2007 had decided that spectrum would be decided mutually between the DoT and the finance ministry. “The issuance of (3G) guidelines without any consultation with the finance ministry, either within the forum of Telecom Commission or outside, is inappropriate and contrary to the Cabinet decision,” the finance secretary’s communication read.

This marks the second instance of differences having cropped up between different government wings over the recently-announced 3G spectrum policy. As reported first by ET, telecom regulator Trai has asked the DoT to review the 3G policy while adding that the government’s decision to allot 3G spectrum to CDMA players without an auction was against the principles of equality.

This is because the policy gives CDMA operators one slot in the 800 MHz band — the most efficient and cost-effective frequency for CDMA players — to offer high-end services, with the rider that the largest operator in a circle would walk away with it.

Source : Economics Times