Indian Telecom Spectrum Auction

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In India, the Department of Telecommunications (DoT) conducts auctions of licenses for electromagnetic spectrum. India was among the early adopters of spectrum auctions beginning auctions in 1994.

Overview[edit]

A telecom company that wishes to offer services in any of the 22 telecom circles in India must purchase a Unified Access Services (UAS) license to operate that circle. Licences are awarded by auctions. The UAS, introduced in November 2003, is valid for a period of 20 years, which can be extended by an additional 10 years once per licence per circle.[1] Initially, a mobile network operator that was awarded a licence to operate in any of the 22 telecom circles in India was allocated frequencies in that circle for a fixed time period. After the expiry of the licence, the company would have to bid to renew the licence. A new telecom policy announced by the government in 2011, delinked spectrum from licences. As a result, when an operator renews its licence it must also pay separately for spectrum.[2]

The first telecom spectrum auction in India was held in 1994. Auctions were held again in 1997, 2000, and 2001. Spectrum in the 900MHz band was auctioned in all these years except 2001, while 1800 MHz band spectrum was auctioned for the first time in 2001.Following the 2001 auction, the government abandoned the practice of auctions in favour of an administrative allocation model. Under this model, the government would select companies that it deemed were best equipped to develop India's telecom infrastructure.[3] The final allocation of 900 MHz took place in 2004, through the new model. This policy resulted in spectrum being allocated at far lower prices than had been done through auctions. For example, Reliance had paid 12.25 crore and 58.49 crore in 1995 for 4.4MHz spectrum in West Bengal and Orissa respectively. In 2004, Airtel was allocated the same amount of spectrum in the same circles for 1 crore and 4.4 crore respectively.[4]

Further information: 2G spectrum scam

In 2008, 122 new 2G UAS licenses were granted to telecom companies on a first-come, first-served basis at the 2001 price. According to the Central Bureau of Investigation (CBI) charge sheet, several laws were violated and bribes paid to favour certain firms in granting 2G spectrum licenses. According to a CAG audit, licenses were granted to ineligible corporations, those with no experience in the telecom sector (such as Unitech and Swan Telecom)[5] and those who had concealed relevant information.[6][7] The Indian National Congress coalition government undercharged mobile telephone companies for frequency allocation licenses, which they then used to create 2G spectrum subscriptions for cell phones. The difference between the money collected and that mandated to be collected was estimated by the Comptroller and Auditor General of India at 1.76 trillion (US$26 billion), based on 2010 3G and BWA spectrum-auction prices.[8] In a chargesheet filed on 2 April 2011 by the CBI, the loss was pegged at 309,845.5 million (US$4.6 billion).[9]

On 2 February 2012, the Supreme Court of India ruled on a public interest litigation (PIL) related to the 2G spectrum scam. The court declared the allotment of spectrum "unconstitutional and arbitrary", cancelling the 122 licenses issued in 2008 under A. Raja (Minister of Communications & IT from 2007 to 2009), the primary official accused.[10] The court found that Raja "wanted to favour some companies at the cost of the public exchequer" and "virtually gifted away important national asset[s]."[11] On 3 August 2012, after a Supreme Court directive, the Government of India revised the base price for 5-MHz 2G spectrum auctions to 140 billion (US$2.1 billion), raising its value to about 28 billion (US$420 million) per MHz (near the Comptroller and Auditor General estimate of 33.5 billion (US$500 million) per MHz).[12][13]

1994 auction[edit]

The first auction was held in 1994. The government divided the country into 23 telecom circles and awarded licences and spectrum to two operators per circle. In the four metro circles - Chennai, Delhi, Kolkata and Mumbai - the DoT fixed several prerequisites for potential bidders to meet in order to be eligible for the auction. The criteria included financial resources, reliability, and investment in research, as well as specific details such as rate of network rollout, pricing, quality, and competitiveness.[14]

1995 auction[edit]

The licences and spectrum for the remaining 19 telecom circles was auctioned and allocated in 1995. In these circles, the government required that all potential bidders must have foreign partner in order to be eligible. The government proceeded on the assumption that no Indian company, at the time, had the financial resources and technical knowledge to provide large scale mobile services.[14][15]

Two blocks of 4.4MHz from the 900MHz band for GSM-based mobile services were auctioned in the 19 non-metro circles. However, the process exposed unforeseen problems with the design and rules of the auction. For instance, Koshika Telecom (operating under the brand name Usha Fone) was awarded multiple licences even though the licence fee was $15 billion while Koshika only had an annual turnover of $60 million. Concerns were also raised about the possibility of a monopoly if a single company secured multiple licences. In order to address this concern, the auction rules were altered to prohibit a single company from operating in more than 3 circles. The auction for the 900 Mhz band was held again under the new rules.[14]

1997 and 2000 auctions[edit]

Spectrum auctions were held again in 1997 and 2000. In 1997, state-owned MTNL was allocated 4.4MHz of 900 MHz band spectrum to commence GSM services. Another state-owned operator BSNL was awarded spectrum in 2000.[14]

2001 auction[edit]

The 2001 auction was the first time spectrum in a band other than 900 MHz was auctioned in India. The government auctioned spectrum in the 1800 MHz band using a three-stage auction process.[4]

2010 Spectrum Auction[edit]

In 2010, 3G and 4G telecom spectrum were auctioned in a highly competitive bidding. The winners were awarded spectrum in September, and Tata Docomo was the first private operator to launch 3G services in India.[16] The Government earned 677 billion (equivalent to 1.1 trillion or US$16 billion in 2016) from the 3G spectrum auction and the broadband wireless spectrum auction generated a revenue of 385 billion (equivalent to 600 billion or US$9.0 billion in 2016) for a total revenue of 1,062 billion (equivalent to 1.7 trillion or US$25 billion in 2016) from both auctions.

Participants[edit]

The private companies which participated in the auction were:

State-owned telecom companies BSNL and MTNL were also awarded spectrum, although they did not participate in the auction.[17] BSNL paid the Indian government 101.87 billion (equivalent to 160 billion or US$2.4 billion in 2016) for spectrum in 20 circles and MTNL got spectrum for 3G services in 2 circles, Delhi and Mumbai.[18]

Results[edit]

The auction took place over 34 days and consisted of 183 rounds of bidding. The most expensive telecom circle was Delhi at a price of 33169 million per operator. The five most expensive circles were Delhi, Mumbai, Karnataka, Tamil Nadu and Andhra Pradesh. They accounted for 65.56% of the total bids.[18][19]

Circle Vodafone Bharti Airtel Reliance Tata DoCoMo Idea Aircel S Tel BSNL MTNL Total
Andhra Pradesh N YesY N N YesY YesY N YesY N 4
Assam N YesY YesY N N YesY N YesY N 4
Bihar N YesY YesY N N YesY YesY YesY N 5
Delhi YesY YesY YesY N N N N N YesY 4
Gujarat YesY N N YesY YesY N N YesY N 4
Haryana YesY N N YesY YesY N N YesY N 4
Himachal Pradesh N YesY YesY N YesY N YesY YesY N 5
Jammu & Kashmir N YesY YesY N YesY YesY N YesY N 5
Karnataka N YesY N YesY N YesY N YesY N 4
Kerala N N N YesY YesY YesY N YesY N 4
Kolkata YesY N YesY N N YesY N YesY N 4
Madhya Pradesh N N YesY YesY YesY N N YesY N 4
Maharashtra & Goa YesY N N YesY YesY N N YesY N 4
Mumbai YesY YesY YesY N N N N N YesY 4
North East N YesY YesY N N YesY N YesY N 4
Orissa N N YesY N N YesY YesY YesY N 4
Punjab N N YesY YesY YesY YesY N YesY N 5
Rajasthan N YesY YesY YesY N N N YesY N 4
Tamil Nadu YesY YesY N N N YesY N YesY N 4
Uttar Pradesh (East) YesY N N N YesY YesY N YesY N 4
Uttar Pradesh (West) N YesY N YesY YesY N N YesY N 4
West Bengal YesY YesY YesY N N YesY N YesY N 5
Total (22) 9 13 13 9 11 13 3 20 2 93

2012 Spectrum Auction[edit]

In 2012, the DoT auctioned 2G spectrum in both GSM and CDMA bands. The government put on sale 271.25 MHz of spectrum.[20] The 1800 MHz band and 800 MHz band are currently being used for GSM and CDMA services respectively. Eleven blocks having 1.25 MHz each in the 1800 MHz frequency band were auctioned, except in Mumbai and Delhi where only eight blocks were available. Three of the eleven blocks, in each circle, were reserved for new telecom players or operators whose licences were cancelled by the Supreme Court on 2 February 2012, following the 2G spectrum scam. New players and companies affected by the Supreme Court verdict will have to win at least 4 blocks in each circle to start or continue their operations in that circle. Existing players whose licences were not affected by the Supreme Court verdict can bid for only 2 blocks in each circle. This applies to all circles of Airtel and Vodafone, and in some circles for Idea.[21]

Three blocks of 1.25 MHz frequency each in the 800 MHz band were also available for auction.[22] Initially, only Videocon Telecommunications Limited and Tata Teleservices (Tata DoCoMo CDMA) had applied to participate in the auction for spectrum in 800 MHz band (CDMA). Both companies withdrew their applications before 5 November, the last date for withdrawal of applications. Videocon was announced as a pre-qualifier in the bidding process by the DoT on 29 October, but withdrew its application on 2 November.[23] Tata Teleservices was also announced as a pre-qualifier on 29 October, but withdrew its bid later. The withdrawals meant that there were no bidders left and the CDMA spectrum auction was subsequently cancelled.[24]

The final list of bidders was announced on 6 November. This was followed by a mock auction on 7 and 8 November and the e-auction of 1,800 MHz band began on 12 November.[25]

Participants[edit]

The companies which participated in the auction for spectrum in 1800 MHz band (GSM) were:

Results[edit]

The auction took place over 2 days (starting 12 November and ending 14 November) and consisted of 14 rounds. The government received bids worth a total of 94.07 billion (US$1.4 billion), far lower than its target of 280 billion. No one bid on the India-wide spectrum, which had a reserve price of Rs 140 billion.[26] Bids were tendered on 102 of the 140 blocks being offered. Delhi, Mumbai, Karnataka and Rajasthan circles did not receive any bids. Minister of Communications and Information Technology Kapil Sibal said of the unsold spectrum, "Of course there will be an auction. There is no doubt about that. What procedure we follow for that auction is something that we will decide in another few weeks."[27][28]

Circle / Operator Vodafone Airtel Uninor Idea Videocon
Assam YesY YesY N YesY N
Andhra Pradesh N N YesY N N
Bihar YesY N YesY YesY YesY
Delhi No bid
Gujarat N N YesY N YesY
Haryana YesY N N N YesY
Himachal Pradesh YesY N N N N
Jammu & Kashmir YesY N N YesY N
Karnataka No bid
Kerala YesY N N N N
Kolkata N N N YesY N
Madhya Pradesh YesY N N N YesY
Maharashtra & Goa YesY N YesY N N
Mumbai No bid
Punjab YesY N N N N
North East YesY N N YesY N
Orissa YesY N N YesY N
Rajasthan No bid
Tamil Nadu N N N YesY N
Uttar Pradesh (East) YesY N YesY N YesY
Uttar Pradesh (West) YesY N YesY N YesY
West Bengal YesY N N YesY N
No. of Circles 14 1 6 8 6
Total Amount ( crores) 1,127.94 8.67 4,018 2,031 2,221

2013 Spectrum Auction[edit]

Results of the 2013 spectrum auction
Circle Price per block
Delhi 4,505 million (US$67 million)
Gujarat 1,462 million (US$22 million)
Karnataka 2,146 million (US$32 million)
Kerala 425 million (US$6.3 million)
Kolkata 739 million (US$11 million)
Maharashtra & Goa No bid
Mumbai No bid
Tamil Nadu 1,989.6 million (US$30 million)
Uttar Pradesh (East) No bid
Uttar Pradesh (West) 698 million (US$10 million)
West Bengal 168 million (US$2.5 million)

In the 2013 spectrum auction, the Government planned to auction 50 MHz of airwaves in the 1800 MHz band and 76.25 MHz of spectrum in the 800 MHz band.[29] The Government put CDMA spectrum worth 64 billion (US$950 million) up for auction[30][31] and fixed the price of 900 MHz, two times higher than 1800 MHz.[32] DoT issued notice inviting applications for spectrum auction on 30 January 2013, and the last date for submitting an application was 25 February 2013.[33] The auction for all three bands was planned to begin on 11 March 2013. However, no bidders expressed interest in the 1800 MHz and 900 MHz bands and as a result, the auction for those bands was postponed indefinitely. The auction for spectrum in 800 MHz band proceeded as planned on 11 March.[34]

No companies tendered bids for spectrum in 1800 MHz and 900 MHz bands, and MTS India was the only bidder in the 800 MHz band.[35] Vodafone Group's CEO Vittorio Colao stated, "The problem is that in India there is a misperception of what is the value of spectrum. The reserve prices are set too high. India has very low prices and very low revenues so we cannot afford to pay high price for spectrum. We have told them [Indian government] a number of times that the order of magnitude that they have in mind just does not make sense".[32]

Participants[edit]

The sole bidder in the auction was Sistema Shyam TeleServices Limited (SSTL), under the brand name MTS, who bid for spectrum in the 800 MHz band.

Results[edit]

The auction was held on 11 March and lasted little over 4 hours.[36] Auction rounds were scheduled to begin between 0900 hrs and 1900 hrs IST.[30] The table shows the prices per block for each of the 11 telecom circles in which spectrum was put up for auction. The participant in the auction, MTS, won spectrum in 8 circles and did not bid for 3 circles. No spectrum was put up for auction in the remaining circles of India.[37]

2014 Spectrum Auction[edit]

In 2014, the Dot auctioned 2G telecom spectrum in the frequency range of 900Mhz and 1800 MHz. The winners were awarded spectrum in February. The Government earned 612 billion (US$9.1 billion) from the spectrum auction. The 1800 MHz spectrum auctioned were cancelled by the Supreme Court, following the 2G spectrum scam. The government put on sale 307.2 MHz of 1800 and 46 MHz of 900 MHz-wide spectrum. The licences are valid for 20 years. Vodafone and Bharti were already using 900 MHz frequency and had to renew before their license expire in November 2014. Reliance Jio, the only company to have all-India 4G license entered into voice service and won in 14 circles in 1800 MHz frequency.[38] Companies also plan to provide 3G and 4G services on the spectrum.[39]

Participants[edit]

The private companies which participated in the auction were:

Results[edit]

The auction took place over 10 days and consisted of 68 rounds of bidding. The most expensive telecom circle in both 900 & 1800 MHz frequencies[40] was Delhi at a price of 7409.6 million and 728 million per operator. Delhi and Mumbai together accounted for 57% of the total bids.[41][42]

900 MHz
Circle / Operator Vodafone Airtel Idea Total
Delhi YesY YesY YesY 3
Kolkata YesY YesY N 2
Mumbai YesY YesY N 2
Total 3 3 1 7
1800 MHz
Circle / Operator Vodafone Airtel Rel Jio Idea Aircel Uninor RCom Tata Total
Andhra Pradesh YesY YesY YesY YesY N YesY N N 5
Assam N N YesY N N YesY N N 2
Bihar N N N N N YesY N N 1
Delhi YesY YesY YesY YesY N N N N 4
Gujarat YesY N YesY YesY N N N N 3
Haryana YesY N N YesY N N N N 2
Himachal Pradesh N YesY N N N N N N 1
Jammu & Kashmir N YesY N N YesY N N N 2
Karnataka YesY YesY YesY YesY N N N N 4
Kerala YesY YesY YesY YesY N N N N 4
Kolkata YesY YesY YesY N N N N N 3
Madhya Pradesh N YesY YesY YesY N N N N 3
Maharashtra & Goa N N YesY YesY N N N N 2
Mumbai YesY YesY YesY YesY N N YesY N 5
North East N YesY YesY YesY YesY N N N 4
Orissa N YesY YesY N N N N N 2
Punjab YesY YesY N YesY N N N N 3
Rajasthan YesY YesY N N YesY N N N 3
Tamil Nadu N YesY YesY N N N N N 2
Uttar Pradesh (East) YesY N N N YesY YesY N N 3
Uttar Pradesh (West) N N N N N YesY N N 1
West Bengal N YesY YesY N YesY N N N 3
Total 11 15 14 11 5 5 1 0 62

2015 spectrum auction[edit]

The 2015 spectrum auction concluded on March 25, after 19 days and 115 rounds of bidding.[43] Spectrum in the 800 MHz, 900 MHz, 1800 MHz and 2100 MHz bands was auctioned. The Government accrued a total of 109,874 crore (US$16 billion)[44] from the auction. Approximately, 11% of the spectrum available for auction remained unsold.[45]

Participants[edit]

The private companies which participated in the auction were:

2016 auction[edit]

The 2016 spectrum will be held beginning 1st October. A total of 2354.55 MHz of spectrum ranging across the 7 bands of 700 MHz, 850 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz will be put up for sale. This is the first auction in India in which 700 MHz band spectrum will be sold.[46]

Bharti Airtel, Vodafone, Idea Cellular, Reliance Communications, Tata Teleservices, Aircel and Reliance Jio have applied to participate in the auction. Telenor is not participating.[47]

References[edit]

  1. ^ "Telecom at a Glance". www.dot.gov.in. Retrieved 9 September 2016. 
  2. ^ "Tech 101: What Is Spectrum, and Why Is It Being Auctioned?". Retrieved 2016-09-12. 
  3. ^ "Tech 101: What Is Spectrum, and Why Is It Being Auctioned?". NDTV. Retrieved 12 September 2016. 
  4. ^ a b "The History of Telecom Spectrum in India: The 1800MHz and 800MHz Auctions". NDTV. Retrieved 12 September 2016. 
  5. ^ "What is 2G scam". NDTV. 
  6. ^ "Here's how CAG report on 2G scam blasts Raja". Rediff. 
  7. ^ "2G Spectrum Scam: Chronology of events". The Economic Times. 2011-05-02. Retrieved 23 July 2013. 
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  12. ^ "Cabinet sets Rs 14,000 cr as reserve price for 2G spectrum". Firstpost. 4 August 2012. Retrieved 8 August 2012. 
  13. ^ "Zero loss R.I.P.". The Hindu. Retrieved 21 August 2012. 
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  17. ^ Lobo, Sharon (26 April 2010). "Impact of 3G auction on MTNL and BSNL". CXOtoday.com. 
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  20. ^ EGoM on 2G spectrum auction to meet tomorrow – Hindustan Times
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  33. ^ "CDMA spectrum auction from March 11". Smetimes.in. 27 February 2013. Retrieved 6 March 2013. 
  34. ^ R. Jai Krishna (26 February 2013). "India Postpones Part of Bandwidth Auction - WSJ.com". Online.wsj.com. Retrieved 6 March 2013. 
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  37. ^ "Sistema Secures CDMA Spectrum In 8 Circles For Rs 3,639 Cr; Closing Down In 3 Circles". MediaNama. Retrieved 5 February 2016. 
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  42. ^ Auction provisional results for 2014
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  47. ^ "Airtel, Voda, Idea, Jio, RCom, TTSL & Aircel apply to bid in largest spectrum auction". 2016-09-14. Retrieved 2016-09-14. 

External links[edit]