Will the 3G launch ever happen in India? One has to keep fingers crossed. The Finance Ministry has sent a note to the Department of Telecommunications (DoT) to double the reserve price for 3G to $826 million (Rs 4040 crore) and $413 million (Rs 2020 crore) for BWA spectrum in the country.

The present base price for 3G spectrum is $413 million (Rs 2020crore) and $206 million (Rs 1010) for BWA.

The Ministry of Finance asked DoT to amend the clauses and seek approval from the cabinet panel. The cabinet committee is yet to respond to DoT’s 3G and WiMax policy decisions.

Potential bidders will definitely not find the changes acceptable. The greatest fear now is the auction can also be further delayed. The scheduled date for auction on January 30 has already been postponed two weeks which was earlier scheduled to take place on January 14.

There is a certain amount of confusion over the entire matter. It was earlier said that Finance Ministry was involved in taking the final call on the reserve price. But, with this latest move from the finance ministry, things look confusing as it contradicts its earlier statement.

The Government of India’s high hopes of generating large sums from the 3G and BWA spectrum auction seems to have experienced a setback with the global recession making foreign telcos think twice before throwing cash the Government's way. The level of participation of foreign players in 3G bids has not been up to expectation so far. A section of telecom constituencies believe that note to double the reserve price could just be an attempt to throw an impression that 3G and BWA spectrum auction can still generate revenues irrespective of whatever the situation is.

Or, is it just an attempt to justify the delay and reach a time where 3G will bring better fortunes for the Government?

Gain for BSNL and MTNL
The state telcos, Mahanagar Telecom Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL) are in a better position as 3G spectrum has been assured to these telcos.

MTNL has recently launched its 3G services with the brand name ‘3G Jadoo’ in Delhi which is in testing phase is expected to go for commercial launch by the end of this month. Mumbai will get 3G after Delhi. BSNL will launch it in Chennai by March and in Bangalore by April.

So, if the note send by the Finance Ministry leads to further delay in the launch and auction, will that affect the private telcos as unlike state telcos, they haven’t been assured of spectrum? 

BSNL and MTNL will benefit from any delay, which might make bidding even less attractive to others. X