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    Published : 4th Aug, 2008 New Delhi

3G e-auction a first for India on this scale

Recent e-auctions for telecom spectrum in the US, the UK and Germany have been mostly successful
R. Jai Krishna  / New Delhi Aug 4, 2008

New Delhi: The electronic auction, a method to be used later this year to farm out rights to use spectrum, or airwaves, for third generation (3G) mobile phone services, has only been previously used in India to bid for spices, tea or coal.

But that does not deter Siddhartha Behura, the top bureaucrat here in charge of spectrum sale, one bit. “E-auction brings in greater transparency, less cartelization, and ‘on-the-spot’ bidding will force the competitors to match the highest price,” said Behura, secretary in the government’s department of telecommunications, or DoT.

An e-auction, he said, would take a few hours instead of the several months if “the bidding is circle-wise” in paper. DoT commonly calls telecom licensed areas “circles”. On Friday, DoT announced its e-auction plans as part of a larger set of guidelines for 3G services, which enable high data speeds and promise fast video and audio downloads. The much-anticipated auction, minister of state for communications Jyotiraditya Scindia said then, is expected to bring the government Rs30,000-40,000 crore.

An inter-ministerial committee, with members from the Telecom Commission (DoT’s apex body) and the finance and information technology ministries, will first set rules on who can bid, request interest in the bidding, and shortlist eligible firms in a technical evaluation. Then, the e-auction will be held, said Behura.

Recent e-auctions for telecom spectrum in the US, the UK and Germany have been mostly successful. In those cases, Mahesh Uppal, director of Com First Consulting Pvt. Ltd in New Delhi, noted only “occasional defaults by telecom firms. But (such instances) happened during the dot-com bubble; it was held at a time when the markets were ill-understood.” He predicted the chance of “extreme bids” and licence commitment defaults at near-zero.

An industry expert said e-auctions offer better transparency, price realization on tangible and intangible resources and time-bound accuracy. “A ‘virtual auction room’ is created and bidders are allowed to enter using a user name and password, and can place bids from any geographical location,” said Jaganni Vasan, managing director of e-auction firm MatexNet Pvt. Ltd. “The seller and bidders will be able to see the price movements, but will not know which firm or individual have placed the bid till the process is completed and a final report is generated and sent to the seller.”

New Delhi’s exposure to e-auctions in the past includes Coal India Ltd’s June announcement to sell some 15 million tonnes of coal through one such auction. The Spices Board of India has been following e-auctions since 2004 and the Tea Board has been doing so for the past one year.