The tussle between the Department of Telecommunications (DoT) and the finance ministry on pricing of the third generation (3G) spectrum may result in both the ministries taking a middle path.
According to the 3G policy released by the DoT prior to the elections, the reserve price for pan-India 3G spectrum was set at Rs 2,020 crore and a maximum of five players were to be accommodated per circle. However, the finance ministry had objected to both the price of spectrum and number of players to be accommodated.
The finance ministry, at that time, wanted DoT to double the reserve price for 3G auction and accommodate 10 players in each circle. The proposals of finance ministry were aimed at raising the revenue from the auction. However, the issue could not be resolved then and the auction was postponed.
The DoT is now understood to be agreeing for a middle approach and is likely to convey to the Union Cabinet that it was ready to hike the reserve price of spectrum to Rs 3,540 crore and auction up to eight slots of 3G spectrum in each circle. This stance of DoT would be kind of a compromise position between its earlier stand and that of finance ministry and the Cabinet may therefore approve the same.
The finance ministry may not also push the issue further as some of the concerns raised by the finance ministry have been addressed by changing economic situation. The view of the finance ministry early in the year was that due to economic slowdown, enough number of players may not be available in the auction, resulting in poor pricing of the scarce spectrum. However, the economic recovery witnessed over last quarter or so and the robust performance of the telecom industry despite slowdown have to a large extent addressed concerns of finance ministry.