To ensure competition in the third generation mobile segment, the Department of Telecom is likely to impose a ban on mergers between operators who win the auction to be held later this year. Though the number of players to allotted spectrum is yet to be determined, discussions indicate that there could be between two and four operators offering 3G services.
Top DoT sources said that the Government does not want an oligopolistic market especially if there are only two or three players in the fray. In order to ensure competition amongst 3G operators, the notice inviting application (NIA) will prohibit merger of successful bidders in the current auction, stated an internal DoT note.
Meanwhile, the Empowered Group of Ministers, headed by the Finance Minister, Mr Pranab Mukherjee, has suggested a re-look at the memorandum of understanding between the DoT and the Ministry of Defence since this agreement will be the basis of deciding the number of slots to be auctioned.
While the Finance Ministry wants at least four slots to be auctioned in each circle, the Defence forces insist that they can release spectrum that will be enough only for three players. The DoT, on the other hand, has suggested that auction may be held only for two slots because there is only that much air wave immediately available.
On other issues such as allocating 2G spectrum to foreign and new players who win the 3G auction, the DoT is likely to give its nod subject to availability of air waves. However, the existing mobile operators who are already awaiting 2G spectrum will be given priority for allocation. Though some of the players have sought more clarity on the 2G spectrum allocation rules before the 3G auction, DoT officials said that the two are not being linked.
The DoT is also likely to extend the term period of any universal access licence holder who wins 3G auctions for another 20 years without any additional fee. Some of the existing GSM players including Bharti Airtel and Vodafone have licences that expire in the next few years. If they win the 3G auction then they won't have to apply for an extension anytime soon.
The NIA, which is being finalised, is also expected to clarify that while new players bidding for 3G need to have prior experience, there is no such requirement for those in fray for the broadband wireless access spectrum.