AG may refer foreign role in 3G to GoM

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The ongoing controversy over the entry of foreign communication majors and new domestic players into India’s telecom market via the 3G spectrum auction route has taken a new twist. ET has learnt that the Attorney General of India, to whom DoT had referred the matter, favours setting up of a Group of Ministers (GoM) to resolve this issue. However, ET could not verify this with the Attorney General’s office.

If the communications ministry were to refer this issue to a GoM, it would be the second time that a telecom issue has been referred to GoM under the UPA regime.

In September 2005, following directions from prime minister Manmohan Singh, a GoM headed by the external affairs minister Pranab Mukherjee was constituted to look into the issue of additional frequency from defence services. So far, this GoM has met only once.

The DoT and communications minister A Raja are keen to open the 3G auction process to all players against the wishes of sector regulator Trai who wants only existing players to participate. Confronted with stiff opposition from Trai, the DoT had referred the issue to the AG. This was to avoid legal complications, as the department had wanted the AG to clarify whether foreign companies which do not hold telecom licenses in India can be allowed to bid for 3G.

The finance ministry too has supported the DoT and wants new foreign companies to participate in the 3G auctions. Despite DoT asking Trai to reconsider its stand against allowing international majors, the regulator has refused to budge.

Going a step further, Trai chairman Nripendra Misra has written to the finance ministry to drop its demand for a global auction. Mr Raja had met Mr Chidambaram on this issue last week and said that there was a ‘broad consensus between both ministries on 3G’, implying that foreign players would be allowed.

AG may refer foreign role in 3G to GoM - Telecom-News By Industry-News-The Economic Times

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It is now a group of ministers which will take a call on whether foreign and domestic Companies can participate in the auction for 3G spectrum. The attorney general of India, who was asked by the government to sort out the issue, has made this recommendation. This means the roll-out of 3G services may not happen during the UPA government’s remaining term. Bids can only be invited after the ministers’ group takes a decision. Given the timeline usually required by Companies to roll out the services, which is a minimum of seven to eight months, 3G is unlikely to happen in the immediate future.
Minister for communication and IT A Raja had recently said the roll-out would be completed by January 2009.
The latest twist in the 3G auction business follows the difference between the department of telecommunication and the Telecom Regulatory Authority of India. The department, supported by the finance ministry, favours the inclusion of new players in the auction, but the regulator wants no new participants in order to avoid complications. The DoT had asked the Attorney General to decide whether foreign and new domestic players be allowed to participate in the 3G auction.
As reported by FE earlier, there were technical constraints in allowing new players to participate in the auction of the 3G services. Allowing new foreign players, for instance, would entail granting of a unified access service licence (UASL) to them for 3G services. If the licence is provided, the government will find it impossible to stop them from competing with the existing 2G service providers in the country, except through an amendment of the licence terms, which could be challenged in a court.
The DoT and the finance ministry had felt that more players be allowed as that would generate more revenue for the government for a resource so scarce.
But Trai had been of the view that, since the existing Companies already had the requisite infrastructure in place, there were enough players to bid competitively for the scarce resource. It also felt that allowing new players would needlessly delay the roll-out of 3G.

3G roll-out set to hit roadblock