Spectacular deals

The revenue from the 3G & BWA (third generation and broadband wireless access) spectrum auctions which concluded on Wednesday has exceeded the most optimistic expectations by bringing in about Rs 80,000 crore to the exchequer. The 3G auction will contribute Rs 67,719 crore and BWA Rs 12,000 crore. The budgetary estimate was only Rs 35,000 crore and therefore the additional revenue will soften the financial position. It is likely that the fiscal deficit estimated at 5.5 per cent may fall below 5 per cent and this will give the government much manoeuvrability with its finances. The bonanza is only one part of the story. The social and economic benefits for the country from graduating to the next level of cellphone use and broadband applications are immense. India is actually late in moving on to that stage. It can change the telecom sector entirely in the world’s fastest growing mobile phone market. The 3G platform will facilitate high-speed internet, TV viewing, content download, data sharing and transfer and many other things. Sectors like health, education, agriculture and business can benefit a lot and the benefits will be real and substantial for the common man too. In that sense it is a step for greater empowerment.

A remarkable feature of the auction was that it was efficient and transparent. The multi-phase bidding process aided price discovery in stages and helped to avoid cartelisation. The contrast with the 2G spectrum sale was marked. While the scandalous sale of spectrum by communications minister A Raja gave away 2G licences for a pittance in 2008 and caused losses of thousands of crores to the exchequer, the returns have been maximised now.

Though the cost of 3G spectrum may appear to be high operators may not be too worried about their investment. 3G spectrum availability will reduce operational costs and wireless internet services can bring in more revenue per user. The demand for 3G services will increase at a fast pace in the coming years and therefore the high price is bound to become viable in future. In any case, the operators stand to gain from the expansion of the market, technological and business innovations. For the consumer, competition between operators is likely to keep the charges affordable. There is a view that high-cost spectrum is not ultimately good for the country, but in the given circumstances that was the best option.

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