New Delhi: With no clarity on availability of third generation (3G) mobile spectrum, the government is considering, among others, restricting the number of private players to just two to avoid a situation where it would need to pay damages to operators.
The government had earlier announced allowing four private players in the 3G telephony space, but if it fails to allot spectrum (airwaves for transmitting data and voice) to a winning bidder then it would end up paying compensation.
Restricting the players to two is one of the options being considered, sources said.
"In case the third block is auctioned and could not be assigned, the successful bidder would seek for compensation of the investments made by them for procurement of equipment and creation of infrastructure," a source said.
According to an internal note of the Department of Telecom (DoT), in case only two blocks are put up for auction there would be no issue, as spectrum for two slots have already been released by the Defence Ministry.
An Empowered Group of Ministers, headed by the Finance Minister, had decided last month to allow four private players in the 3G space, besides BSNL/MTNL. The government expects to mop up Rs 25,000 crore from sale of 3G spectrum.
The problem is only in case when more than two blocks are auctioned and the airwaves are not vacated/released by the Defence. "There is uncertainty over the availability of spectrum...," the DoT said.
In case of two telecom PSUs (BSNL and MTNL), who have been assigned 3G spectrum, any change in the frequency band would be improper at this stage, DoT sources said.
Sources said that the DoT may seek another meeting of the EGoM and may propose three blocks to be auctioned with identification of frequencies in consultation with the Ministry of Defence.
The DoT is scheduled to issue Notice Inviting Applications (NIA) from the potential participants on January 10 but uncertainty over the availability of spectrum could further delay the process.
As per the schedule, the auction is scheduled to start from February 12 and completed by March 5, 2010.
On the issue of payment to be made by the successful bidders, sources said that the DoT may ask for full payment by March so that it could be accounted in the current financial year.