Wrong auction format drove 3G spectrum bid high: Sunil Mittal

Mr Mittal has already said that 3G services will not come cheap, especially for metro cities like Delhi and Mumbai, where the 3G spectrum bid was the highest at Rs3,316.93 crore and Rs3,247 crore respectively

With no operator getting a pan-India footprint for third generation (3G) because of high bid for spectrum, telecom czar Sunil Mittal today slammed the auction design, saying it created an artificial scarcity, reports PTI.

The government has earned over Rs67,700 crore from the sale of 3G spectrum with pan-India bid touching Rs16,750 crore. Bharti paid Rs12.295.46 crore, the most among operators, for 3G spectrum in 13 circles, including Delhi and Mumbai.

The pan-India reserve price for 3G spectrum was Rs3,500 crore.

To a question on operators initially welcoming the auction process, but later opposing it after bid prices touched sky high, Mr Mittal said "we welcomed the auction process for giving spectrum out. The auction design we never welcomed.

"The auction design, given that the auction will close when all 22 circles close, to my mind lends itself to mischief by some of the non-serious players," he said.

Global consultant NM Rothschild was the lead auctioneer, contracted by the Department of Telecom (DoT).

After the end of the 34-day long auction process for 3G spectrum, Mr Bharti had said "we would like to point out that the auction format and severe spectrum shortage, along with ensuing policy uncertainty, drove the prices beyond reasonable levels.

The government had estimated Rs35,000 crore revenues from the sale of 3G and Broadband Wireless Access (BWA) spectrum but it got over Rs1,06,262 crore, an amount that would bring down the fiscal deficit of the Centre by about one percentage point.

Mr Mittal has already said that 3G services will not come cheap, especially for the subscribers in the metro cities like Delhi and Mumbai, where the 3G spectrum bid was the highest at Rs3,316.93 crore and Rs3,247 crore respectively against the reserve price of Rs420 crore each.

As per the auction format, the bidding remained open till the demand and supply became equal in all the circles.

This created a situation of an artificial scarcity and drove the prices beyond reasonable levels, Mr Mittal said, adding this would determine the tariffs for 3G mobile services offering high-speed broadband.

Similarly in case of BWA spectrum auction the all-India bid touched Rs12,847.77 crore vis-à-vis reserve prices of only Rs1,750 crore.

In the BWA auction, only Infotel Broadband, which was later acquired by Mukesh Ambani-led Reliance Industries (RIL), bagged the pan-India spectrum while other leading players like Airtel could manage to get the radio airwaves only in four circles.

In fact Anil Ambani group firm Reliance Communications (RCom) and Vodafone exited from the auction citing high bid prices.

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MasterCard: The price of heroism

One has to admit that for a change, our cricketers have been cast realistically in this campaign

There’s one thing about Indian cricketers. They are almost always cast mindlessly in advertisements. It’s like the marketing director decides he wants Dhoni to plug for his brand, and then asks the creative director to work out some sort of a storyboard. Once the celebrity is bagged, the idea itself takes a backseat. The fit between the product and the player is never really thought through carefully. Apart from Birla Sun Life, whose commercials featured Virender Sehwag and Yuvraj Singh worrying about their future (in fact, the ads proved prophetic… based on their recent non-performances, they SHOULD be worrying!), I can’t recall a single recent advert starring the cricket stars that can convincingly claim to have done that exercise.

In that context, one has to admit that for a change, our cricketers have been cast realistically. The MasterCard commercial features Sachin T, Zaheer Khan and Harbhajan Singh. The three are seen arriving at an Indian airport, as they get harassed by the waiting journalists. Clearly, they must have done horribly at an international tournament (quite a common occurrence with Dhoni’s ‘dhurandars’ these days). Stressed out, the three decide to make a quick escape to the wildlife of the Kenyan forests… tickets bought through MasterCard, of course! For some peace and privacy. But yet again they get recognised at the local airport. And some hot gals chase down Bhajji and Zaheer (not Sachin, please note… the master-blaster will let nothing affect his carefully-cultivated image of a family man… smart!). And so the three (reluctantly) flee again. But no use. The forest ranger at the safari park recognises Sachin, thanks to his MasterCard, so it’s time to scoot again. And they finally enjoy the trees and the beasts, as they drive into the deep forest. But just when you think it’s escape to freedom and tranquility at last, Tendlya gets recognized by a tribal kid. So, no escape for our heroic cricketers. They are doomed to a life of fish-bowl existence.

I actually like the commercial, and the jingle is pleasing and warm too. It strikes at a good insight: The one thing our heroes crave for is privacy and solitude (except for Yuvi perhaps, and thank God they didn’t invite him, the macho stud would have vanished into some remote forest lodge with the tribal girls). So the idea makes sense. It’s relevant and believable. Good lesson on how to use cricketers in advertising.    

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New inflation index likely from August 14

The new index, which would provide a more realistic picture of price rise and its impact on people, would include 685 items against 435 items at present

A new system of inflation measurement, under which price changes of about 250 extra items would be covered, is likely to be rolled out by the government on August 14, reports PTI.

The present monthly inflation measurement system, based on the wholesale price index, reflects the price variations of 435 items.

The number of items would now go up to 685 and include a host of new products, including consumer goods like mobile phones and liquid crystal display (LCD) televisions, sources said.

Dated items such as typewriters and video cassette recorders (VCRs) would not find a place in the new inflation measurement mechanism.

The Committee of Secretaries (CoS), headed by cabinet secretary K M Chandrasekhar, is likely to give a final shape to the new index next week. The base year of the new index would also be changed from 1993-94 to 2004-05.

"A note on the issue has been sent to CoS by the Department of Industrial Policy and Promotion (DIPP)...they may consider this next week," a senior official told PTI.

Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan has also given his approval for the new wholesale price-based index, the official said. "The July inflation data is expected to be released on August 14 with the new base year," he added.

Asked if there would be any variations in the inflation when it switches to the new base year, the official said, "It would be insignificant and less than 1%."

The new index would provide a more realistic picture of price rise and its impact on people, he added.

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