The encyclopedia · Strategy & Leadership · Strategic decision · 2010
India auctioned 3G spectrum for Rs 67,719 crore in 2010 across 22 service areas
India priced scarce 3G airwaves with an open auction across 22 service areas in 2010, raising Rs 67,719 crore
Department of Telecommunications, India · Telecom Regulatory Authority of India
the move
Mobile spectrum is a fixed public resource worth far more than any official can guess, and handing it out at an administered price risks both windfalls and accusations of favouritism.
India put scarce 3G airwaves to an open ascending auction across 22 service areas. Operators bid against each other until the number of bidders matched the blocks available, so the clearing price reflected market demand rather than a regulator's estimate.
Nine operators paid a total of Rs 67,719 crore, with Bharti paying the most for 13 circles. The auction showed that competition, not official judgement, was the reliable way to price a bottleneck resource.
why it works
- Bidding reveals what a licence is worth, so the state captures the true value
- A transparent auction removes the discretion that allows under-pricing and corruption
- Across many service areas, operators priced each local market differently and correctly
- Winners paid upfront, so the public got the revenue immediately
what transfers
When a scarce public asset is worth more than anyone can forecast, let an auction set the price: bidders reveal value honestly and a politician's discretion to under-sell disappears
what came after
The 2010 3G auction raised Rs 67,719 crore from nine operators; seven won via the e-auction while state-owned BSNL and MTNL matched the winning prices in their areas. Licences ran for 20 years with a rollout obligation. The auction set the benchmark prices later used to recover under-pricing from older 2G allocations and to price subsequent 2G and 4G auctions, though operators later said they had overpaid.
references
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