3G license winners to pay full fee upfront

While assuring that strict transparency will be maintained in the upcoming spectrum auction for the technology neutral 3G licenses, Pakistan Telecommunication Authority (PTA) has clarified that winning bidders will have to pay entire license fee before the launch of services. A statement issued by PTA said that allegations that government would not get the amount of license fee upfront are factually incorrect. Spectrum auction for 2G cellular services in 2004 had an arrangement of 50 per cent upfront and the remaining 50 per cent in instalments over 10 years. In the current auction process for 3G/4G/LTE services in 1900/2100 MHz spectrum the entire amount will be have to be paid upfront. The winning bidder will need to pay 100 per cent upfront license amount to the government exchequer before the launch of service.
It said transparency for current auction remains the foremost priority. PTA will be striving hard to attract reputed investors in the situation where the adverse security environment and slow economic growth is already an impediment to lure reputed investors. All details about auction process are available in the Information Memorandum (IM) posted on PTA website, having information on the current regulatory practices and well defined and transparent procedures of international standards being followed by the regulator for telecom license auctions. About reselling of defunct Instaphone cellular mobile license in 800 MHz spectrum, PTA clarified that the original license issued was for 15 years. Upcoming auction will be for the remaining eight year period of the defunct license and accordingly the base price is set at $155 million, which is based on the winning bid price of $291 million for GSM spectrum in 2004.
Clarifying concerns on the base price, it said many factors were considered including expected service revenues, subscriber growth, economic growth, per capita income and population of the country. Government has also determined the base price using GDP growth, previous 2G auction price, local political situation and experience of regional countries. Base price serves as the minimum price to start the bidding process. Final bidding price will be determined through a transparent multiple round open outcry method where the highest bid will be the final price. Determining the base price is the best practice around the world for auction of spectrum in different countries like UK, India, Egypt and Taiwan who all set base price before auction.
Base price of $210 million for 3G/4G spectrum has been misconceived as final price of the license and perceived lower than 2G licenses prices of 2004. At the time of 2G auction the base price was merely $61 million. Technology neutrality of the licenses has also been criticised. It needs to be clarified that government is auctioning the spectrum of 1900 MHz/2100 MHz which can be utilised for 3G/4G or any expected future advanced technology. It is clarified that already issued licenses in Pakistan are technology neutral.