3G licences: Restarting the process

The optimism at the beginning of this year that the much-anticipated 3G spectrum auction would finally take place is long gone. Though the authorities are still in hibernation mode, recent events suggest that the process may be moving ahead. Reportedly, the finance minister is keen to expedite the pre-auction process, and so is the National Assemblys Standing Committee on IT, saying: Hire the Consultant!
Considering the current political climate in Pakistan and the looming intrigues and intricacies of an election year, it seems unlikely that the incumbents would be in a position to complete the transaction this year. Yet there is also a perception if government weathers the impending political storms and decides not to go for early elections; then there is a strong possibility that the auction could be completed in this fiscal year.
Holding this auction is very important, and Pakistan does not really have a choice but to migrate to 3G data networks to allow the socio-economic benefits of mobile broadband. It has been reiterated by telecom experts that the said auction must be conducted in a manner that ensures transparency and balances interests of all stakeholders: operators, customers and government.
For that, the auction modalities - drafted by the PTA earlier this year - need to be significantly revised. The international consultant, whose hiring is in limbo thus far, must be commissioned at the earliest. The consultant would have to start over, as the existing mechanism falls short on many counts. The issues of base price, technology-neutrality and payment modes are there, yes, but they are secondary.
One must keep the eye on the ball here. The core issue relates to the design of the auction, which seems to favour the incumbents. Offering the highest bidder the choice to take two out of three spectrum blocks (10MHZ each) renders the whole process uncompetitive. Imagine the post-auction competitive landscape where there could be only two 3G operators out of six operators.
In that case, the winning operators will benefit and the customers and government will both be losers.
Moreover, its a disincentive to have the sole international competitor (the winner of Instaphone license) bid alongside local, established operators. This will deter foreign participation, which will be detrimental for the government to raise significant revenues. Pakistans is an established telecom market, with cellular subscribers over 120 million now - a significant number in international context.
Finally, the collaboration between PTA and the Ministry of IT must improve to steer this transaction through. After the auction hit snags earlier in March, one could see signs of bad blood between the telecom watchdog and the MoIT, with the latter shrugging off the responsibility for things gone wrong.
Pakistan is already four years late in joining the 3G bandwagon, so its not like the countrys running out of time - it already has. Therefore, if and when the auction is conducted, it needs to be done in a competitive and transparent manner. Radio spectrum is scarce national resource, so it should be priced accordingly and the technology running on it must be rolled out strictly for healthy socio-economic impact.