2G auction rules illegal: Vodafone

Vodafone, one of India's leading telecom operators, has said the new guidelines for the fresh auction of second-generation (2G) spectrum are illegal.

In a communication to the Department of Telecommunications, the telecom firm said the guidelines were discriminatory in nature, and the spectrum prices have been fixed at arbitrarily high levels, much higher than international benchmarks.

The government is holding another auction of 2G spectrum on March 11 after the first auction on November 12 and November 14 drew muted response from telcos, mainly due to high reserve prices, with the government managing to garner bids worth just Rs. 9,407 crore, way below its estimates of Rs. 30,000 crore.

GSM spectrum in key circles such as Delhi, Mumbai, Rajasthan and Karnataka had found no bidders, while the CDMA spectrum was not auctioned at all after the two interested parties - Tata Teleservices and Videocon - withdrew from the auction.

In a bid to improve participation from telcos in the second auction to be held in March, the empowered group of ministers, led by Finance Minister P. Chidambaram, has recommended lowering the base price of the CDMA spectrum by 30-50 per cent.

The government had earlier set the reserve price of CDMA airwaves at 1.3 times that of GSM airwaves, a price that was criticised by operators as too high. The price was set at Rs. 3,640 crore per megahertz of spectrum for all of India's 22 telecommunication zones.

in the March auction, airwaves in the 1800MHz and the 900MHz bandwidth of the GSM spectrum will be bid for first, followed by the CDMA airwaves in the 800 MHz bandwidth.