Content of Policy Directive for Next Generation (3G) Telecom Licenses

Ministry of Information Technology and Telecom, earlier this month, issued the policy directive for the auction of 3G / next generation telecom licenses. MoIT had said that the policy for auction of next-gen licenses was approved by Mr. Nawaz Sharif, the Prime Minister of Pakistan.

This policy directive was handed over to Pakistan Telecommunication Authority for the implementation of license auction, for which PTA is already perusing with all its resources.

Here is the full content of the policy directive on the auction of next generation telecom licenses:

• PTA will be responsible for transparent and competitive auction of the next-gen spectrum.
• The directive said that allotment of spectrum will be technology neutral and will be usable for technologies standardized for 3G and advanced generation(s) of mobile services.
• As identified by Frequency Allocation Board (FAB), a 30MHz paired spectrum in 1.9GHz/2.1GHz band will be auctioned to telecom operators.
• PTA is entrusted to carry out the auction process, fulfilling the policy objective of optimal outcome mitigating chances of collusion among bidders.
• Auction shall by accordingly conducted by PTA in the minimum possible time after the issuance of this directive.
• PTA shall carry out the appointment of internationally reputed consultant(s) with following terms of references (TORs):
  • Identify the number and size of blocks to be auctioned considering the market situation
  • Recommend the most appropriate auction methodology and plan
  • Recommend the reserve price for auction
  • Design and management of auction process
  • Analyse potential impact on auction price with respect to upfront payment of the bid price versus staggered payment over five years and recommend the optimal bidding procedures
  • Develop a license template for new license
  • Any other allied matter relating to the auction and any assignments deemed necessary by PTA
• Reserve price of 1MHz will be finalized by the Federal Government after recipient of report from consultants.
• All existing cellular mobile operators as well as new entrants will be eligible to participate in the auction
• A new license for the provision of next generation mobile services will be issued to the successful bidders/auction winners.
• The tenure of the new license will be 15 years.
• For efficient and optimal rollout of next generation mobile services, cost-based sharing of infrastructure shall be considered as a matter of first priority by cellular operators at the time of rollout.
• PTA shall prepare detailed guidelines for infrastructure sharing with the view to provide level-playing field to both existing as well as new entrant(s).
• Existing licensee would provide National Roaming on request by any New Entrant(s) or as directed by PTA, as deemed appropriate.
• Auction winners will encourage and facilitate local manufacturing, assembling and development of telecom equipment, terminal devices, applications, transfer of technology and Research & Innovation in Pakistan
• Auction winners may deploy renewable energy sources as power back up.
• The advisory committee shall be kept informed/updated by PTA regarding the progress of auction process and on tasks assigned to the consultant(s).
• Recommendations brought forward by consultant(s) will be shared by advisory committee, which may review any provision contained in the policy directive.
• With the issuance of this policy directive, the earlier policy directive for 3G license auction (issued on December 19th, 2011) stands suspended.

It maybe recalled that PTA has already published advertisement in international and national media to hire consultants. Last date for applying for the job is November 12th, 2013. It is likely that PTA will be able to select consultants around the last week of November.

After appointment of consultants, one to two month period will be required to prepare IM, a document that will detail the procedure, methodology, price and other information on the auction.

IM will also contain an auction date – likely to be one month after the issuance of IM.

In simpler words, 3G auction date is still at least four months from now.