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Commentary

3G Auction Process – Fascinating

Reuters reports on the process:

Each of the auctions for 3G spectrum in India’s 22 telecoms zones would be a separate but simultaneous process conducted over the Internet.

Bidders have authentication tokens and passwords to access the electronic auction from their own computers. The names of bidders for each service area would not be disclosed during the auction, only the total number of applicants would be known.

The auctions will consist of multiple rounds and at the end of each round, provisional winners will be declared. The auctioneer, Rothschild and DotEcon, will announce higher price for every round and will look for demand at that price.

The auctions end when demand is equal to the number of slots available in each service area.

The auctions would be held from 9 a.m. (0330 GMT) to 7:30 p.m. (1400 GMT) on all days except Sundays and national holidays in India, beginning April 9.

The rounds could go on for a long time. But this is an extremely interesting process. Can it remove the problem with cartels? (Where multiple bidders decide to converge on a price and don’t bid up further, divvying up the areas before hand – that makes the government lose potential revenue)

But this concept is cool – people stay in at the price announced. If there are more players than slots, a higher price is announced. And so on, until enough bidders drop out so there are exactly that many slots as bidders remaining.

3G is going to be very big. From live streaming TV to video conferences over the internet while stuck in the classic Indian traffic jam, I see a lot of potential; but the first few years will be too expensive. But after that, the growth will be explosive. Watch the price.