Beauty parade likely for 3G

Trai may set base price, criteria for spectrum.

The Telecom Regulatory Authority of India (Trai) is thinking of a base price combined with a beauty parade based on certain criteria for allotting limited 3G spectrum to telecom operators.

With 25 MHz spectrum available this year, only five operators will get the minimum 5 MHz needed to roll out 3G services. 3G (Third-generation) networks allow high-speed access to the Internet and multi-media content like streaming video.

While the base price for the spectrum has not been decided, sources in Trai said there was no question of companies not paying for what is clearly a scarce resource.

However, since there are more than five operators "" Bharti, Hutch, BSNL, MTNL, Reliance, Tatas, Aircel and Spice among others "" a beauty parade of the eligible operators has to be undertaken. This could be based on various criteria such as who offers the maximum revenue share and who offers the cheapest 3G tariffs.

The regulator explored various options apart from a beauty parade, including an auction of frequencies and sharing infrastructure like mobile virtual network operations, a technology that allows operators to sell time to others who then market the service under their brand.

Officials in Trai feel an auction will lead to unnecessarily expensive frequencies. Also, experience in Europe has shown that operators overbid hugely and went under in their attempt to offer 3G services. On the other hand, licence regulation restricts sharing of active infrastructure.

Trai officials are of the opinion that India is not ready for the advanced infrastructure sharing concept, and the department of telecommunications is not in favour either.

Trai officials said most operators had realised that they would not get spectrum free. Ratan Tata, in a letter to the government, had triggered the debate by saying 3G spectrum should be paid for and had suggested a Rs 1,500 crore price tag. GSM operators had vehemently opposed the move, saying this would only increase their cost, which had to be passed on to customers.

However, this year, in a meeting with the Cellular Operators' Association of India, they agreed to pay around Rs 980 crore, which is the cost incurred by the government while vacating the 3G spectrum from the defence services.