The telecom regulator's latest take on spectrum pricing for advanced services has divided the industry yet again. Within minutes of the recommendations, the government said a separate 3G policy will be out “in three months”. Happily, this could cut short the 3G limbo.

The first step towards resolving issues — pricing at the helm — was taken this week, and Trai is now out with its recommendations.

A big step up from today's 2.5G services, 3G will let users download data in real-time and watch videos or play Internet-based games. But since these services won’t be cheap the government and Trai have been struggling with the formula for pricing the spectrum, or airwaves, that will transmit this high-end data.

Trai has chosen a mix of methods — a minimum reserve price of Rs 15 crore in 'C' category towns and a maximum Rs 80 crore in 'A' category areas. In addition, there will be bidding by auction. Since only 25 MHz spectrum is available, for eight mobile players, each asking for at least 5 Mhz to launch 3G, Trai has decided that only five operators — all currently active — can bid for 3G spectrum.

Based on Trai’s pricing formula, if any one operator goes for seamless 3G spectrum across the country, it will cost Rs 1,000-1,400 crore. But of all operators, Bharti and Reliance have the highest existing coverage — in 23 circles — making them best placed to introduce 3G countrywide.

But the Trai price of spectrum does match CDMA operator Tata Teleservices' controversial offer of Rs 1,500 crore. The GSM lobby, represented by the Cellular Operators Association of India (COAI), has said the Trai formula is unfair and favours CDMA, while placing GSM at a disadvantage. Bharti group chairman Sunil Mittal has decided to appeal to the government to “much lower the threshold price” for 3G if the service is to be made affordable, a sentiment echoed by Reliance.

... contd.