The Department of Telecommunications has decided to hike four-fold the reserve price for broadband wireless access services in the country.

According to sources, the reserve price for the auction of every 10 MHz block should be 25 per cent of the reserve price for 3G spectrum. It has also decided that due to spectrum constraints, only four blocks of 10 MHz would be allocated to such service providers.

In addition, the DoT has decided that category B internet service providers will not be allowed to offer broadband wireless services. It also wants controlled, simultaneous e-auction of the spectrum, similar to what will be done for 3G services.

The DoT is of the view that if the reserve price for a 3G spectrum block in category 'A' circles is pegged at Rs 160 crore (Rs 1.6 billion), the price for broadband wireless access spectrum should be Rs 40 crore (Rs 400 million), as against the Rs 10 crore (Rs 100 million) that the Telecom Regulatory Authority of India had recommended in September 2006. The regulator had said the reserve price for  categories 'B' and 'C' circles should be Rs 5 crore (Rs 50 million) and Rs 2 crore (Rs 20 million), respectively.

The DoT has also decided that a broadband wireless access licence should be valid for 15 years, instead of the five years recommended by Trai.

According to sources, the DoT has decided that since the licence for internet service provider is valid for 15 years, a similar time frame for BWA licence will help in providing a level playing field.

This will enable the existing internet service providers and universal access service licensees to bid for the BWA licence to extend their licence period. Further, the licensees will be able to extend the validity of their licences at a price, which will be determined by multiplying the number of years of the extension required by the pro-rata fees entry fee of the licence to be paid.

Trai had earlier recommended that spectrum in blocks of 15 Mhz each in 3.3-3.4 Ghz and 3.4-3.6 Ghz should be allocated. However, the DoT has pointed out that due to the constraints of the available spectrum, four blocks each of 10 MHz should be allocated.

Narrowing its criteria for eligible bidders, the government is of the view that the bidders should be restricted to category 'A' ISPs along with UASLs and cellular mobile service providers as opposed to Trai's recommendations to include category 'B' ISPs as well.

Following the method proposed for spectrum allocation for 3G spectrum, the government has proposed a similar process of controlled simultaneous auction. When the number of bidders is equal to the number of blocks of spectrum being auctioned, the auction will end.

All bidders will have to match the highest price of the highest bidder. If the bidders are unable to match the highest price, the block would be offered to the next highest bidder. Any block which is left vacant would be re-auctioned according to the modifications proposed by the government.

The DoT decisions have been conveyed to Trai for its comments.