The Department of Telecommunications is examining a proposal to auction around nine licences for 3G -- or third generation -- services among incumbents and new players in place of an earlier proposal to allow five players in this space.
This will be made possible because wireless experts in the ministry have reportedly identified bands for over 20 MHz of additional spectrum that would accommodate at least four more operators (each operator will be given 5MHz).
The move could resolve the year-long controversy over scarcity of spectrum, the radio frequencies that enable wireless communication, for telecom services in general and 3G services in particular.
Incumbent operators have been opposing DoT's decision to open the auction of 3G services -- to provide high-speed access to the internet, entertainment, information and e-commerce -- to new players including foreign telecom companies.
They have argued that there is already enough competition, so allowing more players would only lead to over-bidding and unduly high licence fees that would make services expensive and unviable.
DoT has already earmarked 25 MHz spectrum for 3G services on the 2.1 giga hertz band to be auctioned to five operators. Of this, one will be reserved for state-owned BSNL.
Some spectrum is also available on other bands that can accommodate two CDMA operators, taking the total number to seven. But lack of equipment might deter the two incumbent CDMA players from taking this option.
There are currently 10 to 12 operators offering 2G services in each circle, including incumbents and companies that were recently granted licences and yet to start operations. Industry experts expect another three or four new players that want to enter India's rapidly growing mobile services market to bid for 3G licences.
DoT had doubled the reserve price recommended by sector regulator TRAI for 'A' category circles -- Delhi and Mumbai -- to Rs 160 crore.
For 'B' category circles -- Chennai and Kolkata -- the reserve price is Rs 80 crore. For the 'C' category, it is Rs 30 crore.
The government had expected to earn around Rs 20,000 crore from 3G auctions. With more licences available, operators may lower their bids, but the revenue generated from them will be much higher than initial government targets.
