In its draft copy of reply to the Telecom Regulatory Authority of India's consultation paper on changes in licence norms, the Cellular Operators Association of India has said that it "fully agrees with the regulator that introduction of more operators may harm the competitive equilibrium and have a negative impact on the quality of service."

Rejecting a suggestion that the number of operators should be left to market forces, the COAI said, "We strongly believe that the decision on the number of access providers should ...be decided by the government."

The association has also rejected a suggestion for allowing mergers between CDMA and GSM operators, stating that "in case of a cross-technology merger between GSM and CDMA, the merged entity must be required to choose its technology path and it cannot follow two growth paths under the same entity or licence".

However, it has said that such operators should be given time to transfer their subscribers to one platform. This, if accepted, will be a major damper for the Reliance [Get Quote] Anil Dhirubhai Ambani group's plea for more spectrum for its GSM business as the company is essentially an all-India CDMA player.

It will also mean that CDMA operators like Reliance will find it difficult to buy GSM operators.

COAI chief TV Ramachandran said he could not comment as discussions between the association members were still on.

The association has, however, supported the continuance of the 67 per cent cap on the market share of merged companies. It also has supported the retention of the controversial 10 per cent limit. Under this rule, a telecom company cannot pick up more than 10 per cent stake in a competing company in the same circle.

Each circle has six to eight operators at present. The government has said that it may allow other players to start 3G services. The COAI, supporting a cap on the number of operators, has argued that India has the lowest average revenue per user and the competition has had an adverse impact on the financial health of the companies.

This, it said, had limited teledensity to 19 per cent. It said the return on capital employed for Indian mobile service companies was only 7.3 per cent, compared with 22.8 per cent in China.

It said even if the availability of spectrum was doubled, it would be enough only for the existing operators.