If ET is to be believed, then TRAI is proposing Rs85 crores for every MHz of spectrum to offer 3G services. TRAI is considering auctioning the spectrum on European model of Telecom business – Price it for every MHz. For any operator to offer 3G services efficiently then he has to atleast have 5MHz of spectrum. However, recall that, in the past officials and telcos have said that the economics of west can’t be applied in the Indian context because of bandwidth scarcity. Considering Rs425 crores per circle and 23 such circles in India it will cost operators who want to have PAN India presence a whopping $2.0 Billion to acquire the licenses. Insane ? Ask TRAI.

FCC is auctioning AWS(Advanced Wireless Services) spectrum in the United States. With AWS spectrum you can offer 3G services like Voice, Data, Video and other applications requiring wireless broadband. After round 28, the bids total stood at $11.3 Billion. So will revenues of Indian cellular service providers be comparable to their American counterparts ?

If TRAI is adamant on its pricing structure at Rs85crores/MHz then not many cellcos will come forward or they may opt to start in fewer circles(Metros) and then expand gradually. Tata’s have asked for a flat fees of Rs1500 crores while Reliance Telecom aligned itself with COAI and is seeking Rs150, Rs100 and Rs50 crores for Metros, Circle A and Circle B respectively. If TRAI manages to sell the spectrum at this price to atleast four all India mobile operators, then P.Chidambaram is a happy man with $32 Billion in his pocket 🙂