TRAI to try "Free" 3G

May 5, 2005 - source: BWCS

India has moved a step closer to launching 3G network services today when the Telecom Regulatory Authority of India (TRAI) announced that it plans to propose a zero entry fee for the IMT 2000 spectrum. However, this will apply only to existing operators and the authority says it will impose roll out conditions on them as a result. TRAI plans to release more of its 3G plans in a set of spectrum policy guidelines to be announced this week.

As part of its move to reduce the costs of offering next generation mobile services, TRAI may even reduce the annual spectrum fee payable by all Indian mobile operators. Currently this stands at a maximum 6% of all revenues. TRAI says it would like this to be scaled down to 4%.

The most likely course of events is that the regulator will offer each currently licensed operator in India between 5MHz and 10MHz of 3G spectrum in the IMT-2000 band. It is thought extremely unlikely that TRAI will try to charge for this spectrum. However, it will require that each operator make 3G services available in at least 10% of their geographic areas within one year of the spectrum being handed out. An additional annual fee will be levied on any operator not complying with the roll out stipulations.

To maintain the level playing field, new players have to pay a one-time entry fee for any 3G spectrum which they may be granted. This, says TRAI, will work out at about the same amount as that paid by operators under the annual fee scheme at the moment.

However, all of this is still speculation on the part of TRAI. And while it may appeal to the operators, the government still retains the right to introduce bidding for 3G spectrum in India.

TRAI has suggested earmarking 30MHz of radio frequency in the 2Ghz band so that every operator gets at least 5 MHz radio frequency for 3G services. The TRAI recommendations would be submitted to the Government in the next few days.