Licensing of 3G Spectrum

The Telecom Regulatory Authority of India recommended allocation of 3G spectrum in IMT 2000 band without any upfront license fee for the existing mobile service providers and allocation to the new players at the fourth cellular operator's entry fee equivalent to about Rs 1,600 crore (16 Billion Indian Rupee) for all India coverage. There is debate on licensing and some points and arguments regarding this license fees are outlined here

• Licence fee determined through auction is traditionally seen as the efficient mechanism for putting an economic value on spectrum and allocating it to the firm that uses it most efficiently
• High licence fees could either force the exit of some firms as happened in some cases in India or signal post-entry collusion. If firms exit, competition reduces and prices may increase. High licence fees can also affect the speed of infrastructure development.
• On the other hand, lower licence fees lead to a larger number of viable operators with no collusive behaviour. This will lead to lower prices and higher market growth.