Finmin proposes base 3G entry fee

Posted on | December 7, 2005 |

The finance ministry has proposed a compromise formula for putting a value to the scarce 3G spectrum. It has recommended that operators should be charged a base entry fee to begin with and subsequently a revenue share for the use of 3G spectrum.

The ministry, in its proposal, says the entry fee should not be so high that competition is throttled and the price of services becomes high. The fee should not also be so low that non-serious players accumulate the frequency.

TRAI had suggested there should be no entry fee for providing 3G services while Ratan Tata had offered to pay a one-time entry fee of Rs 1,500 crore because it was a scarce resource. Mr Tata reasoned that spectrum is a scarce national resource and if it is given free of cost to operators, it would not be used efficiently and some operators could also engage in its hoarding.

But Sunil Mittal opposed it saying that it would increase price of services. He said that the country was short of high quality infrastructure. Any fee by the government would discourage infrastructure buildout. From Rs 1,500 crore, one can build 5,000 base stations and cover 3,000 small towns and villages.

Comments