The Economic Times (27/09/06): So it may be a fixed fee plus auction for 3G in India. The telecom regulator - Telecom Regulatory Authority of India (TRAI) - may recommend an auction system with a fixed fee component to allocate 3G spectrum to service providers, says an ET report. It’s not recommending a beauty parade for allocating spectrum.
So this is likely to let only serious deep-pocketed players enter the business. Category A circles - all four metros and states like Maharashtra, Gujarat and Tamil Nadu - would cost more since they would have more premium customers. It was earlier weighing between fixed pricing and auctioning for allotting spectrum. For WiMAX, service providers will have to pay a fixed price for spectrum.
Nikhil adds: This is how the various alternatives (3G, Fixed Fee and Beauty Contest) compared. According to TRAI, internationally, the average price for allocations since 2002 has been Rs. 68 per Hz. TRAI recommends Auction over Beauty parade, with the following considerations:
There should be a minimum reserve price for the auctions; only one block per winner to encourage competition; all spectrum blocks auctioned simultaneously; Multiple rounds recommended to facilitate price discovery; the auction will have a time limit, and the bids will be sealed; bid withdrawal should not be permitted.

There are other considerations, and you may download the entire report from the TRAI website here.

Updated: The Economic Times adds: Trai has recommended an auction system with a reserve price for allotting 3G spectrum. The reserve price has been fixed at Rs 80 crore for category -€œA-€ circles, Mumbai and Delhi; Rs 40 crore for category -€œB-€ circles, Chennai and Kolkata, and Rs 15 crore for category -€œC-€ circles. The operators will also be required to pay 1% of adjusted gross revenue (AGR) per annum as spectrum fee for 5 MHz of spectrum.
An operator seeking 3G Spectrum on all-India basis will have to pay about Rs 1,400 crore. There are six operators in most of the category -€œA-€ circles.
Bharati Airtel has opposed the high reserve price saying it will impact rural penetration. Tata Indicom is believed to have welcomed it.