India confusion - 28 May 2005

India: some confusion raised as the regulator (TRAI) and Department of Telecommunications (DoT) do not seem on the same line. Last week, the regulator (TRAI) proposed a zero entry fee for 3G spectrum. This week DOT announced it is considering a €272m fee for each 3G operator, that could bring €1.6bn to the government. The communications minister has not yet made a decision, but said that TRAI has exceeded its mandate and has made recommendations it had not been asked to make, a way to clarify the situation and to recall who is the decision maker.

Both proposals, however, have their pros and cons. No fee proposal is defended by some operators saying it will lower the cost of mobile services for the customers, and could encourage infrastructure build-out (equivalent to some 5,000 base stations and could help cover some 3,000 additional small towns and villages). The fee proposal is supported by people saying spectrum is a scarce resource and must be valued. Paying for spectrum is a warranty of more efficient use.

Final decision by mid 3Q05.