The Minister for Communications, Mr A. Raja (right), and the Minister of State, Mr Jyotiraditya Scindia, addressing a press conference in the Capital on Friday.

3G services are expected to facilitate higher speeds and data throughputs, which enable the delivery of a wide range of multimedia services, including video telephony, e-commerce and television on mobile devices like handsets, smart phones and palm tops. For instance, a 3-minute song can be downloaded in 15 seconds using 3G compared with the 8 minutes needed in existing mobile technologies. Consumers will, however, have to pay extra for the service and also buy a 3G-compatible handset.

To start with, only 4-5 operators per circle will be selected from the auction process due to limited availability of spectrum. Delhi and Mumbai will each have only two 3G operators of which one slot has already been given to the State-owned MTNL. Given that there are at least 9-10 private players in the fray, the lower number of slots could make the bidding more aggressive, especially in the two metro cities. That could in turn make 3G services expensive for consumers.

But operators said they would make 3G affordable in a price-sensitive market like India. "If 3G has to succeed in India, then operators will have to take the affordability plank. We have seen this in voice services where the uptake was low as long as the tariffs were high. In other countries, 3G may be a premium service but here it could be a different story," said Mr T.V. Ramachandran, Director-General, Cellular Operators Association of India.

Mr Raja said that while 2-3 CDMA players will also be given 3G spectrum, the total number of operators may go up to 10 subsequently if the Defence releases more spectrum. The Government will clarify the total number of slots up for grabs based on the spectrum availability, before the auction begins. Mr Raja said the Government hoped to rake in close to Rs 30,000 crore from the auction process.

The Minister said that the Department of Telecom will appoint an independent agency to carry out the global online auction within 15 days. The agency will be asked to work out the modalities of the auction within 45 days.

The auction will be open to both existing and new players. Existing operators such as Bharti Airtel and Vodafone will have to pay a minimum base price of Rs 2,020 crore if they want to offer 3G services across the country. But new and foreign players such as AT&T and NTT DoCoMO will have to pay an additional entry fee of Rs 1,650 crore to acquire a unified access licence to qualify for 3G services.

Analysts said that the policy may act as deterrent to many foreign players. "A foreign player will have to commit a minimum investment of $1 billion for 3G in India. That will make sure that only a few serious players will come in," said Mr Prashant Singhal, head of telecom practice at Ernst & Young.

DoT has also made it mandatory for the new players to have prior experience in rolling out 3G services. This means that some of the Indian companies such as Hindujas, Jindal and DLF, which had earlier sought a telecom licence, will have to partner with a global player with 3G experience if they want to participate in the auction.

The biggest gainers are State-owned BSNL and MTNL, which have already been given 3G spectrum ahead of the rest. The two companies are planning to launch services within the next 3-6 months.