COAI chairman KV Seshasayee says that the licences should be given to all cellular operators without imposing any fee. These frequencies were recently auctioned by the UK government at a cost of approximately $34.42 billion.

The COAI is of the view that India is a developing country and that domestic cellular companies cannot afford to cough up licence fees of this magnitude."We will share the revenue from third generation operations with the Union government. We estimate that the total investment by cellular operators in India for the 3G segment will be about Rs 14,000 crore. The increase in demand for 3G licenses will help the government get additional revenue," Mr Sheshasayee told The Financial Express.

In a letter to the Department of Telecommunications (DoT) and the Telecom Regulatory Authority of India (TRAI), the association said that any auctioning of the licence will lead to an increase in the cost of operations and will therefore be passed on to domestic consumers.

According to rough estimates, each cellular player will have to secure about 100 MHz of frequency in the radio spectrum out of a total 2.5 GHz. In the case of GSM operations, cellular companies were given 4.5 MHz out of the total capacity of 900 MHz. The 3G licence lets users access the Web at 40 times the existing speeds using wireless devices.

"Cellular traffic in the country is a dream. The traffic in Finland is 20 times more than that of India. We are also far behind China. How can we spend huge sums as licence fees the way developed countries do?" Mr Seshasayee added.

He said that China was adding about 1.5 lakh cellular users per month against India's 1.5 lakh cutomers per annum.

India is expected to touch the three million user mark by March 31, 2001. The increase in cellular demand has helped companies like BPL rope in four lakh customers in its areas of operations.

Sources say that DoT plans to auction 3G licences in the country within the next 12 months. Companies like BPL Innovision, VSNL and Hutchison Max (Orange) are expected to join the fray. 3G licence, which rides on higher frequency for offering quality broadband access to the consumer via wireless devices, will be of great interest in India too.

DoT is setting up a special group to finalise guidelines to be followed for the auctions. Countries like Italy are planning to auction the spectrum for 3G and has set a floor price of $1.9 billion for each of the five high-speed mobile phone licences. Italy plans to use a multi-step bidding process to offer the licences.