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India’s telecommunications regulator on Wednesday unveiled proposed guidelines for allocation and pricing of additional mobile spectrum, a crucial step in the country’s ambitious quest to have 500m mobile phone subscribers by 2010 and to boost broadband wireless in rural areas.

The Telecom Regulatory Authority of India (Trai) expects the launch of sophisticated third-generation, or so-called 3G services, such as internet access on mobile phones by June next year.

“How do we reach 500m subscribers by 2010? A major factor is spectrum,” said Nripendra Misra, chairman of Trai, on Wednesday. “If we don’t have a longer-term vision for how much spectrum is required, reaching 500m is a difficult proposition.”

Trai recommended auctioning chunks of spectrum to licensed telecom operators and recommended establishing a National Frequency Management Board to oversee planning for spectrum availability.

India last month overtook China as the world’s fastest-growing mobile phone market in terms of monthly net additions. It added 5.9m new subscribers last month, bringing total numbers to more than 123m. By comparison, China added 5.19m subscribers in August.

Indian telecom operators are clamouring for more spectrum to provide broadband wireless and high-speed 3G data services such as video and internet access, but also to accommodate basic voice calls needed to grow mobile phone subscribers five-fold by 2010.

Spectrum contains the frequencies used to send and receive signals that enable mobile phone calls. Spectrum is a valuable commodity because much of it is reserved for defence purposes.

The issue of pricing and allocating spectrum is growing more complicated worldwide because of the convergence of cable, satellite and telecom operators in providing phone, internet and entertainment services.

In the US, bidders for spectrum include not just traditional telecom operators but also cable and satellite companies.

Trai set the base price for acquisition of 3G spectrum at Rs800m in “Circle A” cities, or the country’s biggest urban centres such as Delhi and Mumbai; Rs400m for smaller “B” cities such as Chennai and Kolkata; and Rs150m for the smallest “C” category of urban centres.

Trai on Thursday allocated chunks of spectrum at 450 MHz, 800 MHz and 2.1 GHz for 3G services. It has specified 200 MHz of spectrum for broadband wireless access.

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