The department of telecommunication (DoT) is considering an option to price new radio spectrum in a manner that will reflect demand for such frequency in addition to the current formula that has telecom operators sharing revenues with the government, according to department officials.

The DoT plan comes in the wake of demand from various quarters of the government that the value of spectrum is not adequately captured in the revenue-sharing formula. A new formula based on demand for such spectrum in a particular area as well as the technology—such as GSM, CDMA and Wimax—that is used for by a service provider is one of the options being considered by the department.

Voicing opinion: The Wireless Planning Committee of DoT is discussing the various aspects of spectrum pricing and valuation with various ­industry bodies and is expected to give its recommendations next week

In 2006-07, the government collected Rs2,100 crore as one-time spectrum charges from telecom operators in addition to about Rs6,300 crore as licence fee, according to the Telecom Regulatory Authority of India (Trai).

The Wireless Planning Committee of DoT, which is looking into various aspects of spectrum pricing and valuation, had invited industry associations, such as Cellular Operators’ Association of India (COAI) and Internet Service Providers’ Association of India (Ispai), in addition to experts from the Indian Institute of Management Ahmedabad, to discuss spectrum valuation and pricing.

Thursday’s meeting was a part of a two-day series, with more industry representatives expected to voice their opinion on Friday, said one DoT official, who did not want to be named.

“The committee will give its recommendations next week," the official added.

The committee is considering whether spectrum pricing should be different for metro, urban and rural areas, “especially since there is a need to encourage more spectrum usage in rural areas," said officials from DoT who didn’t want to be identified.

In its presentation to the committee, Ispai maintained that spectrum valuation and pricing should be based on “market capitalization of telecom operators in a given quarter," said Rajesh Chharia, president of Ispai.

According to COAI, the industry association for operators such as Bharti Airtel Ltd and Vodafone Essar Ltd, existing pricing of spectrum, “which requires operators to pay more as they increase their subscriber base, does not encourage roll-out to newer areas," said T.V. Ramachandran, director general of COAI.

“We also believe that existing one-time licence fee of around Rs1,500 crore, which has been prevalent from 2001, could be at least doubled," said one Trai official who did not want to be named.