Telecom companies now face costly spectrum as more players bid prices higher and the expense of switching their networks to a less efficient frequency. The Telecom Regulatory Authority of India (Trai) estimates companies would need to raise call costs by 8.5-13 paise per minute if every megahertz of allotted spectrum, and more that is yet to be allotted, is sold to the highest bidder over the next two decades. It does not see this as a crushing burden in a nation with some of the cheapest call rates in the world. The older telecom companies, however, reckon the migration to a different frequency would require them to upgrade their networks, a daunting prospect when spectrum costs have gone through the roof. The new players argue that is a small price to pay for a more competitive industry.
Despite a decade of muddled policies, the number of India's telephone users has sprinted to nearly 1 billion. The government's reading is that subscribers are willing to shell out a little extra for a better policy environment.