The Cabinet on Thursday approved a 50% reduction in the reserve price of CDMA spectrum. The new reserve price will be Rs. 9,100 crore for 5 MHz of spectrum that is required for operating services throughout the country.

“The Cabinet has approved 50% reduction in CDMA spectrum prices, which was fixed earlier at Rs. 18,200 crore,” said communications minister Kapil Sibal.

The next round of auction will take place in March.

CDMA technology is considered to be more efficient than GSM. A company needs only 2.5 MHz of spectrum to launch operations. This means that for start-up spectrum, a company will have to shell out Rs. 4,500 crore.

Among existing operators, only Sistema Shyam Teleservices Ltd (SSTL) provides CDMA services under the MTS brand. If SSTL accepts the new price, then over 16 million subscribers would not be affected.

“The decision by the Cabinet to reduce the CDMA reserve price by 50% clearly reflects the growing realisation that demand for 800 MHz is very limited,” said an SSTL spokesperson. “The decision taken is a step in the right direction. However, as per ground realities one would have expected much greater reduction.”

The government will also auction spectrum in the 900-MHz band, supposed to be the premium spectrum, in three metros. Airwaves in the 1,800-MHz band will be offered in four circles.