Auction process for the third generation (3G) spectrum allocation got a kickstart on February 25, 2010 with the issuance of notice by the government asking for bids from private telecom operators.

The government has set a target of Rs. 3, 500 crore as starting auction price for the first slot and Rs. 1, 750 crore is the reserved price for the auction of broadband services.

According to the notice issued by the government that invites bids from three private players each in 17 circles, including Delhi, Mumbai, Kolkata and four each in the remaining five circles including Punjab, West Bengal and Bihar excluding the slots already allowed to Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Ltd.

Successful bidders would be liable to pay the entire amount of deposit within a period of 10 days of the auction and spectrum will be allocated by August.

Along with the auction price and application license fees, the government also plans to levy a spectrum usage fee as a percentage of total revenue earned from both 2G and 3G spectrums by the company. GSM and CDMA operators would have to pay between 3 and 8 per cent of their revenue as spectrum usage fee, based on how much spectrum they hold.