At a time when mobile operators have agreed that auctions should be the sole method for 2G spectrum price discovery, the finance ministry has come out with a different view that would be presented before the Telecom Commission at its meeting on December 26.

Officials said the ministry is in favour of computing the value of excess spectrum (beyond 6.2 MHz) held by operators through a formula based on the State Bank of India?s prime lending rate compounded on a monthly basis since the extra spectrum was allocated in 2003-04. Alternatively, it can be done by using the number of times by which the GDP, at current market prices, has gone up since 2003-04.

The finance ministry?s methodology to determine the 2G spectrum price differs from what has been worked out and suggested by the Telecom Regulatory Authority of India (Trai). The Trai formula, which broadly links 2G spectrum prices to 3G, has priced per megahertz spectrum up to 6.2 MHz at R1,769 crore and beyond it at R4,571 crore.

In putting forward this formula the finance ministry has stuck to its proposal first mooted in July 2008 when the issue of excess spectrum was discussed with it.

The finance ministry’s proposal differs from that of Trai on another count. While the regulator has suggested that the one-time charge for holding excess spectrum be levied on a prospective basis ? the remaining tenure of the licence ? the finance ministry wants it to be levied on a retrospective basis, that is, from 2003-04.

The Telecom Commission, the highest policy-making body of the department of telecommunications (DoT), is going to take a decision on 2G spectrum pricing and some other related issues on December 26. It has earlier discussed these issues at two meetings. The secretaries of finance, Planning Commission and department of industrial policy and promotion are also members of the commission.

When contacted, DoT secretary and chairman of the Telecom Commission R Chandrashekhar said that so far the finance ministry has not presented any alternative formula for 2G spectrum pricing.

Once the final decision on spectrum pricing is taken by the commission on December 26, the matter would be sent to telecom minister Kapil Sibal and finally to the Cabinet for final approval.

The crucial decision on spectrum pricing will come at a time when the mobile operators have reached unanimity on how it should be priced. The chairmen/CEOs of leading mobile operators like Bharti Airtel, Idea Cellular, Vodafone, Reliance Communications and Tata Teleservices had late last month met the Prime Minister, telecom minister and finance minister and submitted a joint letter that the pricing of spectrum should be determined through auction.

This was followed up with a separate letter by the CEOs of Bharti, Vodafone and Idea, the three companies that hold spectrum beyond 6.2 MHz in some circles, that there should be no one-time charge of what is called extra spectrum because it was given in lieu of higher spectrum usage charge. They also said that Trai in its 2007 recommendations never asked for any one-time charge on spectrum held beyond 6.2 MHz.