In a development that may impact the telecom sector in a major way, the Telecom Ministry is understood to have endorsed Trai's proposal of allocating up to 10 Mhz of GSM spectrum in metros like Delhi and Mumbai.

With this operators like Bharti, Vodafone and Idea would be able to retain spectrum up to 10 Mhz in metros but would have to return beyond this. This would help operators offer quality services in view of dense population in these cities.

The decision in this regard was taken by the Telecom Commission, the decision making arm of the Department of Telecom (DoT), at its meeting held here today.

With regard to pricing of spectrum, however, no final decision could be taken, sources in the know said, adding that the Telecom Commission could not complete the discussion on Trai's report on spectrum management.

Trai had recommended nearly six-time hike in 2G spectrum prices, besides higher prices for spectrum beyond contract amount of 6.2 Mhz.

The Telecom Commission is also understood to have agreed to allocate 2G spectrum up to 8 Mhz in cities with population of more than ten lakh, they said.

Sources said the Telecom Commission would take up the issue of pricing of 2G spectrum in next meeting scheduled for August 10.

On spectrum pricing Trai had proposed that under new licensing regime, annual licence fee should be 6 per cent of annual gross revenue (AGR).

The telecom regulator's recommendations on spectrum pricing and management proposed an entry fee of Rs 20 crore for nationwide unified licence, which the panel has accepted.

It recommended entry fee of Rs 2 crore for the metros and category A service areas, Rs 1 crore for category B and Rs 50 lakh for category C service areas.

For V-SAT licences, it recommended an entry fee of Rs 30 lakh and Rs 10,000 for licences through authorisation.

Under the present framework, telecom licences can be given on First-Come, First-Serve basis, where a unified access service licence comes bundled with 6.2 Mhz spectrum.

The last pan-India licences were issued for Rs 1,658 crore in 2008. Since the new licences will not have spectrum bundled with them, an applicant will only have to pay entry fee which will be finalised by DoT.

Telecom Commission could not take up VSNL land issue in the meeting.

"VSNL land issue will come up in the next meet. We did not get time to discuss it," DoT Secretary R Chandrasekhar said.

The Telecom Commission is also understood to have approved Trai proposal to limit CDMA spectrum at 5 MHz for all service areas, except Delhi and Mumbai where it would be 6.25MHz.

This would be the prescribed limit to be incorporated in the licences for both GSM and CDMA services and no licensee will be entitled for being assigned any spectrum by the government beyond this limit.

In Feburary, telecom regulator TRAI had recommended a price of Rs 10,972.45 crore for a pan-India licence with 6.2 MHz spectrum.

Going by this valuation, six new pan-Indian licences given in 2008 could have garnered Rs 65,834.7 crore to the government along with additional revenue from other firms who were given licences in fewer circles.

The Telecom Regulatory Authority of India (TRAI) has also recommended 'one-time' entry fee for additional spectrum beyond 6.2 Mhz.

In fact, the regulator has classified valuation of spectrum in two categories. There are different prices for spectrum up to contracted limit of 6.2 Mhz and different for additional airwaves.

The spectrum price varies from circle to circle in both categories. In case of contracted limit, the price ranges from Rs 7.60 crore per Mhz in Jammu and Kashmir to Rs 187.38 crore in Tamil Nadu.

For the additional spectrum the range is Rs 22.89 crore in Jammu and Kashmir to Rs 431.95 crore in Andhra Pradesh.