NEW DELHI: Companies seeking global expertise from the UK and US to prepare their bid strategies for 3G spectrum auctions, are confessing that 3G spectrum in India will be used primarily for voice rather than high speed data or mobile content. This discovery has a direct bearing on the bid price of 3G as it relates to consumer tariffs.

Sections within the government, including in Trai and industry have been arguing, using Europe's 3G bids as an example, that high bids for 3G could increase consumer tariffs. However, contrary to this view, the heads of some firms told TOI that emerging data clearly shows that irrespective of the value of the 3G bids, operators will not be able to transfer their spectrum costs to the consumer.

Supporting this conclusion, latest industry forecasts, especially by British Monitor International reveal that out of a total mobile subscriber base of 449.2 million by 2009-end, the number of 3G subscribers will be 14.6 million. During the next four-year period, 3G subscribers will grow to 71.5 million, which will account for 11.5% of the overall mobile market share while total mobile subscribers are expected to reach 620 million.

Between 2009 and 2012, market share of 3G will nearly quadruple from 3.3% to 11.5%, but still be a fraction of the overall subscriber base. This directly translates to the fact that in India, like Europe, 3G spectrum in its initial years will be used for vanilla voice. The Indian market is dominated by voice as a product, accounting for over 90% of total revenues. This trend is expected to continue.

Under the circumstances, it is virtually impossible for any 3G player, existing or new, to raise tariffs. That's because on an average, every state already has seven to eight operators providing voice telephony, ruling out the possibility that consumers will be willing to pay more only because voice is now offered on 3G spectrum.

Even in Europe where business was slow to take off due to the high bids in UK, Germany and France, the effect on consumer pricing was minimal. Consumer pricing is reasonably insulated from the possibility of high value bids in 3G, as most companies will amortize such capital expense over a 20-year licence. The real threat is to government revenues as global operators have not shown open interest in bidding for 3G on account of regulatory and financial barriers, says a telecom consultant.