The Telecom Regulatory Authority of India (TRAI), the industry watchdog, also feels that subscriber-linked auction of 2G spectrum may be cumbersome as it would be very difficult to ascertain for which technology -- 2G or 3G -- the spectrum is being used.

'A new 2G spectrum policy shouldn't be held back,' said Jaideep Ghosh, director with the global consultancy and audit firm KPMG. 'Also, 3G spectrum, in any case, will be used to offer 2G services as well, since it will take time for 3G to pick up.'

Even the latest Economic Survey of the Indian government says that telecom licensing and the allocation of radio spectrum should be de-linked. It says while the licence fee should be nominal, spectrum should not only be auctioned in a transparent manner but also made freely tradable.

'The number-based formula is quite unorthodox. It provides little incentive to use the scarce resource efficiently. It rewards those who add subscribers indiscriminately,' said Mahesh Uppal, director of Delhi-based telecom consultancy Com First.

'Spectrum should be given in a way which reflects its value,' Uppal told IANS, adding a strict rollout obligation on the operators was also a must to prevent them from making unrealistic bids.

The 3G auctions, scheduled for January, have been postponed twice because of differences between the finance and the communications ministries. The finance ministry wants the reserve price of Rs.2,020 crore ($400 million) for pan-India spectrum doubled.

(Pupul Dutta can be contacted at pupul.d@ians.in)