Mobile operators have requested that India’s Department of Telecommunications (DoT) reviews the reserve price of the 900 MHz spectrum to be auctioned next month, complaining that the price is too high and could lead to higher mobile rates, slowing the government’s Digital India initiative.

The Cellular Operators Association of India (COAI) complained in a letter to the telecom minister that the price is “prohibitive and unreasonable” and would adversely impact the viability of their business, The Economic Times reported.

The government increased the base price of the 900 MHz spectrum to be sold off by 32.5 per cent over the price recommended by the Telecom Regulatory Authority of India (TRAI). COAI said the new price was 107 per cent above the price paid in 2010 for 3G spectrum.

The DoT also raised the base price of the 800 MHz spectrum by 17 per cent and the 1.8 GHz airwaves by 2.5 per cent over the regulator’s proposed price.

Earlier this week the DoT rejected TRAI’s suggested price for 3G spectrum and recommended the regulator raise the base price by 43 per cent to INR38.9 billion ($612 million) per megahertz.

The cabinet on 5 January approved the reserve price of INR36.46 billion per megahertz for the 800 MHz band, INR39.8 billion in the 900 MHz band (excluding Delhi, Mumbai, Kolkata and Jammu & Kashmir where frequencies are unavailable) and INR21.91 billion in the 1.8 GHz band (excluding Maharashtra and West Bengal).

The COAI is also pushing the ministry to free up at least 15-20 MHz of 3G (2.1 GHz) spectrum for the auction. TRAI recommended at the end of the year that 20 MHz be auctioned off, but the government has said only 5 MHz can be made available.

Telecom Minister Ravi Shankar Prasad told the Times that while the department of defence has agreed in principle to swap 15 MHz of 3G spectrum for the DoT’s 2G airwaves, an actual swap has not been worked out. “How can the telecom department auction spectrum it doesn’t have?”

COAI has said releasing only 5 MHz would lead to “artificial scarcity” and raise bids during the auction and likely lead to higher mobile rates. The association noted that the country’s operators already have a combined debt of some INR2.5 trillion.

The cabinet has cleared the sale of 99.2 MHz of 1.8 GHz spectrum in 15 regions, 177.8 MHz in the 900 MHz band in 17 service areas, 103.75 MHz of 800 MHz (2G used by CDMA operators) in all 22 regions, and 85 MHz in the 2.1 GHz band (5MHz across 17 regions).