NEW DELHI, INDIA: The Union Government today approved the release of one block of 3G spectrum each to public sector telephone service providers BSNL and MTNL in the country.

Minister of Communications and Information Technology A. Raja has approved the release of one block to MTNL in Delhi and Mumbai/Metro service areas, said an official press release. He has also approved the release of another block to BSNL for other service areas.

The approval follows soon after the minister's announcement last week to allow the two state-owned telephone companies a first-mover advantage over private operators.

The spectrum blocks released for the two companies have the size of 2x5 MHz in 2.1 GHz Band.

Incidentally, BSNL has been providing EVDO service in the country, which can be technically termed as 3G. Though BSNL claimed it was 2.5G, the Department of Telecom recently confirmed it as 3G service.

The Ministry has also approved release of a block of 20 MHz BWA spectrum each to both the public sector undertakings. The spectrum block released for the two companies will be in the 2.5 GHz band at 2645.0 MHz.

Besides this special consideration for BSNL and MTNL, 3G / BWA spectrum would be allocated through an auction process to be conducted by a specialized agency, the release said.

For the spectrum blocks released to them, BSNL and MTNL will pay a price equal to the highest bid in the respective service areas.

The Minister has approved the proposal to waive annual licence fees in terms of AGR on BSNL's rural wire-lines and also approved payment up to Rs.2000 crore per annum from USO Fund to compensate loss from operations from rural connections resulted by removal of ADC by TRAI.

MTNL is expected to rollout its 3G service in another four months, while BSNL said it would launch the service in six months.