retaining quality of service, and reduction of infrastructural costs. Further, as spectrum is often underutilised by one telecom operator in a given area, trading/sharing may guarantee optimal use of spectrum by two or more operators.
Another important factor to be considered is that the Indian telecom market is highly competitive and demands newer technology trends.
In light of this, I am of the view that spectrum trading/sharing should have a good case in the Indian telecom market.
Mahesh UppalYes, because the demand for spectrum far outstrips the supply. The operators should be able to get spectrum from the secondary market if they cannot get it from the government. For efficient utilisation of this scarce resource, operators have to be allowed to buy spectrum from those with unused spectrum. This can also prevent speculation in spectrum auctions.
What has been the international experience in spectrum trading/sharing?
Romal Shetty Spectrum trading has already been implemented in the US, Australia and many European countries, including the UK. In the European Union, the significant benefits that spectrum trading, in conjunction with radio frequency spectrum management tools, could bring to the development of electronic communication networks and services have already been identified. The European Commission is in favour of all member countries adopting a coordinated course with respect to spectrum trading.
In 1989, New Zealand became the first country to allow spectrum rights to be traded. It is an example of a market in which spectrum trading has been fully implemented, extending even to trading of spectrum between applications. The attitude of the government as well as the operators in New Zealand towards the spectrum trading regime remains positive, although it is difficult to measure any increase in efficiency. The impact and success of spectrum trading can only be demonstrated when trading in spectrum rights reaches significant volumes. In Germany, following the framework directive, legislation ensures that any transfer takes place in accordance with the procedures laid down by the national regulatory authority and is made public.
There might be different ways of spectrum trading for different frequency ranges, and different ways of use with specific institutional arrangements. Therefore, specific regulations for different frequency ranges may be expected in the future.
Prashant Singhal Spectrum trading allows users of wireless licences to transfer some of the rights to third parties. Thus, spectrum is transferred to users who can use it more efficiently. The practice started way back in 1989 in New Zealand. Since then, spectrum trading has been adopted in various countries including Australia, Guatemala, the US, the UK, Canada, Hungary, Spain and Sweden.
Under spectrum trading, companies holding spectrum licences can transfer all or part of their rights and obligations to another party. Basically, spectrum is traded between users who can buy, sell, aggregate and disaggregate spectrum holdings in response to the dynamics of market forces and technological change. As a result, spectrum is transferred to those who can put it to use efficiently. So, spectrum can even be provided for a short period to those who need it.
Namrta Sudan Many countries have been looking at new ways and means for effective and efficient use of spectrum. Some have introduced innovative market-based measures to determine the value of spectrum and fully exploit the resource. For this, spectrum trading/sharing has been allowed among telecom players, on a temporary or permanent basis, depending upon the requirements. However, the regulators in such countries initially faced difficulties in understanding the complexity involved in the spectrum trading/sharing model.
Countries such as Australia, Guatemala, the Netherlands, New Zealand, the UK and the US have adopted the concept of spectrum trading/sharing in varying degrees. In the US, selling and trading of spectrum is already allowed. US regulators sometimes allow changes in spectrum use; such changes are approved on a case-bycase basis. New Zealand has been following spectrum trading since 1989. Countries like Australia and Singapore permit spectrum trading in varying degrees. On the other hand, a recent study reveals that spectrum trading has not been a hugely successful concept in the UK owing to reasons such as incomplete competition, liberalisation, and lack of technical/commercial support of operators.
Mahesh UppalMost of the modern regulatory regimes allow some mode of transferring spectrum. Spectrum is treated as a transferable resource in most developed markets.
Moreover, an increasing number of countries are moving towards property rights for spectrum.
What are the different modes of spectrum trading/sharing? Which of these has been successful so far?
Romal Shetty For the potential buyers and sellers of spectrum, there are many ways to transfer the rights and obligations to match each other’s requirements and maximise the economic benefits from the trade. The theoretical possibilities of spectrum trading, even though independent of their respective legal authorisations, are: Sale: One way of disposing of the rights to use radio frequencies is to transfer the rights and obligations connected with the right to use radio frequencies, with the effect that the rights and obligations of the seller become the rights and obligations of the buyer.
Lease: Leasing spectrum is an attractive option for potential lessors as the transaction is time limited and the spectrum eventually comes back to the lessor.
A range of lease lengths could be granted, depending on the needs of the potential lessee. By allowing flexibility, active markets with a variety of spectrum available for purchase can be established.
Frequency pooling: This might be described as a mutual lease of rights to use radio frequencies between undertakings having such rights and willing to use such rights in total. Frequency pooling is very
complex from the perspective of coordination of use.
Transfer of licence together with the right to use spectrum: The transfer of telecom licences together with unchangeable spectrum rights is something that is already permitted in some European countries under the current radio or telecom laws, or at least is not forbidden. The licence is transferred to another licensee together with the respective rights to use radio frequencies with unchanged conditions. The transfer is made via the NRA or after informing the administration.
Share deals with rights to use the radio frequencies involved: The right to use radio frequencies may be transferred by transferring the shares of an undertaking having such rights to another legal entity.
Prashant Singhal There are broadly three models –? trading and flexibility model, unlicensed model and new technologies. In the first, spectrum users are given a tradable right. This works in a situation where the suppliers of wireless applications and services compete for spectrum. In the unlicensed model, users jointly use spectrum without a licence. However, this could lead to interference. But this problem can be solved so that transmission is not affected. The new technologies model works through complementary spectrum management approaches like using intelligent radios.
Spectrum trading results in three key benefits. It brings about economic efficiency, promotes innovation and provides organisations with the flexibility to acquire spectrum for short-term use.
Namrta Sudan Some of the international models of spectrum trading involve outright sale of all or part of the allocated spectrum by way of auction or sale, or leasing out all or part of the allocated spectrum. Leasing or licensing of spectrum by one telecom operator in a given area to another telecom operator, either temporarily or permanently, is the most prevalent model.
Mahesh UppalNo comments.
What are the various issues (licensing/regulatory/legal/technical/commercial) that are involved in spectrum trading/sharing, especially in India?
Romal Shetty The potential drawbacks are competition and interference control and market fragmentation. Sufficient safeguards need to be implemented by the administration to ensure that the benefits of spectrum trading/sharing are not offset by adverse consequences. TRAI would still have a role in ensuring that the traded spectrum continues to be used in an appropriate manner.
Allowing operators to trade spectrum could mean a direct revenue loss for the government. It might also be difficult to regulate, particularly with respect to interference problems.
Spectrum trading would have to take place within a clear and effective framework of spectrum planning and regulation to ensure:
Prashant Singhal The current telecom licences do not allow spectrum trading. So, first, this needs to be amended. Second, the government will have to specify what share of the spectrum price it should get once companies start trading.
Namrta Sudan Spectrum trading is a relatively new concept in many countries. The Indian government currently does not permit selling or buying of spectrum amongst telecom players. Accordingly, there are no regulations, policy or guidelines relating to spectrum trading/sharing.
If the government chooses to permit spectrum trading/sharing, the first step would be to create a clear, flexible, sound and transparent regulatory framework.
Such a framework should, inter alia, regulate the pricing of spectrum amongst telecom players (depending on the competition in the area proposed to be licensed), ensure transparent pricing guidelines, and spell out the rights and obligations of telecom operators that have licensed their spectrum. Similarly, the framework should include the rights and obligations of the other party, the nature of use of spectrum, changes in usage of spectrum after it has been leased or licensed, usage rights, etc.
As far as technical issues are concerned, telecom operators may face difficulties related to harmful interference, infrastructural requirements, usage rights, etc.
As the relationship between the licensor and licensee would be commercial in nature, there may be issues related to contractual obligations such as the liability of the licensor if the licensee interferes with the other’s spectrum usage rights, the licensee’s obligation to protect the rights of the licensor against third-party use, payment terms and conditions, use of spectrum, change in use of spectrum after acquisition by the licensee, the geographical area in which spectrum can be used, as well as issues relating to compensation if the licensor of spectrum is a direct competitor of the licensee.
Mahesh UppalEventually, spectrum should be traded amongst people who meet the criteria for mobile licensing. In addition, spectrum trading should be done in line with standards laid down by the International Telecommunication Union (ITU). The government should ensure that the spectrum is being used only for purposes that are part of the overall framework laid down by the ITU, and in line with internationally acceptable standards. Also, there has to be a check on services that can potentially cause damage.
