The issue of allocation of additional 2G spectrum refuses to die down. The government has, in the past, constituted three expert panels to look into the matter but has met with little success. Now, another expert committee comprising top officials from the government, the telecom regulatory body, technology experts and industry officials is deliberating on a solution to the problem and looking into the issue of allocation and auction of 3G spectrum.
Problems cropped up recently when it was widely reported that the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had asked the communications and IT ministry to stop allocations of radio frequencies (spectrum) beyond 6.2 MHz to GSM players. The news was disconcerting for GSM players who approached the TDSAT claiming that, in accordance with their licence conditions, they had an automatic right to get up to 15 MHz of spectrum. The tribunal, however, did not relent. It ruled that according to the terms of the New Telecom Policy, 1999, GSM players did not have any “vested right” to receive spectrum beyond 6.2 MHz.
Since all the top GSM operators ?? Bharti Airtel, Vodafone Essar and Idea Cellular (in some circles) ?? hold over 6.2 MHz of spectrum, they had to approach the TDSAT seeking clarity on what exactly “vested right” to receive spectrum beyond the 6.2 MHz mark meant.
The current spectrum allocation policy based on the Telecom Regulatory Authority of India’s (TRAI) recommendation allows operators using GSM technology to avail of 6.2 MHz of spectrum each, while operators using the rival CDMA standard get 5 MHz each. Thereafter, subject to the operators’ meeting certain predefined subscriber targets, GSM operators can have a maximum of 15 MHz of spectrum, while for CDMA players, this limit is 7.5 MHz. The Department of Telecommunications (DoT) had even issued a press release early last year stating this rule.
However, not willing to buy this reasoning, the telecom tribunal has stated that “TRAI’s recommendations on the subscriber-linked criteria for spectrum allocation had been made in total violation of the principles of transparency”.
In a fix about ending the ongoing controversy, DoT has announced that the current spectrum allocation policy is only an interim measure and that the new committee will soon have answers to resolve the spectrum issue.
It has come as a relief to GSM operators that the TDSAT judgment does not direct DoT to stop following the interim policy till the committee submits its report. DoT has also sought legal opinion on the way forward since it wants to avoid any further controversy.
Meanwhile, it is being strongly rumoured that the committee set up by the government in 2008 to resolve the issue of additional spectrum allocation is coming around to the unanimous view that an auction-based system has more merit than subscriber-based allocation.
The model being reportedly considered is this: all allotments beyond 6.2 MHz and 5 MHz for GSM and CDMA operators respectively be handed out through the auction route. However, operators need to have a minimum subscriber base to be eligible to participate in the auction process.
Of course, this decision is not public; if the committee does reach a consensus, however, India could move to an internationally accepted auction-based system for issuing additional radio spectrum to existing mobile operators. According to telecom experts, this would be a healthier practice as India is the only country that allocates spectrum based on subscriber numbers, a practice that has led to charges that several Indian mobile operators inflate subscriber numbers to corner this critical resource.
There are issues to this solution, however, and these will need ironing out. One issue concerns the pricing of spectrum beyond the 4.4 MHz frequency band that is given out initially with a new licence. The question here is, should new licensees like Reliance Communications, Sistema Shyam TeleServices, Swan and Unitech be charged market prices for spectrum beyond the initial 4.4 MHz, or should they get up to 6.2 MHz free and then pay the market price for spectrum beyond this?
Analysts also want to know what would happen to companies like Bharti Airtel and Vodafone Essar, which have already received spectrum beyond 6.2 MHz. Will they be asked to pay the market price for the “extra” spectrum since the TDSAT has said that existing GSM players do not have any automatic right to more than 6.2 MHz of spectrum?
Whatever the final decision, it will have to be a carefully thought-out one as the key fact remains that the government does not have enough 2G spectrum to meet the demands of existing players and new entrants who got licences last year. Neither does the government have sufficient 3G radio frequencies that will allow operators to offer this much-awaited service in the country.
Meanwhile, DoT has refused to sign a memorandum of understanding with the defence ministry over spectrum vacation as its new demands include waiver of spectrum charges payable by the armed forces and that DoT should take care of the defence forces’ network maintenance charges for 10 years. In light of this, analysts fear that the spectrum crunch in the country will only get worse.
