The spectrum issue refuses to die down. A new issue has now arisen over the former telecom minister Dayanidhi Maran’s stated interest in allowing global players into the ambit of 3G services in order to increase competition and improve quality.

Given that spectrum is a scarce resource and its fair allocation amongst mobile operators is already a subject of dispute, the question being asked is, is it justified to allow global players to offer 3G services

Tata Teleservices Limited (TTSL) wrote to D.S. Mathur, secretary, Department of Telecommunications (DoT), asking for a level playing field for existing players as against new and global players. The company also sought a hearing of its concerns. “The interests of existing telecom licence holders who have contributed significantly to make India the fastest growing telecom market world over must be protected and a level playing field should be provided to them,” says a senior company official.

Sunil Mittal, chairman and managing director of the Bharti Group, echoes the sentiment. “My concern is that the existing players get enough spectrum. There is scarcity of 2G (voice) spectrum. In fact, most operators believe that today, it would be wiser to allow the entry of 2G companies into 3G in order to develop the markets.

In its representation to DoT, the Cellular Operators Association of India (COAI) drew attention to the fact that the Telecom Regulatory Authority of India (TRAI) had in its earlier recommendations clearly stated that “additional spectrum, if available, should be given to existing operators for cost-effective service”. Quoting TRAI, COAI stated that a balance has to be maintained between increasing competition and improving quality on the one hand, and coverage and price efficiency of service on the other, so that the larger objective of providing quality services at affordable prices is not compromised. If new entrants are allocated GSM spectrum at the expense of the existing operators, it would lead to a “suboptimal” cost structure and quality of service, which in turn would be detrimental to the overall teledensity growth.

In fact, GSM operators claim that paucity of adequate spectrum is already affecting the quality of service. This has been highlighted on a regular basis by the regulator as well. Moreover, now that the government is to take a decision on the allotment of 2G spectrum for Reliance Communications Limited (RCL)’s GSM venture, existing operators are demanding that spectrum allocation be prioritised.According to GSM players, though the licence is technology-neutral, they should have the first right to 2G spectrum when it becomes available.

According to COAI, “Both policy and regulations emphasise adequate spectrum availability for existing service providers, before considering the needs of new players. Even in the case of a CDMA licensee seeking allotment of GSM spectrum, it should be able to get the same only after the needs of the GSM providers are fully met and secured.

Not surprisingly, the Association of Unified Service Providers of India (AUSPI) does not agree with the COAI’s viewpoint that CDMA operators’ spectrum needs to be placed second to GSM operators. However, both sides agree that encouraging new players to offer 3G services is not necessary.Notes S.C. Khanna, secretary, AUSPI, “India is the only country with as many as seven telecom service providers with their own extensive networks. So it makes no sense at all in calling more players from outside. Moreover, given the scarcity of spectrum, it would be prudent to satisfy the seven players who have already spent a lot of money taking up licences and setting up networks.They are also in a better position to leverage the network to offer better tariffs to users ?? this has been proved by us.Hence, I personally feel there is no further need for foreign players to come in.

On its part, DoT has stated that it will go ahead with TRAI’s recommendations on allocation and pricing of 3G spectrum so that only existing operators bid for 3G spectrum.

Meanwhile, in a separate development, the defence ministry, which was to vacate some frequency bands for the telecom sector, is far from doing so. It claims that the cost of releasing the spectrum is prohibitive. “BSNL itself has admitted that laying exclusive fibre takes about two years to complete, incurring an additional cost of Rs 13 billion. In that case, the total cost of the army project for the three services will be about Rs 40 billion,” states a defence ministry letter to DoT.

Earlier, DoT had approved Rs 9.8 billion, the initial estimated network cost worked out by the project definition team comprising members from DoT and the defence ministry. However, little has been done to raise additional funds to meet the cost escalation.

In all this, it does appear that the spectrum policy and release of additional spectrum, expected by June 2007, may get more than a little delayed.