The spectrum issue has become something of a conundrum. There are certainly no easy answers to this riddle. Operators cannot do without it, yet can’t seem to agree on any viable method of accessing it. A battle is now under way between Ratan Tata, chairman of the Tata Group, and the entire telecom industry over spectrum allocation and pricing ?? actually, whether to pay for it or not.
The war clouds started gathering soon after the Department of Telecommunications (DoT) released guidelines for allocating additional spectrum based on subscriber numbers. Though the Wireless Planning and Coordination (WPC) wing has always followed a discretionary spectrum allocation procedure of 2:1 for GSM and CDMA operators, tying spectrum allocation with subscriber numbers has ruffled CDMA operators. They feel they have been denied a level playing field because, despite having the same subscriber base in a circle, they would be entitled to only half the spectrum allocated to GSM operators.
Ratan Tata, whose Tata Teleservices Limited (TTSL) offers CDMA-based mobile services, took up cudgels on behalf of CDMA operators and sent off a missive to the prime minister highlighting the issues plaguing the industry. He pointed out that there should be technological neutrality in spectrum allocation, with both GSM and CDMA operators getting the same amount of spectrum.
Darryl Green, CEO of TTSL, went a step further in voicing his discontent. He stated that the current system of allocation is “a mechanism for granting favours”.
Meanwhile, Tata put the cat among the pigeons by adding in his letter that spectrum ought not to be given free since it is a scarce resource. Instead, he suggested that it be priced at Rs 15 billion or auctioned.
Not surprisingly, the GSM lobby is protesting. T.V. Ramachandran, secretarygeneral of the Cellular Operators Association of India (COAI) points out that with a substantially larger mobile subscriber base in the country, the requirements of GSM operators for fresh spectrum are much higher. Also, going by the CDMA operators’ claim that as a technology CDMA is more spectrum efficient, they ought to be satisfied with half the spectrum that GSM operators need to service their increasing mobile base.
Sunil Mittal, chairman of the Bharti Group, also sent off a letter to the prime minister, pointing to the hurdles in pricing or auctioning of spectrum.
Unfortunately for the Tatas, they seem to be quite alone in this battle as even Reliance Infocomm, their rival and bigger CDMA operator, has remained silent through the proceedings. Analysts say that the Tatas’ strong involvement perhaps stems from the fact that they are among the worst hit. Since spectrum allocation is linked to subscriber base, Reliance Infocomm, with close to 19 million subscribers, more than twice that of TTSL and comparable to Bharti in many circles, would be entitled to fresh allocation whereas TTSL would not.
At the moment, as far as spectrum allocation is concerned, the situation remains unchanged. Since both sets of operators bring in experts to certify different levels of spectral efficiencies, it is obvious that any new norms recommended will lead to allegations and counter-allegations.
Meanwhile, with the growing subscriber base, it is becoming increasingly imperative for operators to get additional spectrum in order to maintain quality of service norms. India is adding nearly 5 million mobile subscribers each month. According to TRAI’s previous estimates, a six-seven-month delay in spectrum allocation translates into 12-14 million subscribers clogging the mobile network.
All the major telecom players including Bharti, Reliance Infocomm, Hutch, Idea and the Tatas have been in queue for getting additional spectrum to expand their connectivity to more areas. Bharti applied for additional spectrum for its Delhi circle in August 2005. The application is yet to be cleared. It is the same for Hutch, which applied for spectrum in June 2005 and Reliance in October 2005.
Taking note of the gravity of the situation, the Ministry of Telecommunications has stepped in to set up a coordination team comprising members from both DoT and the Ministry for Defence to resolve the issue. The plan is to release about 45 MHz of spectrum by the year-end, which the defence ministry has agreed to vacate in the 1800-1900 MHz band. The project is likely to cost Rs 10 billion. While the committee will work out the modalities for compensating the defence forces, it is unlikely to frame a spectrum policy.
For that, DoT has once again approached TRAI for its recommendations. The regulator will also have the opportunity to reconsider its earlier recommendations. This is necessary as WiMax has since emerged as a promising technology to deliver wireless broadband. The implementation of WiMax will be contingent on allocation of an appropriate frequency band and quantum of frequency available upfront.
Net net, while steps are being taken, they do not seem to be keeping pace with the urgent requirement for spectrum. Several analysts view auctioning or pricing of spectrum favourably, arguing that it would be more realistic in terms of ascertaining spectrum efficiency and requirement. But the decision on dispensing spectrum rests finally with DoT.
