DoT, defence ministry resolve spectrum swapping issue

The Department of Telecommunications (DoT) and the defence ministry have finally resolved the contentious issue of swapping spectrum for commercial use. The issue has been hanging fire from 2009, when a basic plan of vacation of spectrum was decided between the two.

Sources said Communications and Information Technology Minister Ravi Shankar Prasad met newly appointed defence minister Manohar Parrikar on Monday evening, adding the two had reached an agreement on the matter. "The department has given a detailed work plan on the swapping of 2,100 MHz with 1,900 MHz, with a tentative timeline for implementation. Both ministries have discussed this in detail and have agreed in principle," said a senior DoT official.

CLEAR TONE

• Communications and IT Minister Ravi Shankar Prasad met Defence Minister Manohar Parrikar on Monday evening and agreed on a plan of action
• Defence would give 15 MHz of spectrum in the 2,100 band (which is currently used for 3G)
• In return, it would get a similar amount in the 1,900 band which is with the department of telecom
• With this understanding, telecom firms, who feared shortage of spectrum would lead to competition and high prices, can breathe easy

The point of contention was a plan that the defence ministry would give 15 MHz of spectrum in the 2,100 band (currently used for 3G) in return for the same amount in the 1,900 band, which was with the DoT and had been reserved for providing spectrum to CDMA operators for expansion. Earlier, the two ministries had agreed the spectrum in the 1,700-2,000-MHz band would be equally divided between the two, each getting 150 MHz. However, the procedure for the division wasn't decided and this had become the bone of contention.

Now, telecom companies, including Bharti, Vodafane, Idea and Reliance Communications, which had feared a shortage of spectrum would lead to cut-throat competition and raise auction prices, can breathe easy.

The amount of spectrum to be available in the swap for the current auction isn't known. Experts say if the entire 15 MHz is made available, it will provide slots for three operators (each with five MHz) and moderate pricing in the auction.

The understanding between the two ministries comes a few days after Telecom Regulatory Authority of India Chairman Rahul Khullar said the tussle between the defence ministry and the DoT had to be resolved politically. He had added if the defence spectrum wasn't made available, there would be a severe shortage of spectrum in the coming auction, leading to a "bloody battle" that would hit the telecom sector.

Earlier, Trai had recommended the defence ministry give at least 15 MHz of spectrum in the 2,100 band. However, the Telecom Commission had rejected the recommendation, saying this wasn't possible.

With two operators returning their spectrum in the 900-MHz band (across 18 circles) in 2015 and with hardly enough spectrum available in the 1,800-MHz band for even one operator in key circles, the availability of 15 MHz in the 2,100-MHz band with the defence ministry will be key to a balanced auction.

The Cellular Operators Association of India has said there will be at least four players (including the two incumbent operators that will want to retain the spectrum in the 900-MHz band that they had returned) who will compete for spectrum in each circle. It added there wouldn't be more than three-four slots, leading to a huge increase in prices.