Key meeting tomorrow on spectrum refarming

Telecom Commission to decide on three proposals on how to refarm spectrum in the 900 MHz band

The Telecom Commission (TC) will hold a crucial meeting on Wednesday to discuss three ways on how to refarm spectrum in the 900 MHz band, which is available with incumbent operators such as Airtel, Vodafone, BSNL and Idea Cellular.

The three options are: Permitting operators to retain up to 5 MHz of spectrum, allowing them to retain only 2.5 MHz, and refarming all spectrum as has been recommended by the Telecom Regulatory Authority of India (Trai).

The TC’s decision will form the basis for the empowered group of ministers (EGoM) on telecom, which is expected to meet this week to take a final call on the issue.

The refarming of spectrum has become necessary because the 900 MHz on which incumbent operators offer 2G services is a very efficient band, used globally to provide 3G and 4G services. Besides, newer operators in the 1,800 MHz 2G band have repeatedly argued that those using 900 MHz always puts them at a disadvantage.

In its note for the Wednesday meeting, the TC says the idea of refarming of the entire spectrum has been endorsed by the Department of Telecommunications (DoT) committee apart from the Telecom Regulatory Authority of India and said it gives equal opportunity to all telecom service operators to bid.

However, operators would need to make substantial additional investments on towers and auctions if they fail in the auction, and it could have an adverse impact on rural coverage and quality of coverage in urban India.

On the second option, where operators will be permitted to retain 2.5 MHz of spectrum, the note says that it will help moderate redundancy of existing infrastructure, and give adequate opportunity to all telecom operators.

But the amount of spectrum might not be optimal technically and can be optimised only if operators have some spectrum held in the 1,800 MHz band as well. Also, it cannot be enough the deploy LTE (long term evolution) services unless 5 MHz is available in the 900 MHz band.

The other option is to allow operators to retain 5 MHz of spectrum.

But the note says that this will provide no incentive for incumbents to bid for auctions and could have an adverse impact on price realisation in the auctions.

Also, there will be no equal opportunity for non-holders to win 900 Mhz spectrum with only zero or one block of 5 Mhz available for non-holders of 900 Mhz.

The move for refarming has been opposed by incumbent operators, who have argued that this would lead to a huge disruption in network and fall in the quality of service.

It would also lead to considerable disruption of service of customers due to blackout of GSM services in many areas. If these sites are replaced with 1,800 Mhz band, providing GSM services the coverage would shrink and large portion of existing customers will not get mobile services.

Also, they argue that the cost of migrating the network from 900 Mhz to 1,800 Mhz is band is estimated at around Rs 125,000 crore. Also, operators have to write off investments of over Rs 25,000 crore.