New spectrum caps may lead to 4G monopoly

Telecom regulator should ensure that rules are not misused by one telco to monopolise airwaves in a coveted frequency

In a recent consultation paper on spectrum valuation and reserve price, the Telecom Regulatory Authority of India, or Trai, has proposed a change that has the potential of distorting the playing field. Under the current rules, a telecom service provider cannot own more than 50 per cent of spectrum in any given frequency in a circle and 25 per cent of the total spectrum. This rule applies for spectrum in the 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz frequencies. Trai has now proposed the auction of spectrum in the 700 MHz frequency too. Since this frequency is being sold for the first time, spectrum cap rules for it need to be put in place before the auctions that are likely to take place by March. The regulator proposes that all the frequencies below 1 Gigahertz (700 MHz, 800 MHz and 900 MHz) should be pooled together and an ownership cap of 50 per cent on a single telecom service provider should be imposed. It has not proposed any band-specific cap. For frequencies above 1 Gigahertz, too, it has talked of doing away with the band-specific cap of 50 per cent.

This would make it possible for a telecom service provider to own the entire spectrum in a band - most notably in 700 MHz, which will be auctioned for the first time. This frequency, as Trai has noted in the consultation paper, offers very good possibilities for 4G LTE (Long-Term Evolution) services. Since it is a lower frequency, it offers better signal propagation strength. If a telecom service provider gets the entire band in a circle, it will have a distinct advantage over others, which operate on higher frequencies. Thus far, the core band for 4G LTE services has been 1,800 MHz. But several countries across the globe have started hosting the service on 700 MHz as well. It is fast emerging as a prime band for 4G LTE services. As a result, equipment for this band, as well as handsets, are now easily available - the prices have come down steeply. Since the battleground in India is shifting to data, and 4G LTE offers faster internet connectivity, there is a lot at stake on this frequency. It is the telecom regulator's job to make sure that the rules are not misused by one telecom service provider to monopolise the airwaves in this coveted frequency.

In fact, if the Trai proposal is accepted, it would be technically possible for a telecom service provider to own the entire spectrum in the 800 MHz or 900 MHz bands in a circle, too. In the past, spectrum in these two bands has been auctioned under the old spectrum caps (50 per cent on one band and 25 per cent overall). Telecom service providers had accordingly made their bids under those assumptions. To change the rules midway would be unfair to those companies. Naturally, the Cellular Operators' Association of India has voiced concern. Trai, it is hoped, will take these valid concerns on board.