Running out of airwaves

Spectrum crisis needs government attention

There's a spectrum crisis looming over the telecom industry. Spectrum for 18 of India's 22 telecom circles, allocated in 1995, will expire next year. The issue is that there aren't enough airwaves to accommodate the demand of the incumbents and the newcomers. The spectrum surrendered by the incumbents (in the 900 MHz band) will be enough only in five circles to sell slots (5 MHz each) to three service operators. In six circles, there will be slots for just two operators. And in the remaining seven, there will be spectrum to accommodate just one operator. There could be four or five bidders for spectrum in each of the 18 circles. Apart from the two who got spectrum in 1995, those which want to offer high-speed data services to their subscribers are expected to take part in the auction. The 900 MHz band is highly efficient and the law permits it to be used for all services - in the second, third and fourth generation categories. In the 1,800 MHz band, there is some spectrum available. But contiguity is a problem in this band as chunks of it are with the armed forces. In addition, there is no availability of this band in eight circles including big ones, such as Karnataka, Maharashtra and Punjab.

The problem can be solved if the armed forces vacate 15 MHz spectrum in the 2,100 MHz band. They had let go of 20 MHz that was auctioned for 3G services in 2010. They are now required to cede more. In 2009, the armed forces had agreed to give up spectrum if the department of telecommunication, or DoT, demarcated a separate "defence band", as well as a "defence interest zone". Five years later, there hasn't been much movement on that front. The armed forces in 2009 had also agreed to release 5 MHz once the DoT built a secure fibre-optic network for them. The DoT now says the network is more or less ready and the armed forces should quickly release 5 MHz spectrum. But that will hardly meet the demand for spectrum in the auction scheduled for February next year. It is important for the Narendra Modi government to resolve the issue quickly. There could be some intra-government rivalry here. After all, if the DoT demarcates a "defence band", it loses all control over that spectrum. So, it's a matter that requires the attention of the Prime Minister's Office, which could ensure inter-ministerial co-ordination.

If there aren't enough slots, telecom companies will bid aggressively for spectrum. For a sector already laden with debt, thanks to the auction of 3G spectrum, and stuck with low tariffs, this could be really bad news. Most companies are in no position to contract more debt on their balance sheets. Also, spectrum sold in auction needs to be quickly allocated, especially in cases where migration from one band to another is involved. The spectrum that was bought by telecom companies in February has only now been allotted. It should have happened six months ago. Disruption is quite possible when the companies make the switch over the coming month or so. In the next round, the DoT should see to it that the delay is not repeated.