Drop combined spectrum cap proposal for sub-1 GHz bands: COAI

GSM operators' body COAI today said the Trai's proposal to have a combined cap for 700, 800 and 900 MHz bands should be dropped as it will lead to spectrum concentration in specific band by single operator, depriving others from acquiring airwaves in a particular band.
In its consultation paper for valuation and reserve price of spectrum in 7 bands for the next round of auctions, Trai has sought stakeholders comments if cap on the spectrum holding within all bands in sub-1 GHz (700, 800, 900 MHz) frequencies be specified and in such a case, should the existing provision of band specific cap (50 per cent of total spectrum assigned in a band) be done away with.

The spectrum cap, the limit of radiowaves a telecom operator can hold for providing wireless services, is 50 per cent in a spectrum band identified fit for transmitting mobile signals and 25 per cent of the total such spectrum assigned in a telecom circle.
In a letter to Trai Chairman RS Sharma, COAI said, "The industry is deeply concerned over the proposal of a new spectrum cap, which once enforced, may promote spectrum concentration in a specific band with a single operator."
It further said, "It will seriously affect the level playing field and may deprive many operators from acquiring spectrum in a particular sub-1 GHz band. Therefore, this question needs to be dropped from the consultation paper."

COAI said the current cap of 50 per cent has effectively served the interest of consumer, competition and industry whereas the proposal of a separate cap in a market of 10-13 players may empower a single operator to acquire excessive amount of spectrum in a particular sub-1 GHz band, creating monopoly.

It also said the new spectrum caps are tantamount to changing rules midway as during the last few auctions when spectrum in 800 Mhz and 900 Mhz was assigned, the operators were subject to band specific cap rule.
"Has this new spectrum cap implemented during the past few spectrum auctions, operators' cap limits for 900 MHz and 800 Mhz would have been different and they would have placed their bids accordingly," Cellular Operators Association of India (COAI) said in the letter.

It said currently, 800 Mhz and 900 Mhz are held by 3-4 operators due to intra-band cap, but with the proposal, may allow one operators to acquire excessive spectrum in 700 Mhz or consolidate airwaves in 800 Mhz, which is underutilised to a great extent.
(REOPENS DEL43)
The Department of Telecom will issue clarification, if any, on August 29, and then will give 15 days time to companies for submitting their application.
Interested bidders will have to submit application for participating in auction by September 13.
Successful bidders will have to pay 3 per cent of their revenues from telecom services as spectrum usage charges (SUC) to government.

Existing or incumbent telecom operators winning spectrum in the upcoming auction will need to pay SUC according to weighted average method calculated taking in account current levy applicable on them and three per cent on fresh airwaves.
Government has relaxed equity lock-in period. This will free company, whose networth has been used to procure spectrum, to exit from the company in 1 year as against 5 years prescribed earlier.
"The roll out obligation will be considered complete if the district headquarters and block headquarters are covered by use of any technology in any band. In the sense that if a district headquarter is covered through one technology it does not have to be done by other technology," Deepak said.

New participants in the auction will have to provide Performance Bank Guarantee (PBG) of Rs 35 crore per telecom circle for bidding in 700 MHz, 800 MHz, 900 MHz and 1800 MHz. Existing players will need to provide PBG of Rs 21 crore per circle.