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Refarming spectrum not legally tenable, says Vodafone

Firm regrets that both DoT and Trai failed to consider far-reaching adverse implications of move that will put additional cost burden on company, likely to be passed on to consumers

Piyali Mandal  |  New Delhi 

Challenging the government’s decision to refarm spectrum, telecom giant Vodafone has said any such move to withdraw spectrum in the 900-MHz band from incumbents would not be “legally tenable”.

In a hard-hitting letter to Telecom Secretary R Chandrashekhar, it said, “Trai recommendations on refarming are based on an erroneous and incorrect interpretation of the principle of technology-neutrality embedded and enshrined in both policy and licence and is in violation of the rights of the licensees to deploy any technology without restriction in the designated frequency band.”

It added: “The licence provides for extension on terms that are mutually agreed... thus, there can be no change in the fundamental structure or construct of our licences and, thus, there can be no change in the fundamental structure of our licence at extension, either on the quantum or band of spectrum.” It regretted that both the department of telecommunications and Trai had failed to consider the far-reaching adverse implications of the proposed spectrum refarming that will put an additional cost burden on the company, likely to be passed on to consumers.

Vodafone said any decision to withdraw the 900 MH band spectrum will have grave impact on service providers, consumers and the environment. Adding: “Operators will have to write-off existing 900 MHz assets at an estimated cost of Rs 22,310 crore.”

Besides, if the incremental investments in refarming and spectrum costs are passed to consumers, the national average rates would go up by as much as 64p/minute (30p due to refarming and 34p from spectrum investments).

The issue has created a clear division among telecom operators, with the old trio of Bharti, Vodafone and Idea on one side, opposing the refarming, while the others, including the Tatas and Reliance Communications seek immediate refarming of spectrum in the 900-MHz band. Both sides have given to the DoT a detailed analysis of costs involved, with the newer operators contesting the claims of Bharti, Vodafone and Idea.

Trai had recommended that service providers using the 900-MHz spectrum band (being used for 2G GSM service) to transmit signals for mobile and other wireless services should be shifted to the higher frequency band of 1800 MHz after the licences come up for renewal. The government had accepted the proposal. it has set the minimum price for 5 MHz of spectrum across India in the 1,800-Mhz band, being used by most of the new players for 2G services, at Rs 14,000 crore for the coming auction. The spectrum price will be double this in the 900-MHz band.

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First Published: Mon, September 17 2012. 00:24 IST