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In a significant move that could address the problem of call drops, the government on Wednesday allowed spectrum sharing between telecom operators. For telcos, it means they will be able to improve the quality of their services, efficiency of their spectrum, and expand their networks without buying more spectrum through an auction route. Telecom players have always claimed that lack of spectrum, among other things, is one of major reasons for call drops.
In simple terms, spectrum sharing will allow telecom companies to share their unutilised spectrum with other service providers in the same circle in the same band.
At present, the government allocates spectrum to telecom firms only through auction while earlier it was being allocated through an administratively fixed price.
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Telcos will have to pay one-time processing fees of Rs 50,000 per licensed area for sharing spectrum. Also, additional spectrum usage charges (SUC) of each of the licensees after sharing will increase by 0.5 per cent of aggregate gross revenue (AGR). Currently, telcos pay SUC at 3-5 per cent of their AGR.
The decision to this effect was taken on Wednesday in a Cabinet meeting. The processing fee, though, could be modified from time to time and will be payable individually by each licencee for each service area at the time of intimation.
Spectrum-sharing can be done between two licencees on the condition that there will be two independent networks in the same band. Leasing of spectrum will not be permitted. All access to spectrum, including traded spectrum, can be shared.
Sharing will also be permitted where both entities possess spectrum for which market price has been paid. However, in respect to spectrum in the 800 MHz band acquired in the auction held in March 2013, sharing of spectrum would be permitted only if the differential with the latest auction price on pro-rata basis is paid.
Sharing will be permitted where both sharing entities have 'administratively allotted spectrum' and where one entity has spectrum acquired through auction or liberalised spectrum and the other has spectrum allotted administratively. Sharing will be permitted only after spectrum charges are paid for liberalising the administratively allocated spectrum, a government statement said.
Till now, only passive infrastructure (towers) sharing was allowed among operators, while active infrastructure (spectrum) was not allowed.
According to experts, sharing spectrum will enable operators to provide additional network capacities in places where there is network congestion due to spectrum crunch.
Rajan Mathews, director-general, Cellular Operators Association of India, termed it "a very positive step" that will help the telecom operators manage their networks efficiently and improve the quality of services. "This will give the much-needed fillip to the telecom sector. It will help the sector build capacity and address issues like call drops."
Telcos also welcomed the decision of the government to allow spectrum sharing. "This was a much-awaited regulation and with this, operators like Uninor will be able to optimise use of spectrum as well as offer a superior customer experience both on voice and internet," said a Uninor spokesperson.
A Vodafone spokesperson echoed similar views, saying "the decision is a step in the right direction for ushering in Digital India".
Telecom Commission, the highest policy making body of the Department of Telecommunications, had cleared the guidelines for spectrum sharing in June this year based on the recommendations of the Telecom Regulatory Authority of India.
The operators will have to inform the government at least 45 days before the start of spectrum sharing. They will also have to give an undertaking that they are in compliance with all terms and conditions of the guidelines for spectrum sharing and licence conditions.
Hemant Joshi, partner, Deloitte Haskins & Sells, said, "This is good news for the telecom sector as the network operators can now make optimum utilisation of spectrum. It would improve the quality of service for the end consumer and help in improving the financial performance of telcos. It will also improve the investor confidence in the sector."
SHARE AND SHARE ALIKE
- Operators will be allowed to share spectrum in a licensed circle in the same band
- A one time processing fees of Rs 50,000 will be charged to each operator in a circle
- Additional 0.5% spectrum usage charges will be levied on operators for sharing spectrum
- Operators have to inform govt atleast 45 days before start of spectrum sharing
- Move to help operators utilise spectrum efficiently and address call drop situation
- For consumers, quality of services to improve
