The government’s decision to refarm spectrum in the 900-MHz band so that it can be used to offer high technology services such as 3G is in jeopardy, unless it can find additional spectrum for the auction slated next year. Currently, the band is used to offer 2G services, mainly voice calls.
Incumbent operators say they will oppose any move by the government to reserve five MHz of spectrum for a new operator in this band, which will leave them with hardly any additional spectrum, unless more is made available.
However, state-owned companies could provide a major relief to the government as they might not oppose a move to prepone the refarming of their spectrum in the 900-MHz band, slated in 2017 (for MTNL) and 2020 (for BSNL) when their licences come up for renewal. This will bring an additional 3.7 MHz of spectrum in each circle for the 900-MHz auction next year. Says A K Garg, chairman and managing director of MTNL, which operates in the Delhi and Mumbai circles, “If the government wants us to prepone refarming, we will have no problem with that.”
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The government has only 7.4 MHz to 11 MHz of 900-MHz spectrum available in 12 of 22 circles after it was decided to refarm the spectrum of incumbent telcos whose licences would come up for renewal in 2014-16. The government permitted them to retain only 2.5 MHz of spectrum. In the rest of the circles, spectrum availability is even lower. If the Department of Telecommunications (DoT) decides to reserve one block of five MHz of spectrum for a new operator, as stipulated by the regulator, it would have enough spectrum left for only one incumbent operator to take 2.5 MHz. However, there are two incumbent telcos in each circle whose spectrum has been refarmed.
The telcos and the DoT are talking to ensure more spectrum is released in the 900-MHz band. The DoT is considering the regulator Trai's recommendation that spectrum available with BSNL and MTNL in the 900-MHz band be refarmed immediately, as they got the spectrum without paying.
In its latest recommendations, the Trai has allowed operators to keep 2.5 MHz in 900 MHz on the assumption that 3.7 MHz of additional 900-MHz spectrum would be available from the state-owned corporations in each circle in the first phase of the auction process. That is why they have assumed there will be spectrum of 11.1 MHz to 14.7 MHz, which would be enough for three operators with five MHz of spectrum to operate in the 900-MHz band and even offer high technology services.
Telcos are in discussions with the government to push for the release of another 1.6 MHz of spectrum in most circles, which could be vacated by the railways. The Trai has said this 900-MHz spectrum is valuable and is used all across the world for 3G and other services than 2G voice services. It has recommended it should be offered as “liberalised spectrum” (spectrum which can be used to offer any service) with at least a block of five MHz for a new operator.
Rajan Mathew, director general of Cellular Operators Association of India, says, “The government has now let us retain only 2.5 MHz of 900-MHz spectrum, for which it is asking us to pay a premium or the market rate that was supposed to be paid if I was given 'liberalised spectrum' of up to five MHz. So why should I pay a premium at all? Even if I win 1.25 MHz in the auction, why should I again pay the market rate?”
Telcos say the real availability of spectrum could be even less. “If you take the requirement of a guard band to separate spectrum in the same band being used for different technologies (2G, 3G, LTE, etc), the total available spectrum in 900 MHz after refarming for auction will go down further, at least by another MHz to 1.25 MHz,” says a top executive of a leading telecom operator.
