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Spectrum sharing spoiler

New Delhi, Dec. 22: The new guidelines on spectrum sharing, to be issued by the department of telecom, could translate into higher spectrum use charges for telecom operators and prevent them from buying radio waves in circles where they are not present.

A new draft guideline on spectrum sharing, a copy of which is with The Telegraph, states, “Parties sharing spectrum will be deemed to be sharing their entire spectrum holding for the purpose of (calculating) spectrum sharing charge.”

At present, the formula to calculate spectrum use charge is based on slabs. The charge varies from 3-8 per cent of revenue, depending on how the resource is being used. This means when an operator buys or rents fresh spectrum, it moves to a higher slab. Analysts maintain that the implementation of this rule will lead to the clubbing of total spectrum being shared by two operators to calculate the fee.

“For example, if telco A had 7MHz of spectrum and B had 4.4MHz and A rented out 2MHz to B, both will pay a proportionate but higher charge calculated on the total, that is 11.4MHz,” said Sudipto Bose, a telecom analyst.

This, along with the government’s refusal to charge a flat rate for spectrum, is not only detrimental to the upcoming auction in January but may also prevent operators from going ahead with the proposed sharing of spectrum and even mergers and acquisitions.

Sharing is also banned in circles where one of the operators does not offer services. The guideline drawn up by the wireless adviser’s department within the telecom ministry stipulates, “Spectrum sharing will be permitted in the same licensed service area.”

This implies that if an operator has services in the Calcutta circle but not in Bengal or Bihar and wants to rent spectrum in these circles, it will not be allowed to do so.

The government’s decision to stick to a slab-based formula to calculate the fee has attracted plenty of flak at a meeting held on Friday with major operators, including Vodafone and Bharti Airtel, warning that it would hamper their participation in the auction.

Telecom regulator Trai had, however, proposed a uniform rate of 3 per cent for all auctioned spectrum, including 2G and 3G.

This has not been accepted by the ministry, which maintains that spectrum sharing deals are commercial in nature where airwaves owned by the government will be shared commercially by its licensee with other operators for a profit. Officials argue that a higher charge is the government’s way to take its share of this profit.

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