The Telegraph
Friday , August 8 , 2014
CIMA Gallary

Parleys begin to price spectrum

New Delhi, Aug. 7: The telecom regulator today kicked off a consultation process ahead of a crucial spectrum auction later this year to determine the reserve prices for radio waves in the 900MHz and 1800MHz bands in India’s 22 telecom circles.

The Telecom Regulatory Authority of India (Trai) has lobbed a set of 28 questions at the stakeholders.

Based on the responses, it will determine the process of valuing spectrum in the two frequency bands and determine the reserve prices for each telecom circle in the new round.

Spectrum in 18 out of the 22 telecom service areas for 900MHz and 1800MHz bands, which are used by GSM service providers, will need to be re-farmed as the 20-year validity of the spectrum-bundled licences ends.

Trai said spectrum availability in the 900MHz band varies from 4.4MHz to 15.6MHz in different circles.

Officials also cautioned that available spectrum was fragmented and non-contiguous.

Stakeholders are expected to send in their comments by September 8 which will be placed in the public domain. They will be given another week to make counterpoints to the suggestions received.

The regulator will then hold an open house to thrash out the issues raised by mobile operators, consumers and other interest groups.

The consultation paper said 184MHz of spectrum in the 900MHz band and 104MHz in the 1800MHz band can be put up for auction.

Earlier, the government had said it planned to hold the auction of telecom airwaves next February and would start the process of selecting an auctioneer by mid-August.

In the budget presented last month, finance minister Arun Jaitley had estimated earnings from spectrum auctions at Rs 9,355 crore this year as the telecom companies will have to stump up only a third of the bid price upfront and the rest in several instalments spread over several years.

DoT officials estimate the auctions to yield over Rs 30,000 crore.

Analysts said the government’s expectations were conservative, given the successful auction that generated a total bid value of Rs 61,162.22 crore in February by selling 46MHz of airwaves in the 900MHz band and about 307MHz spectrum in the 1,800MHz band.

India’s top telecom companies, including Bharati, Vodafone India, Idea and Reliance Communications, are required to bid in the auction to renew their permits in some service areas.

In December 2015, four licences of Bharti Airtel, seven each of Idea Cellular and Reliance Telecom and six of Vodafone must be renewed. DoT had put 385MHz of airwaves in 1,800MHz band and 46MHz in the 900MHz band for auction in February.

Besides, all available spectrum in the 800MHz band, primarily used by CDMA operators, across all the 22 circles may also be put up for auction, a long-standing demand from MTS.

The department of telecom has asked the telecom players to say whether the block size for the auction should be capped at 1MHz in 900MHz band and 200KHz in the 1800MHz — as in the February 2014 auctions. The other critical point is whether spectrum should be auctioned in contiguous blocks of 5MHz each.

This could pose a problem in the Bengal circle where only 4.4MHz of spectrum is available in the 900 Mhz band currently held by Reliance Telecom. If the block size is fixed at 5MHz, the auction cannot be held in the Bengal circle.

It gets even worse in the 1800MHz band where only 1.8 MHz of spectrum is available in the Bengal circle.

“The incumbent telecom service provider in Bengal will (then) be forced to close down its GSM service,” the paper said.

“Similarly, in the NorthEast, there would be only one successful winner, whereas there are two licences which are expiring.”

There is only one way to get out of such a sticky situation.

The regulator said that before conducting the auction, the government should explore the possibility of making additional spectrum available in the 900 MHz band in six circles: 5.6 MHz in Punjab by redistributing spectrum among the telecom service providers, 1 MHz in Maharashtra, Gujarat, Andhra Pradesh, and Karnataka, and 0.6 Mhz in Bengal.