Deep divide over spectrum sale
Telecom operators are divided over the sale of spectrum in the cost-efficient 700MHz band. While Telenor and Tata Teleservices are in favour of buying the spectrum which can be used to provide high speed 4G services, operators such as Airtel, Vodafone and Reliance Jio want to wait till devices that can support such high-speed service become popular.
- Published 25.12.15
New Delhi, Dec. 24: Telecom operators are divided over the sale of spectrum in the cost-efficient 700MHz band. While Telenor and Tata Teleservices are in favour of buying the spectrum which can be used to provide high speed 4G services, operators such as Airtel, Vodafone and Reliance Jio want to wait till devices that can support such high-speed service become popular.
"It will be prudent to not auction the spectrum in the 700MHz band now. A recommended approach would be to do an ecosystem evaluation in two years' time and plan the auctions accordingly," Reliance Jio said in reply to Trai's consultation paper on the value of spectrum for the next round of auction.
Mukesh Ambani-owned Reliance Jio is expected to launch its 4G services, initially only for its employees, on December 27. The commercial launch is expected in March or April next year.
Last month, the Telecom Regulatory Authority of India (Trai) issued a consultation paper to determine the modalities, including reserve price and quantum of spectrum, for the next round of auctions, which are expected by March 2016.
Some operators think it will be better to auction the 2100MHz and 2300/2500MHz bands, which can be used to provide both 3G and 4G high-speed data services rather than sub-1GHz bands (700, 800, 900MHz).
According to Trai, the cost of delivering mobile services in the 700MHz band is around 70 per cent cheaper than the 2100MHz band. However, operators contend that the price required to buy the band now will increase the debt burden on telcos while no significant revenue will be earned from the resource.
Telecom major Bharti Airtel said: "Any immediate auction of the spectrum in the 700MHz band will lead to under utilisation of the spectrum for several years and block industry's fund.
"Therefore, it should be auctioned only after development of a strong device ecosystem."
Vodafone said, "Necessary caution may be exercised in respect of the terms of auction, including valuation, reserve price and rollout obligations."
An executive from another top telecom operator said 4G will need another couple of years to take off and it is only then that 700MHz spectrum will see a realistic bidding.
For the motion
Two telecom operators - Telenor and Tata Teleservices - have, however, favoured the auction of spectrum in the 700MHz band.
Telenor said 4G devices were being launched at a good pace and 214 devices were already available in this band globally.
"Assuming that the auctions are concluded in first quarter or second quarter of 2016 and the allocation of spectrum happens by the third or fourth quarters of 2016, telecom service providers in India will be ready with their 700MHz networks by mid 2017," Telenor said.
Telecom operators are also divided on the new spectrum holding limit proposed by the regulator.
According to the present rule, spectrum cap in a certain band is 50 per cent of the spectrum assigned in each band in the respective service area and 25 per cent of the total spectrum assigned in all bands put together in each service area.
While Reliance Jio, R-Com and Sistema Shyam Teleservices favour Trai's proposal to consider 700MHz, 800 MHz and 900 MHz as one for the purpose of imposing spectrum holding limit, telecom major Airtel, Vodafone, Idea Cellular, Aircel, Telenor and Tata Teleservices were against it.
"We believe that with the liberalisation of spectrum, the intra-band spectrum caps have lost their relevance," Reliance Jio said, adding that spectrum being technology neutral, the intra-band limit has become redundant.
Airtel said Trai should recommend an increase in the overall spectrum cap from the current 25 per cent to 33 per cent of the total airwaves holding but continue with the 50 per cent limit in a particular band.
The telecom major said that during the last few auctions, when a substantial amount of spectrum in the 900MHz band was assigned, the operators were subjected to band specific cap.
"We believe that changing these rules midway is illegal, unconstitutional and anticompetitive," Airtel said.