The Chief Executive Officers of four telecom companies — Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications — have written to the Government seeking deferment of the next round of spectrum auctions. The operators have said that the auction should not be held till the Government is able to find enough spectrum to ensure continuity of service for existing players.
There are 11 circles in the country where operators whose licences are due for extension in 2015-16 face the risk of business disruption, including potential closure, unless they win back expensive spectrum in the 900MHz band.
This is because the amount of spectrum being put up for auction in January is less than the 2G spectrum currently being used by operators whose licences are due for renewal. For example, in Maharashtra, Vodafone and Idea Cellular together have 14 MHz in the 900 MHz band, which will be put up for auction. If either of these operators is unable to win back the existing holding then there will not be enough spectrum in the 1800 MHz band to fall back on.
“Inability of such operators to win back 900MHz spectrum in these circles (a distinct possibility in view of the fact that the proposed auctions are likely to be open to all bidders),will either lead to the market leaders in these circles shutting down operations or being forced to curtail operations due to inadequate spectrum. This will create an unprecedented crisis for the sector and impact subscribers, operators, their employees and other stakeholders such as lenders,” the joint letter written by the CEOs to the Communications Minister and the Prime Minister stated.
They said that the limited quantum of spectrum shall be an impediment to the provision of affordable broadband data services, which will be detrimental to the Digital India vision outlined by the Government.
“Short-term revenue collection measures of conducting an auction with highly limited spectrum is not going to serve the broad digitization targets envisaged by the Government,” the letter stated. The operators have suggested that the auction should be deferred till availability of spectrum in these circles is increased. “The operators may be asked to pay for the extended period of spectrum usage at prices benchmarked to the closing prices of the February 2014 auction, pro-rated for the period of use,” the telecom honchos said.
Telecom regulator TRAI had also highlighted that supply side issues will affect not only the proposed auction of spectrum arising from expiry of licences in 2015-16, but will also continue to have a negative impact on all subsequent auctions of spectrum becoming available from future expiry of licences. TRAI had warned against the dangers of going ahead with the forthcoming auction without resolving the spectrum constraints. The operators said that the Government should plan to auction all 900 MHz spectrum allocated between 1996 and 2000 to telecom players, including BSNL and MTNL.