In a breather to incumbent mobile operators, the telecom regulator has re-opened the debate on spectrum re-farming. In a consultation paper issued on Tuesday, the Telecom Regulatory Authority of India has sought industry comments on how re-farming can be done in a way that allows existing players to continue services.
This offers a new window to the telecom companies as the Department of Telecom had already made up its mind to shift incumbent players out of the 900 MHz band. According to the department, if the incumbent players want to continue services then they should buy it back during the auction. Operators such as Airtel and Vodafone had objected to this move. With TRAI looking into it afresh now, they can hope to push for a change in the Government mindset.
The regulator has also hinted at the possibility of lowering the base price for spectrum. In the paper, it said using the 3G spectrum price as the base to work out the value of spectrum in another frequency band was akin to comparing apples with oranges.
“The 3G spectrum sold in the auction of 2010 was seen as catering to the provision of data services such as video services and other data packet services. This was significantly different from the voice-dominated services provided on 900, 1800 or 800 MHz spectrum. 3G services have a different eco-system, growth profile and even subscriber base, as compared to 2G services. From this point of view, even assuming similar market conditions in 2012-13 as compared to 2010, the 900, 1800 or 800 MHz spectrum could not, prima facie, have had a relative value in 2012-13, similar to the 3G band,” the TRAI said in its consultation paper.
The regulator has raised the issue of too many players in the market and the possibility of imposing restrictions on the eligibility of companies who can bid in the auction. “Presently, there are 6-10 operators in each service area. However, because of a large number of operators in each LSA, there is cut-throat competition, which has adversely affected the financial health of operators and the industry,” it said.
Contiguous spectrum
However, the paper has not dealt with the issue of availability of contiguous spectrum in the 1800 MHz band. Discontinuous spectrum will be of less value compared to contiguous spectrum. According to DoT, spectrum in a number of areas is not continuous. The TRAI has also not discussed the possibility of swapping 2100 MHz band with the defence forces for creating more spectrum for 3G.
But the paper talks about two other important issues — spectrum trading and using 800 MHz band for GSM services.
Currently, 800 MHz is assigned for CDMA players but the TRAI reckons that operators are increasingly moving away from this technology and therefore the spectrum could be given to GSM operators. TRAI has suggested that BSNL and MTNL should be asked to vacate spectrum in this band.
On the issue of spectrum trading, the TRAI said that this would help to ensure optimal efficiency. The paper would now be discussed with the industry before TRAI issues its final recommendations.