The Department of Telecom’s swap formula, under which the Defence forces have been asked to vacate spectrum in one band for a similar amount in another frequency, is a win-win for all. The 3G spectrum in the 2100 MHz band given up by the Defence will enable mobile users to get better broadband services and help the Centre mop up a sizeable sum by putting the airwaves up for auction. The three Defence forces will also stand to gain by acquiring spectrum in the 1700 MHz band, which is contiguous to their existing usage. One of the aims of the new telecom policy is to make broadband-on-demand available by the year 2015 at a minimum download speed of 2Mbps. Since expanding fixed line networks for broadband will require huge investments and time, mobile broadband is the only realistic route to roll out nationwide broadband quickly. Therefore, ensuring access to its chief raw material, namely spectrum, has to be taken up on priority.
Though the Government is looking at auctioning spectrum in other frequencies including 1800 MHz, 900 MHz and 700 MHz, it is the 2100 MHz band which offers the best economies of scale. There are currently more than 211 operators across the world using this spectrum for 3G services. This has ensured the consumers have access to a wide variety of 3G devices at affordable prices. In contrast, the 1800 MHz and 900 MHz bands are predominantly used for 2G voice services; as for deployments in 700 MHz, they are at a very early stage. The proposal, if accepted by the Defence forces, will free up 20 MHz of additional 3G spectrum in the 2100 MHz band. More spectrum enables more telephone conversations and data traffic over a network. Mobile companies in the US and Japan are able to offer video and live streaming of television channels on smartphones because they have 30-40 MHz of spectrum. In contrast a 3G operator in India has only 5 MHz. A recent study has revealed that 3G data consumption in India has gone up from 338 MB/month in December 2011 to 434 MB/month in December 2012. At this rate India’s 3G networks will get congested by 2015. This will not only impact the quality of service but also the scope of applications available to consumers.
Telecom companies, desperate to shore up higher revenues from data services to compensate for the slowing voice business, are keen on accessing a larger pool of airwaves. The Centre can look forward to some aggressive bidding for this spectrum because most 3G operators are looking to create a pan-India data network. According to the Finance Ministry’s estimates auctioning spectrum in the 2100 MHz band could fetch nearly Rs 50,000 crore, not to be scoffed at, especially in these financially straitened times.