Big telcos wont benefit much from spectrum sharing rules

Written by fe Bureau | New Delhi | Updated: Jul 22 2014, 07:13am hrs
Bharti AirtelDoesn?t address gaps in 3G networks; An Airtel can?t share with an MTNL
The spectrum crunch faced by mega operators like Bharti Airtel, Vodafone and Idea Cellular, especially with regard to 3G services, wont be resolved by the spectrum sharing guidelines released by the Telecom Regulatory Authority of India (Trai) on Monday, although these are liberal and more helpful than those proposed by the department of telecommunications.

The regulator has barred spectrum sharing beyond two operators (see graphic) in a circle and inter-band sharing between, say, 800 and 2100 MHz has also not been allowed. In such a scenario, the big three operators whose active subscriber base is above 90% will have little room to share.

Given the high proportion of active subscribers, spectrum will not be adequate for an operator to share to do that it would need to compromise on its quality of services, said an executive working with one of the top three firms. In such a situation, spectrum sharing becomes attractive for only weaker operators whose active subscriber base hovers around 50-60%.

Though the guidelines, which need to be approved by DoT, allow operators to share 3G spectrum, the restraining factor is that this can be done only in circles where they have spectrum in this band. The concept of intra-circle sharing of 3G spectrum has not been allowed by Trai. The lack of 3G spectrum on a pan-India basis with any operator is the biggest problem in the sector, the sharing guidelines do not address it.

However, if the government approves spectrum trading along with sharing, bigger operators also stand to benefit. Trai had recommended liberal trading guidelines earlier this year but DoT is yet to approve them. How much the government yields on trading and sharing guidelines remains to be seen the view within DoT has been that if allowed in the measure suggested by Trai, they may depress prices in the forthcoming auction either later this year or early next year.

The good news is that while spectrum caps have been retained, for the purpose of calculation of additional spectrum there has been a relaxation.

However, any major gain on this front has been whittled away by levying an additional 0.5% spectrum usage charge on shared spectrum. Operators said that this should not have been done since the government would have anyway earned higher revenues through licence fee if their earnings increased through sharing.

Further, spectrum sharing has been recommended in both spectrum won through auctions and the ones which are with the operators through the earlier allocation process. Earlier DoT had recommended sharing only in the case auctioned spectrum. While allowing sharing in all kinds of spectrum, however, the Trai has said that since the spectrum won in auction is liberalised airwaves, it can be used for all services if shared but the allocated ones can be used for the services for which they were given.

Trai has ensured that the administrative processes for spectrum sharing remains hassle free. For instance, it has said that operators only need to inform DoT about their agreement on spectrum sharing and require no permission from the government for sharing airwaves. Only the Wireless Planning & Coordination Wing (WPC), which is custodian of spectrum, will have the authority to raise objections, if any, to spectrum sharing agreements. However, Trai has recommended that WPC should inform about any objections within 15 days of the companies entering into an agreement. The companies should reply in the next 15 days and the WPC needs to take the final decision within the next fortnight. If not, the agreement would be held valid.