New policy may ban sharing of 3G spectrum, impose charge for 2G

Written by Jayati Ghose | New Delhi | Updated: Dec 19 2013, 20:42pm hrs
In what could put a spanner in the plans of telecom majors, the new spectrum-sharing policy will not allow high-speed 3G radiowaves to be shared. A draft note on the policy also proposes to levy a spectrum usage charge (at the slab rate applicable) on both operators sharing the spectrum, individually, for the entire quantum of radiowaves held by them together.

The government is in the process of finalising spectrum-sharing rules, which have to be announced prior to the start of auctions on January 23, 2014. Industry analysts said that a ban on 3G spectrum-sharing will not only have a bearing on the legal battle being fought by Bharti Airtel, Vodafone and Idea against the government on this issue, but also dampen the spirits of other 2G players who wanted to enter the 3G segment through similar agreements.

Operators had pinned their hopes on the new spectrum-sharing policy letting them provide high revenue- earning 3G data services on a pan-India basis even if they do not have radiowaves for all circles, said an executive from a top telecom firm.

The draft rules also state that spectrum-sharing will be allowed only if both operators hold radiowaves either in 1,800/900 Mhz or 800 Mhz bands. The sharing is, however, limited in the same service area or mobile circle. Analysts said this is likely to open up new revenue streams for existing operators such as Airtel and Vodafone to lease out radiowaves.

The government has refrained from granting a flat spectrum usage charge. If an operator X having 4.4 Mhz of spectrum shares 4.4 Mhz of spectrum of another operator Y, then both X and Y will be liable to pay spectrum usage charges applicable to 8.8 Mhz of spectrum, said the draft rules. The logic being that parties sharing the spectrum will be deemed to be sharing their entire spectrum holdings for the purpose of spectrum usage charges.

Currently, the spectrum usage charge is 3-8% of the operators adjusted gross revenue. Charges go up as the spectrum holding increases.

Operators who have paid a one-time spectrum charge, for holding radiowaves beyond 4.4 Mhz in GSM band and 2.5 Mhz in CDMA band, will be allowed to share spectrum without any additional charges.

While operators need a separate permission from DoT for sharing spectrum, leasing of radiowaves is not permitted, according to the proposed rules. It also caps the total quantum of spectrum, as a result of the sharing, to the limits prescribed in the M&A rules.

For spectrum bought through auctions, the rules state that spectrum sharing will be permitted only if the auction conditions provide for the same. The notice inviting applications for the January auctions allow in-principle spectrum sharing.