In a letter to the Telecom Regulatory Authority of India (Trai) on August 8, which is holding consultations on the modalities of the proposed auctions, the joint communication electronic staff in the defence ministry raised the issue of infringement of the defence band. It also sought a meeting between the department of telecommunications and defence ministry on the issue.
Going by the concerns of the defence ministry the government would have to put smaller quantum of spectrum in the 1,800 MHz for auctions in 13 circles and would not be able to reserve the same for the operators from whom 900 MHz would be refarmed. Refarming means taking away the more efficient 900 MHz spectrum from the operators and putting it up for auction while providing them the 1,800 MHz in lieu of it.
It is evident that if the available quantum of spectrum is put up for auction, the quantum of 2G spectrum for commercial services will exceed 55 MHz in 13 circles, which is a clear case of infringement of defence band, the defence ministry has written.
With regard to the refarming of the 900 MHz spectrum, the defence ministry has said, It has been mentioned in the Trai paper that in the telecom circles areas where sufficient spectrum is not available to accommodate these operators, immediate steps are to be taken for government agencies to vacate this band. This implies that it will severely hamper defence interests as defence is the only other agency which would hold the balance 20 MHz of 2G spectrum. It needs to be ensured that defence interests both in the 900 MHz and 1,800 MHz band are safeguarded.
Sources said the objections raised may make it difficult to refarm the 900 MHz spectrum band by offering operators spectrum in the 1,800 MHz band instead because there wont be enough spectrum in the latter band.
Currently, Bharti, Vodafone and Idea Cellular have spectrum in the 900 MHz band and the three are opposed to refarming.
Government sources said that in November 2014 refarming would be possible in the Delhi, Mumbai and Kolkata circles, where the licences of Bharti (Delhi and Kolkata) and Vodafone (Delhi, Mumbai and Kolkata) are due for renewal. However, there would be a question mark on such refarming for licences due for renewal in other circles in later years as there would not be sufficient spectrum in the 1,800 MHz available. Surely, there can't be two categories of licensees as far as refarming is concerned, said an official involved in the process of policymaking on the issue.
Analysts FE spoke to said that the best course for Trai would be to recommend swapping of spectrum in the 1,900 MHz band with 15 MHz of spectrum in the 2.1 GHz band (3G band) held by the defence ministry. This would be possible as there's no demand for spectrum in the 800 MHz band (CDMA), to refarm which 1,900 MHz was reserved. The government can offer defence 7.5 MHz spectrum in 1,900 MHz band in exchange for 15 MHz spectrum in 2.1 GHz band. This would make at least three additional carriers of 5 MHz 3G spectrum available, which would ensure that the operators are able to get 3G spectrum on a pan-India basis. There would be demand for this spectrum and the government could get more revenues by selling it. Most importantly, the defence ministry has not opposed the swapping proposal.
Operators like Vodafone, Idea Cellular, Reliance Communications and several independent analysts have also supported the swapping proposal in their responses to the Trai consultation paper.