In a move that will not only lead mobile operators like Bharti Airtel, Vodafone and Idea Cellular to increase their 4G coverage but also enhance government revenues in the forthcoming auctions, the department of telecommunications (DoT) has asked all the firms to harmonise their spectrum in the 1800 MHz band by rearranging their frequencies.
Currently, 67% of the assignment in the band is fragmented, which means only a third of it is suitable for 4G.
In a letter sent out a couple of days ago, the DoT has asked the operators to start the process from May 23 and complete it by June 15. This assumes significance since the government is planning to hold auctions in July and, therefore, this process will lead to a contiguous spectrum availability of 209 MHz in the 1800 MHz band from negligible currently. On average, each of the total 22 circles will have 5-10 MHz. Taking an average of 7 MHz per circle with the reserve price of R2,873 crore per MHz, the minimum the government will be able to earn in the auctions will be R20,000 crore. It would have earned nothing if only 21 MHz would have been put up for auctions.
In the forthcoming auctions, 1800 MHz and 2100 MHz bands are crucial for the government as the 700 MHz is too highly priced and is unlikely to see bids by the operators. In the 2100 MHz band, which is used for 3G services, the DoT has got 15 MHz per circle from the defence services by giving them an equal quantum of 1900 MHz spectrum that was earlier meant for CDMA operators.
The benefit for operators due to this harmonisation will be that that the spectrum they currently hold will become contiguous and, therefore, more efficient. The spectrum in the 1800 MHz band is considered crucial because it can be used to provide 4G service on the LTE technology. A minimum of 5 MHz contiguous spectrum in this band is required to provide this high-speed service. Currently, though some operators have 5 MHz spectrum in this band in some circles, it is scattered in chunks and not contiguous and, hence, not usable for 4G.
Vodafone, for instance, has two chunks of 3.4 MHz and 4.4 MHz of spectrum in the 1800 MHz band in Gujarat which cannot be used for providing 4G. Once the harmonisation is done as per the DoT’s directive, it will get contiguous spectrum and the problem will be solved.
Though all the three top mobile operators — Bharti Airtel, Vodafone and Idea Cellular — will benefit from the move, the gains for Vodafone and Idea will be bigger. Both can enhance their 4G coverage by 8-10 circles. Currently, Vodafone has the capability to provide 4G services in five and Idea in 10 circles. Since Bharti Airtel has spectrum in the 2300 MHz band apart from 1800 MHz and has also made some acquisitions recently in these two bands through trading, it is in a position to provide 4G across all circles.
By solving this problem, the government has also created a long-term benefit for itself. Whenever the term of spectrum expires and operators need to renew it via auction, it will get a higher price.
Currently, there’s a total of 2×75 MHz of spectrum in the 1800 MHz band, of which 55 MHz is assigned to the mobile operators and 20 MHz is for the defence forces. The problem is that mobile operators are sitting on the 20 MHz meant for the defence sector and the latter is squatting on some portion of the 55 MHz meant for telecom operators.
Once the harmonisation is done, clear-cut demarcation will take place between the spectrum meant for commercial telephony and defence. A pact on these lines was signed between the defence ministry and DoT in 2011 but has not moved ahead because the harmonisation could not happen so far.
The DoT was finally able to do so by convening a meeting of all the operators and getting them to agree to rearrange their carriers