Telecom companies wary of runaway spectrum bids in February can breathe easy with the defence ministry agreeing to swap 15 MHZ of spectrum in the 2100 MHz frequency band. As a result, subscriber tariffs will also stay in check — with higher auction bids, telcos would have passed on costs to subscribers.
After telecom minister Ravi Shankar Prasad met defence minister Manohar Parrikar to resolve issues on November 17, the telecom ministry has formally delineated a proposal on swapping spectrum in a draft Cabinet note on November 26. The defence ministry has agreed to the proposal on the ‘defence interest zone’ the day after the telecom ministry wrote to it.
With 15 MHz of the 2100 MHz frequency band in the kitty, chances are the February auctions will now be for all spectrum together — in the 900 MHz, 1800 MHz and 2100 Mhz bands — as the Telecom Regulatory Authority of India had initially suggested.
While the telecom ministry was initially talking of a two-stage auction — a 2G one for 900/1800 MHz in February and a 3G one for 2100 MHz spectrum in May — it is now amenable to the idea of one big-bang auction.
Had the swap not been agreed to, auction bids would have spiralled in the critical 900 MHz spectrum frequency band (see graphic). In this band, there is 184 MHz of spectrum up for auction across 18 circles, and telcos need to retain this to continue their services. In which case, it requires just one new telco to bid up prices astronomically. If, however, there is 15 MHz of pan-India 2100 MHz spectrum available — this translates to 270 MHz of spectrum in the 18 circles where auctions will be held — the auction bids will not spiral out of control.
Till November 26, while notifying the ‘defence interest zone’ in the crucial 3G band, the defence interest zone had been delineated as 1907.5 MHz to 1954 MHz on the uplink and 1987.5 MHz to 2000 MHz on the downlink. For the first time, on November 26, the Cabinet note included 1900-1907.5 MHz and 1980-1987.5 MHz and said this would be swapped in return for spectrum in 1939-1954 MHz.
Trai, which has been asked for a recommendation on pricing of 2100 MHz, is likely to complete the exercise by the end of the month. Given the usual time for inter-ministerial consultations, the Cabinet approval could come in about two to three weeks.