The recent bonhomie between the telecom industry captains extends even to auction of spectrum in the 700 mhz band, popularly referred to as the 4G spectrum.
In their meeting with telecom minister Kapil Sibal last week, telecom biggies including Reliance Communications’ Anil Ambani and Bharti Airtel’s Sunil Bharti Mittal demanded a level playing field in 4G allocation. This was a part of their wish list submitted to the minister, which also includes the uniform licence fee of 6% and liberal merger and acquisition regime among others.
The demand opposes the Telecom Regulatory Authority of India’s (Trai’s) initial suggestion that only those players be allowed to participate in the first phase of the 700 mhz spectrum auction who do not currently hold spectrum in the 900 mhz band. This suggestion had meant that incumbent operators such as Bharti Airtel, Vodafone and even Idea Cellular in certain circles wouldn’t be allowed to participate in the first round of auctions but would subsequently be allotted spectrum in the 700 mhz band if it was available subject to they matching the highest bid price.
With the number of participants restricted, this auction process would obviously benefit the newer players who had been complaining that they weren’t allotted the more efficient spectrum since none was left.
Interestingly, the regulator had also cited level playing field issues for its suggestion since the incumbent operators already held spectrum in the 900 /800 mhz band, extremely efficient bands of spectrum compared to the 1800 mhz which the newer operators were allotted. This meant that the newer GSM operators such as Rcom and Tata Teleservices had to invest much more on setting up network than Airtel and Vodafone had to, thus resulting in lesser expenditure and higher returns.
As part of its recommendations on 2G spectrum pricing and licensing framework the regulator has said that spectrum in the 800/900 mhz should be reframed at the time of the renewal of telecom licences.
While operators in the 900 mhz band should be substituted with spectrum in the 1800 mhz band, operators with spectrum in the 800 mhz band should be substituted with spectrum in the 1900 mhz band. Meanwhile the authority would carry out a separate consultation process on the issues involved in refarming of 800/900 mhz spectrum.
