A major fight is brewing between telecom operators Bharti Airtel, Vodafone Idea and Reliance Jio on one side and technology players Google, Microsoft, Apple, Facebook, etc, on the other, over a spectrum band that has the potential to provide high-speed broadband services, especially in remote areas and for better in-building coverage.
The issue that has divided the two sides is whether spectrum in the band concerned should be delicensed or should be allocated through auctions, as is the case for access services spectrum.
The telecom operators, under the aegis of their association, Cellular Operators’ Association of India (COAI), have written a letter to the government that the spectrum in the band concerned should be auctioned, as not doing so would lead to loss of revenue to the government because of these bands having a very high commercial value proposition. Opposing their stand, the technology players through their association Broadband India Forum (BIF) have contested COAI’s stand, and written that the spectrum should be delicensed and not auctioned, as it is not the same as spectrum for access services. Questioning the COAI’s stand, BIF has pointed out that auctioning of spectrum in these bands would go against international best practices.
The spectrum concerned is the E and V bands, which are used as backhaul to connect mobile where fibre is not available.
Sources in the department of telecommunications (DoT) have thus far maintained that auction is ruled out, but so is administrative assignment, which means allocating spectrum on first-cum-first-served basis.
What’s likely on the cards is a light touch licensing but a final decision is awaited.
In fact, the Telecom Regulatory Authority of India, which submitted its recommendations to the DoT way back in August 2014, has also favoured a light licensing approach and not auctioning this spectrum.
The Trai had recommended that both E and V bands should be opened with ‘light touch regulation’ and allotment should be on a ‘link to link basis’. It had said that E band carrier should be charged at Rs 10,000 per annum per carrier of 250 MHz each and there should be initial promotional discount of 50% for three years from the date of allocation of first carrier in this band. In case of charging of V band carriers, it had said that it should be Rs 1,000 per annum per carrier of 50MHz each. It has said that prices would be reviewed after five years based on deployment and usage.
The argument against auction is on the premise that there’s not much the government is going to get by doing so, unlike access spectrum. The value of a spectrum band depends upon various factors like ecosystem but the most important factor is its propagation characteristics. The lower frequency spectrum is more valuable compared to the higher frequency as the radio waves riding on the former travels further, thereby requiring fewer base stations, which means less operational costs.
The value of E and V band spectrum is low because they have very poor propagation characteristics as they fall between 71-76 Ghz and 81-86 Ghz (E band) and between 57-64 Ghz (V Band). These bands are like fibre and can be used for broadband services but not for direct mobile connectivity.
According to some analysts, the telecom operators are opposed to the move to delicense the E and V bands as they fear that technology companies may enter into the broadband market and use the delicensed spectrum, which would come free of cost, to provide services to consumers. This may lead to a non-level playing field as telecom operators have spent billions of rupees in acquiring access spectrum to offer the same kind of services. Companies like Microsoft, Google, Facebook, etc, have in the past shown their intent to provide broadband using delicensed spectrum.