800 MHz battle certain to land up in court, either way
Even as the battle between RJio and the existing telcos begins, the stage is already set for a court battle, with preliminary salvos being fired via letters to the communications ministry. The COAI which represents the incumbents—it also represents RJio which has distanced itself from the COAI letter—essentially makes two allegations. One, the M&A guidelines give firms like RJio and RCom more spectrum than the others in the 800 MHz space, and the price of this spectrum is artificially low in most circles. Fortunately, communication minister Ravi Shankar Prasad took care of the first objection through the NIA document issued prior to this year’s auctions—so the spectrum caps, should RCom and RJio wish to share/trade 800 MHz spectrum are the same as for Airtel, Vodafone, Idea and the rest in other frequency bands.
The second part is trickier, and goes back to Trai’s original recommendations. Trai was of the view that unless contiguous chunks of 5 MHz of 800 MHz spectrum were made available, they could not be used for 4G data services, so the auction would never discover the true value of the spectrum. Trai made recommendations on how such contiguous 5 MHz blocks could be put together, but this was done in only 4 circles before the auctions. In these circles, the final bid was over twice the base price set for the auction; in the rest where there was too little spectrum to be of any real use to most telcos—had there been 5 MHz of contiguous spectrum, Bharti Airtel/Vodafone/Idea could have bid so as to offer 4G services—it is around the same. COAI is arguing that were RCom or someone else with 800 MHz spectrum to share/trade this with RJio, it would have to pay a much lower price in the circles where 5 MHz of contiguous spectrum was not put out for bidding. But since the NIA didn’t talk of spectrum in just 5 MHz chunks, the government has to accept any sharing/trading proposal at the lower values as well. If it does, the incumbent telcos will go to court; if it doesn’t, RJio and some of those with 800 MHz spectrum will go to court.