COAI suggests that of the 20MHz additional spectrum the DoT will have to parcel among cellular operators, existing GSM operators be allocated the spectrum under the subscriber-linked allocation formula. In number terms, that will work out approximately to an additional 2MHz spectrum for every five lakh increase in customer base depending on the circle. The remaining spectrum should be shared between regional telcos wishing to go national and new entrants, Ramachandran says.
However, the suggestion is likely to throw a spanner into the works of operators such Spice Telecom, Reliance Telecom and Idea Cellular, all of whom are waiting to hear from the government on their applications to start operations in new circles. While Spice wants licences and spectrum in 20 out of the 22 telecom circles India is divided into, Idea is keen to take its coverage from 13 circles to 22.
The government has so far issued licences only to the third regional operator Chennai-based Aircel Cellular Ltd, which had applied before the other two telcos. In December last year, the company received licences for 14 circles, nearly a year after it put in an application. Idea received licences only for Bihar and Mumbai in December.
ACROSS THE BAND (Graphic)
Spice Telecom is yet to hear from DoT, a senior executive of the company says, asking he not be identified since his firm has filed for an initial public offering.
A spokesperson for the Anil Ambani group says Reliance Telecom had applied for spectrum in mid-2006. However, the company faces legal challenges. Current laws prevent it from expanding its GSM operations through Reliance Telecom in circles where affiliate Reliance Communications is present. The laws also prevent a telco using the CDMA platform from applying for GSM spectrum. DoT has asked the country’s telecom regulator to review both these rules.
Although 20MHz can accommodate four new operators in each circle, under the government’s spectrum allocation policy, most of the new radio-waves will have to be parcelled out among the existing operators. For example, in Mumbai, which has the highest amount of radio spectrum handed out to GSM operators at a total of 37.2MHz, the biggest operator, Hutchison Essar Ltd holds just 10MHz despite being eligible for another 5MHz going by its 2.6 million customer base.
In the fiercely competitive cellular industry, a less-than-national coverage is considered a serious handicap to increasing revenues while controlling costs. “If the government chooses to give out spectrum according to the subscriber and traffic linked criteria, under the current situation, there will not much spectrum left for us,” says a senior official with one of the regional GSM companies awaiting a licence.
Mahesh Uppal a Delhi-based consultant to regulatory bodies says the government is not legally obliged to give additional spectrum to operators who already have 10 MHz. “The license conditions say that a maximum of 10 MHz will be given, but further allocation can be done based on guidelines issued from time to time,” he adds. Uppal is critical of the government’s policy of linking the cost of spectrum to the operators’ revenues, which has led to inefficient use of the resource.