Data spectrum would be in big demand at auction: J.S. Deepak
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New Delhi: Ahead of the spectrum auction, India’s telecom sector has been witness to some acrimony. Reliance Jio Infocomm Ltd has accused leading telecom operators of not providing sufficient points of interconnections (PoI), while incumbent operators have charged the telecom regulator with bias for a consultation paper it floated.
In an interview, J.S. Deepak, secretary in the department of telecommunications and the person responsible for ensuring a smooth spectrum auction, spoke on these issues. Edited excerpts:
Do you think the entry of a new operator has boosted participation in the auction?
It is difficult for us to say and we will find out in the auctions; but if Reliance Jio is the competition for other players, many of them need certain kinds of spectrum if they are to compete in the future Indian markets in next two years for data. I can see that there are gaps in the spectrum of some of them and they need to bid if they are to remain in the market. And they appear to be keen—as in, there are players who are keen to stay in the market—so that should improve the demand.
What is your response to the reaction that Reliance Jio has been getting?
It’s a big event for the large-sized Indian telecom sector. A player with huge investment and spectrum as well as network has launched services. It has naturally brought some kind of upheaval. They also have introduced some features and pricing plans, which will require adjustment by others. And, as I said, most importantly, since price is being driven down and more choice is being provided, it’s beneficial to consumers and should help uptake of data even faster.
Somehow, every time a new entrant has come in, there has been a debate on interconnection points. What could be a possible solution to PoI? Can we fix it once and for all?
Every time a new passenger enters a compartment which is unreserved and crowded, there is going to be some disruption. So, this is how it is in telecom sector as well. As far as PoIs are concerned, the telecom sector is a mix of a number of networks which are interconnected; so PoIs need to be given. How many, when, initially how much, how much augmentation—that would depend from operator to operator. But a consumer of a network should be able to connect to the consumer of other network, which is our requirement.
Any changes in regulations that are needed? Can the government address this challenge through regulations and policies?
Interconnect is something which is in the remit of Trai. Trai Act clearly gives it the remit. But interconnect is directly related to congestion which is related to quality of service issues, which, again, is monitored by Trai. So, congestion parameters take care over a period of time that there are no barriers in interconnection.
Of the total bands the government is putting in the auction, which bands do you expect to be in high demand?
As I mentioned that Indian telecom sector is preparing itself for heavier data use and more applications, so the data spectrum would be in demand certainly. While operators would like to buy spectrum to fill gaps in 2G and 3G spectrum as well, the data spectrum will certainly see heavy demand, and this included 800, 1800 and 2300 and also 2100.
What about 700 MHz?
700 has been put up for auction for the first time. The ecosystem is developing in the world. We have 700 being used in the US and Europe but not even in China. So, this auction will set the ball rolling for device ecosystem in 700MHz to start developing in India. Now, 700MHz as you know, very high quality spectrum because of its propagation characteristics, it is used for extensive coverage including indoor coverage. Those who value good quality 4G spectrum for 4G services providing data services, we expect bid for the spectrum.
What steps have you taken to ensure that this round of spectrum will be better than before?
In the recent past, last six-to-eight- months I can say for sure, some of the decisions we have taken are transformational as far as improving ease of doing business in Indian telecom sector is concerned.
One, 100% FDI (foreign direct investment) is allowed in both telecom services as well as telecom manufacturing.
Two, we have been looking at making spectrum available in adequate quantities as per international norms.
Three, in the coming auction, we are putting out 2300MHz plus of spectrum in seven bands; so as far as value is concerned, volume is concerned, or as far as variety is concerned, it’s going to be a very big auction.
Fourthly, to make existing spectrum more efficient, we have done a fairly extensive process of harmonization on 1800MHz and 800MHz which has benefited operators by bringing their holdings together, by removing guard bands and filters which has given us more spectrum to auction and the value of the spectrum, reform spectrum that has come out of the reforms and harmonization is about Rs27,000 crore at reserve price, which we will auction again.
Again, as you know, there have been guidelines for sharing, trading and liberalization of spectrum and the clarifications that we have issued in the month of March and April. So, spectrum trading has happened in this country for the first time in the month of May, June and July; so, the spectrum reforms are not only taking place but they are becoming visible on the ground as well.
Beyond the spectrum, we have also done certain reforms; we have introduced new licence which is the VNO licence, virtual network operators, which has been on demand for some time. This helps operators prove their utilization of networks. Now, we are coming out with more rules and simplification of licences, so there are a huge set of reforms, which is being rolled out which will make the Indian telecom sector even more responsive to the needs of telecom operators. So, if an operator says there is a problem in ease of doing business, they are mostly saying it due to past experience rather than current.
Do you think the changes that you have made are enough for a company like Telenor to rethink their strategy to stay in India?
I don’t think Telenor will take a decision depending upon the basis of ease of doing business or otherwise. They must have looked at the competitive environment and the amount of money they are willing to put in the market as it grows, whether they are far behind the others, and things like that.