Any attempt to understand the maze of India’s telecom policy needs to start with the statement of a few facts. One, at various points in time, the policy favoured various telcos (or groupings of telcos). Two, maximizing revenue has not been the sole objective of the government in allocating spectrum (and thankfully so). And three, because of its recent failure to distinguish policy (imperfect as it may be) from its inept and motivated implementation, the government seems to have embarked on a journey to rewrite policy retrospectively.
Since reports first emerged of the 2G scam, the government has sought to draft an all-encompassing telecom policy and ongoing efforts by various bodies include a ministerial panel on a so-called refarming policy for spectrum.
On Wednesday, it emerged that that the Telecom Commission, the highest policy making body in telecommunications, has recommended that telcos that currently operate in the 900 MHz band surrender all of this spectrum in return for that in the 1,800 MHz band. The move will affect most first-generation telcos that operate on the GSM technology platform, the dominant one in India.
The quantum of spectrum given to these telcos, among them Bharti Airtel and Vodafone India, and the frequency at which this spectrum has been given have both been long-time irritants for other telcos, notably Tata Teleservices and Reliance Communications.
Both originally had licences to offer so-called wireless fixed services, then lobbied, first to have these converted into unified licences that would allow them to offer mobile services, and then to make the licences technology neutral which means that these telcos operate on both CDMA and GSM platforms.
A decade and half after the spectrum was first given, the logic behind the decision—if there was logic—to give it in the 900 MHz band is unclear. This frequency is universally considered an “efficient” one. At higher frequencies, spectrum bands typically have more bandwidth but cover a smaller area and don’t display a high ability to get around obstacles. In plain English, spectrum at a lower frequency means fewer cell towers and base stations are required. That explains the ire of those who didn’t get spectrum in this frequency and the reluctance of those who got it to now give it back.
The Telecom Commission’s decision would require the telcos to give spectrum in this frequency back, get that in the 1,800 MHz band in return (most mobile telephones are configured to work only on these two frequencies), and then bid for spectrum in the 900 MHz band (if they so desire) which the government will auction out as “free” spectrum, which means the telco can use it for whatever it desires.
No telco can avoid bidding for the spectrum because it’s perfect for so-called fourth generation or data-rich 4G services such as wireless broadband. Data is the future of telcos just as voice was their past and any telco serious about its business would like a presence in 4G services.
If the ministerial panel that has to decide on the issue accepts the Telecom Commission’s recommendations, some telcos will have to surrender all spectrum in the 900 MHz band, then invest substantially more to create the physical infrastructure required to operate in the 1,800 Mhz band, and then again bid for 900 MHz spectrum if they are serious about 4G.
A more equitable solution may have been to get the telcos to return all spectrum they have in the 900 MHz band, in excess of 6.2 MHz, which is the contracted so-called “start-up” spectrum promised to them. After all, any spectrum they received in excess of this was on the basis of ad-hoc policies that the New Telecom Policy is seeking to replace with a far more transparent one.
This might also encourage the telcos and their lobby, the Cellular Operators Association of India to accept the recommendations of the Telecom Commission. Their current position has been to hint at the disruption of services—to be fair, telcos are labouring under a total of around Rs.2 trillion of debt, and not all of them will be able to incur the additional expenditure required to move to 1,800 MHz—and it is likely that they will take the legal route if the ministerial panel should accept the commission’s suggestion.
Amidst all this, it is hard to ignore the fact that the policy being discussed will significantly favour Reliance Industries, whose telecom firm will soon start offering 4G services (it is the only one with a pan-India licence to offer broadband wireless services) and which has expressed some interest in participating in the 2G (second generation) spectrum auction next month.