New Delhi: The Department of Telecommunications (DoT) has called an emergency meeting of the Telecom Commission, the government’s highest policy decision-making body for the sector, to review its recommendations on refarming spectrum in the 900MHz band.
The government’s decision last week to take back all spectrum in the 900MHz band from incumbent operators has come in for criticism.
“Questions have arisen regarding various issues relating to refarming and the modalities thereof as well as the quantum of spectrum in various bands that could be retained by a licencee at the time of renewal of licence,” DoT said in a 25 October internal note reviewed by Mint.
The note also drew attention to a letter by Montek Singh Ahluwalia, deputy chairman of the Planning Commission, to finance minister P. Chidambaram.
The finance minister is also chairman of the empowered group of ministers (eGoM) on telecom.
In his letter, also sent on 25 October, Ahluwalia asked that the panel seek the guidance of the Telecom Regulatory Authority of India (Trai) on the migration of services by the affected telecom companies from the 900MHz band to the 1,800MHz or other bands before the licences expire.
Ahluwalia has also asked that the government look into all the consequences of the refarming decision before taking a final call.
The commission recommended last week that the 900MHz spectrum held by the existing telcos, including Bharti Airtel Ltd, Vodafone India Ltd and Idea Cellular Ltd, be refarmed when their licences come up for renewal in 2014.
The 900MHz spectrum is considered to be highly efficient, giving older operators an undue advantage in terms of lower expenditure on towers and infrastructure due to the longer reach of the airwaves.
The government has already kept aside spectrum in the 1,800MHz band to replace the refarmed spectrum.
According to the note, the eGoM deferred its decision on refarming and directed DoT to provide a full analysis of the impact of the decision.
“The detailed analysis as directed by eGoM needs to be placed before it at the earliest to facilitate a decision preferably by 5 November,” the note said.
The auction for 2G spectrum in the 1,800MHz band is expected to start by 12 November.
Estimates published by the Cellular Operators Association of India (COAI), the primary GSM lobby group, said that the decision to refarm all the 900MHz spectrum could lead to a payout of around Rs.1.5 trillion to buy back spectrum when it is auctioned early next year.
It is estimated to cost a similar amount if the operators are not able to buy back the spectrum, and have to migrate their customers to the 1,800MHz frequency and fill in network gaps.
COAI said such a move will be a blow to the industry.
In his letter on the issue, that was also sent to all the other members of the eGoM, Ahluwalia said that the telecom panel did not have all the necessary information on refarming methodology, including international experience.
Ahluwalia added that the telecom panel was given three options and chose based on what was recommended by Trai and a DoT internal committee.
“There is no market-discovered price for 900MHz as yet. Licences that are due to expire between the years of 2014-16, along with the licences of BSNL and MTNL, account for 84% of the total 900MHz spectrum. We should have a clearer view of what is going to be done with the 900MHz spectrum after the licencees have been offered the 1,800MHz spectrum at the auction-discovered price,” Ahluwalia said in his letter.
BSNL, or Bharat Sanchar Nigam Ltd, and MTNL, or Mahanagar Telephone Nigam Ltd, are state-owned phone companies.
The Association of Unified Service Providers of India, the primary lobby organization for Reliance Communications Ltd and Tata Teleservices welcomed the refarming decision, saying the move would help in creating a level-playing field between incumbent as well as new GSM operators.