TDSAT ruling backs govt, favours RCom

TDSAT ruling backs govt, favours RCom

New Delhi: The Union government can begin allocating radio spectrum to new wireless licensees for offering GSM-based mobile phone services, after a telecom appeals tribunal declined to extend a month-old ban on such distribution of frequency.

Wednesday’s decision of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) could mean that companies such as Reliance Communications Ltd, or RCom, will be able to set up a nationwide GSM network soon, unless the decision is challenged. TDSAT’s ruling came in response to a petition filed by the Cellular Operators’ Association of India, or COAI, a lobby representing GSM firms, challenging the government’s decision last month to allow phone firms to offer phone services using dual technologies.

The demand by GSM firms, including Bharti Airtel Ltd, Vodafone Essar Ltd and Idea Cellular Ltd, for additional spectrum will be addressed after a government committee studying spectrum use submits its recommendations. TDSAT chairman Arun Kumar said he would not interfere in policy matters of the government. “Let the government decide on it," he said reacting to the GSM lobby’s plea.

GSM is the dominant mobile telephony technology standard in India with three out of four mobile phone users in the country on GSM networks; CDMA is a rival standard.

During the last hearing of COAI’s petition on 12 November, the government had said it would constitute a committee with members from Telecom Engineering Centre (TEC), department of telecommunications (DoT), CDMA industry body Association of Unified Telecom Service Providers of India, and COAI, which would examine TEC’s recommendations of increasing subscriber base eightfold for allocation of additional spectrum. “The committee will be submitting its report in a week’s time," said solicitor general G.E. Vahanvati, who represented DoT before TDSAT.

The government would go ahead and issue fresh blocks of airwaves not exceeding 6.2MHz to operators waiting to start their services in new circles apart from companies that have been allowed to use dual technology to offer phone services, Vahanvati told reporters. Besides RCom, firms such as Himachal Futuristic Communications Ltd and Shyam Telecom Ltd, too, plan to start GSM-based networks.

“We will also consider Tata Teleservices’ application for cross-over technology in a favourable manner," he added. RCom and Tata Teleservices are the largest and second largest CDMA players.

The next hearing of TDSAT will take place on 9 January to examine spectrum allocation to the existing GSM players.

Analysts like Arvind Subramanian, who is a principal at Boston Consulting Group in Mumbai, said the move will benefit new players much more, and may not ensure equal footing for incumbents. “This is only the half solution, I would have liked them to wait till the issue of additional spectrum for existing operators is resolved," he added. “By the time the committee looking into the TEC recommendations submits its views and clears way for incumbents, there may not be enough spectrum left."

The GSM lobby, which was represented by counsel Abhishek Manu Singhvi, said it will challenge the findings of the committee after it comes out with the report. COAI pulled out of the committee last week citing lack of transparency in proceedings of the panel. COAI’s director general T.V. Ramachandran said: “You can’t even go to the Supreme Court against an interim order of TDSAT. We are looking at other options." He did not detail the options.

With DoT having access to just 25MHz of spectrum to be made available to phone firms immediately, new applicants such as Parsvnath Developers Ltd and AT&T Global Network Services Ltd may also have to wait longer. “After allocating around 4.4MHz each to almost four existing licensees waiting for spectrum, there will be room for not more than one new player," said a senior executive at a phone firm, requesting anonymity.

India’s biggest phone firm by subscribers, Bharti Airtel, had offered to pay almost Rs2,650 crore for 4.4MHz of spectrum on Monday and indicated that it could raise the offer if spectrum allocation is done through an auction. Smaller rival Idea Cellular said it will pay Rs1,650 crore for the same amount of spectrum.

Shares of RCom jumped 3.51% to Rs765.75 on the Bombay Stock Exchange (BSE) on Wednesday.