Faced with practical constraints, the empowered group of ministers (EGoM) on Thursday approved partial refarming of the more efficient 900 MHz band telecom spectrum. Though this did not exactly bring cheer to incumbent GSM operators like Bharti, Vodafone and Idea Cellular, it does provide them some relief as they would now be able to retain 2.5 MHz in this band while the remaining would be taken away for refarming in lieu of which they would be given spectrum in the 1800 MHz band. The practical constraint faced by the government is that there isn?t enough spectrum in the 1800 MHz band to carry out full refarming of 900 MHz in all 22 circles. At best, it could be done only in nine circles.
The decision of the EGoM does not need to go to the Cabinet.
However, the three operators will have to pay the auction-determined price for retaining the 2.5 MHz spectrum and can only bid afresh for another chunk of 2.5 MHz . So, the maximum they can hold in this band is 5 MHz. The government plans to auction the 900 MHz spectrum in the first half of 2013. Though Trai has suggested the base price for it at double of what was fixed for 1800 MHz , which works out to R28,000 crore, the EGoM has not taken a final decision on it.
Thursday?s decision comes after the telecom commission, the apex policy-making body in the department of telecommunications with inter-minis- terial representation, revised its October 17 proposal to refarm all 900 MHz spectrum held by the three incumbent GSM operators and state-run BSNL and MTNL. This happened after Planning Commission deputy chairman Montek Singh Ahluwalia ? who is also a member of the EGoM ? subsequently raised concerns about the lack of a consultation process on the impact of refarming. This led the DoT to once again seek analysis and technical inputs from the telecom regulatory authority of India. The Trai report on October 30 highlighted the practical constraint of full refarming on the one end and allowing the operators to retain 5 MHz, thus suggesting that the best option was to allow the operators to retain 2.5 MHz, which was approved by the Telecom Commission on October 31.
The practical constraint pointed out by the Trai in its report was that the government cannot go for full refarming because it does not have enough spectrum in the 1800 MHz band in all circles to provide to operators in lieu of the 900 MHz being taken away. For instance, full refarming was feasible only in 9 out of the 22 circles.
If operators had been allowed to retain 5 MHz, there would not have been enough spectrum to put up for auction so that a new operator gets the basic minimum of 5 MHz to run operations efficiently. In each circle, there are three operators holding the 900 MHz spectrum. Allowing them to retain 5 MHz each would have entailed blocking 15 MHz.
Since spectrum available in each circle ranges between 18.6 MHz to 22.2 MHz, the residual spectrum would have ranged between 3.6 MHz and 7.7 MHz, creating a situation where there would not have been the minimum 5 MHz required to run operations efficiently in all areas for any new operator.
The Trai said that by allowing operators to retain 2.5 MHz, two purposes would be served; one, services provided by them in rural areas would not get disrupted due to changes in network planning because of change in spectrum band and two, sufficient spectrum can be made available in the 1,800 MHz band which needs to be provided to operators in lieu of vacating the 900 MHz band. For instance, in this case, refarming is possible in 13 circles and in the rest, the shortage of 1,800 MHz is less than 5 MHz which can be met by asking some government agencies to vacate spectrum.
The GSM operators’ association, the Cellular Operators Association of India (COAI), which had criticised the move to refarm the full spectrum stating that the operators would have to fork out Rs 1.5 lakh crore apart from huge expenses entailed in fresh network planning, capex and opex, continued to be critical of the EGoM decision.
?It will be next to impossible to service 450-500 million subscribers in the existing 900 MHz band with the same quality of service with limited 2.5 MHz in 900 MHz band and remaining on the 1,800 MHz band without any disruption of wide-scale services…. In fact, an operator with 2.5 MHz in 900 MHz band and remaining spectrum in 1,800 MHz band is worse off than an operator with complete network in 1,800 MHz band as this network will give a false delusion of coverage. The difference in spectrum propagation/ network design in the two bands will lead to coverage constraints,? it said.
The association has demanded that a proper consultation process on refarming be initiated by Trai. Further, it has urged the EGoM to set up a high-powered technical body with representatives of global companies and technical experts to study the feasibility of refarming.
