The Hindu Business Line : Licence acquisition

Airwaves, airwaves, everywhere, if only I could have 5MHz of it as my share! As mobile phone operators queue up for spectrum, the band of airwaves that are licensed by the DoT, the tale of licences and spectrum has taken a new turn.

Reliance Communications (RCom) seems to have won the two initial battles – offering twin technologies (CDMA and GSM) in the same circle and winning countrywide licence for GSM services – for licensed resources.

The company hopes to get 2*4.4MHz of spectrum now as initial allocation. All new licensees to service areas get spectrum that is not linked to subscribers added by the subscribers. Subsequent allocations of spectrum are made subject to satisfaction of subscriber addition and geographical rollout criteria.

A shot in the arm for RCom is DoT’s clearance for one operator to offer twin technologies within a circle. This will allow RCom to expand its GSM operations across the country (it already has GSM operations in the north-east) including high revenue areas such as the metros and A circles. RCom adds over a million subscribers in its CDMA business; its ability to replicate this success in the GSM business remains to be seen. But RCom appears well placed with the technical and financial wherewithal that it possesses.

spectrum usage

There are also implications for other operators from DoT’s acceptance of TRAI’s recommendations on spectrum usage. Idea Cellular, which won licences for expansion to Mumbai and Bihar appears well-placed to receive spectrum for these two circles. But spectrum allocations in existing circles are still linked to stiff subscriber criteria (for example 1.5 million and 2 million subscribers for 2*8 and 2*10 MHz respectively) and may pose a challenge.

BSNL and MTNL have already been allotted additional 2G spectrum, which will allow expansion and raise competition level at large.

Bharti Airtel and Vodafone Essar appear to be at the least advantage under the new subscriber criteria. In Mumbai and Delhi where they are close to achieving the criteria, they will have to pay additional one-time fee and increased revenue share for new spectrum. Bharti may have to invest more to optimise existing spectrum, which is more of a financial rather than technical challenge for it, till subscriber criteria for additional spectrum are met.

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