The Telecom Regulatory Authority of India is in favour of allowing incumbent operators to retain a small amount of spectrum in 900 Mhz band to ensure continuity of services.

TRAI has told the Government that while it supported re-farming of the 900 Mhz band, operators should be given the option to retain 2.5 Mhz. The Department of Telecom on the other hand has proposed to shift the operators from the entire 900 Mhz band to the 1,800 Mhz band.

Rejecting the DoT's view to re-farm the entire 900 Mhz spectrum, TRAI said that such a move will not only lead to coverage issues but also impact the upcoming 2G auction. TRAI said that if the operators are shifted from 900 Mhz to 1,800 Mhz then there will not be enough spectrum left in the 1,800 Mhz band for the upcoming auction.

TRAI also ruled out the option of allowing incumbent players the option to retain 5 Mhz in the 900 Mhz band because that would leave only small amount of spectrum in the 900 Mhz band for future auction. TRAI said by allowing operators to retain 2.5 Mhz it would leave sufficient spectrum both in 1,800 Mhz and 900 Mhz bands for others to buy.

TRAI has also taken a view that operators should be given spectrum in alternative bands at market price even after the 20-year licence period gets over. According to the TRAI, the operators have made heavy investments in rolling out network and, therefore, spectrum at market-based pricing should be given up to 7.5 mhz in non-metro areas and up to 10 Mhz on metros areas.

TRAI’s views are extremely important as a number of Government agencies have questioned the operator’s right to own spectrum after the 20-year period. TRAI’s recommendation will be sent to the Empowered Group of Ministers expected to meet later today. The regulator was asked to give its views by the Department of Telecom after various members of the EGoM could not agree on the quantum of spectrum to be re-farmed.

The Department of Telecom is in favour of re-farming the entire 900 Mhz band and give the incumbent players space in the 1,800 Mhz band in lieu. While the Finance Ministry has backed the proposal to switch the entire 900 Mhz frequency band, it wants the DoT to auction the remaining spectrum available in the 1,800 Mhz band simultaneously with the 900 Mhz band.

The DoT has proposed to shift incumbent GSM players from 900 Mhz band to the 1,800 Mhz band because the 900 Mhz band is superior to 1,800 Mhz band and the DoT wants all operators to get an equal opportunity.

At present, the 900 Mhz band is being used by Airtel, Vodafone, Idea Cellular and BSNL/MTNL. These companies have opposed the move to switch this spectrum band on grounds that it will cost them a lot of money to shift to a new frequency band. The 900 Mhz band is considered to be 30-40 per cent more efficient than 1800 Mhz.

But the Finance Ministry feels that the operators cannot be given the right to operate forever.

“Since the life of the licence was 20 years, the issue of embedding any part of the spectrum in the licence for the purpose of renewal may result in the licences being treated as ‘in perpetuity’,” Arvind Mayaram, Secretary, Department of Economic Affairs, said in a letter to the DoT.

TRAI has now countered this view on grounds that operators have made investments on reasonable expectation that, at time of renewal, the operator would continue to have access to spectrum. “If no such assurance was available, it would seriously and adversely impact investment incentives,” TRAI said in its report to the DoT.

The Telecom Commission which met on Wednesday considered the TRAI’s report and will present it to the EGOM today who will take the final decision.

(This article was published on November 1, 2012)
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