TRAI is right

The Telecom Regulatory Authority of India’s proposal to raise the cap on the quantum of spectrum held by a mobile operator is a well thought out move, given the massive increase in data usage. The existing rule of allowing an operator to own only 50 per cent of the spectrum in a particular frequency band, and not more than 25 per cent of the overall spectrum available, is restrictive and antiquated. This rule was effective when there were seven to 12 operators in each circle and different frequency bands were used for offering different services. For example, 1800 MHz band was allocated to offer GSM-based 2G services while 800 MHz band was for CDMA services. In this scenario having a lower spectrum cap made sense as it prevented concentration of a particular frequency band with one player. Now, technological developments enable operators to utilise multiple frequency bands for the same service. For example, both 1800 MHZ band and 800 MHZ band are used for offering 4G services. Therefore, it does not make sense to put a cap when it comes to spectrum ownership in specific frequency bands.

The average spectrum holdings of mobile operators in India is low in comparison with international standards. The average data usage per subscriber per month is expected to shoot up from 6 GB to 11 GB in the next few years. Bandwidth guzzling applications like movie-streaming, video-on-demand and e-medicine would require communication highways built on large amounts of spectrum. Any limitations due to spectrum cap may also dampen the bidding intensity in future auctions. Most large operators are nearing the existing caps, so they will not be able to bid aggressively to acquire more spectrum.

The Centre must, therefore, accept the regulator’s recommendations to do away with the frequency specific cap and increase the overall holding cap to 35 per cent. In fact, policymakers should go a step further and do away even with the proposed 50 per cent cap on sub 1GHz band. The telecom regulator has justified this cap on grounds that sub 1 GHz is valuable and hence safeguards must be put in place to prevent it being consolidated by a monopolistic player. This seems to be counter-intuitive to the regulator’s own arguments while proposing to relax overall spectrum cap. Operators currently use a mix of 2300 MHz, 2100 MHZ and sub 1GHz bands to offer mobile broadband services. By suggesting a cap on 1GHz bands, the regulator has ignored the efficiency brought in by large contiguous blocks of spectrum.

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