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The Finance Ministry has backed a proposal to switch the entire 900 Mhz frequency band, currently owned by incumbent GSM players.
But it wants the DoT to auction the remaining spectrum available in the 1800 Mhz band simultaneously with the 900 Mhz band after switching of spectrum is done next year.
The DoT has proposed to shift incumbent GSM players from 900 Mhz band to the 1800 Mhz band. The proposal is being discussed by the Empowered Group of Ministers. This is being done because the 900 Mhz band is superior to 1800 Mhz band and 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.
If the Finance Ministry’s proposal is accepted then it would fetch more revenues for the Government but the operators would have to bear higher costs.
DoT was planning on giving spectrum in 1800 Mhz band to all players as a substitute for giving up 900 Mhz. But the DEA wants the operators to participate in an auction even for the substitute spectrum.
This could lead to a scenario where some incumbent operators would be forced out of the market and new players taking over.
To be clear, the DEA’s opinion has no impact on the auction to be conducted in November.
While the upcoming auction is also for 1800 Mhz it is being primarily done to give an opportunity to new players to buy back spectrum since their licences are being cancelled.
But going by the number of applications received by the DoT for participating in the auction, there will be a lot of spectrum that will remain unsold. DoT already has some amount of spectrum in 1800 Mhz reserved for switching.
The DEA wants all of this to be put on the block next year along with 900 Mhz band and let the operators decide what they want to buy.
> Thomas.thomas@thehindu.co.in
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