Spectrum auctions done, but mobile users have nothing to cheer about

Our Bureau Mumbai | Updated on March 27, 2015 Published on March 27, 2015

B.LINE:Wi-Fi Broadband services for public at New Delhi railway station. People can access free Internet for 30 minutes from a unique phone number each day. When the commercial services start, it would be charged at Rs 25 for half an hour and Rs 35 for one hour. The Wi-Fi project on Indian Railways is being executed by RailTel Corporation ,in New Delhi ,on.04.12.14 Pic :Kamal Narang


Tariffs will go up; quality unlikely to improve, others will have to change operators

The spectrum auction has been completed but mobile users do not have much to cheer about. While tariffs are expected to rise, there is unlikely to be any significant change in the quality of service as a result of all the spectrum bought by operators.

That’s because nearly 70 per cent of the spectrum bought by the incumbents is what they already hold. Quality of service would have improved only if they had bought a lot of fresh spectrum.

For example, Airtel acquired 111.6 MHz of spectrum in the 900 MHz, 1800 MHz and 2100 MHz bands for ₹29,130 crore. Of this, ₹17,618 crore has been spent on the renewal of existing spectrum.

Vodafone India acquired a total of 78.4 MHz of which 42.8 MHz is renewal spectrum. The incumbent operators’ licences in some circles are set to expire this year and they therefore had no choice but to buy back spectrum to continue services.

RCom’s travails

Reliance Communications failed to hold on to its existing frequencies in the 900 MHz band in five of seven circles. It managed to buy airwaves in the 1800 MHz band in two of these circles, which means that subscribers could face a drop in the quality of service as the 1800 MHz band is less efficient (they also have the option to shift to another operator in the circle).

In circles where Rcom has not managed to get either 900 MHz or 1800 MHz spectrum, users will have to change operators, as happened with Loop, unless the company is able to get a spectrum sharing deal with another operator.

The other negative for consumers is an imminent tariff hike. There will be a 10 per cent hike in the next 6-12 months.

Better 3G services

Analysts said that some consumers can look forward to improved 3G coverage as a few operators have bought additional spectrum in the 2100 MHz band. “There are a couple of benefits from the customer’s point of view. First, with the 2100 MHz picked up by companies such as Bharti Airtel and Vodafone India, the experience of 3G services will definitely be better,” said Prashant Singhal, partner in a member firm of Ernst & Young Global.

“Further, with the spectrum issued being liberalised (meaning it can be used to provide both voice and data services), 900 MHz can be used for deployment of LTE as well. So, we might see faster deployment of LTE services,” Singhal added. LTE is short for long-term evolution — 4G/mobile broadband.

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Published on March 27, 2015
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