Government
is looting BSNL in the name of spectrum allocation. For 3G spectrum it
collected Rs 10,000 crore from BSNL for all the circles where it is operating.
But it allowed private operators like Airtel, Vodafone, Idea etc to take 3G
spectrum for a few circles and then extend 3G services even in circles where
they do not have the 3G spectrum by sharing the 3G spectrum of other operators
by intra circle roaming, which is illegal. This is still continuing. Thus the
private operators paid less and gained more in the 3G spectrum, whereas BSNL
has paid the highest amount for the 3G spectrum without much benefit. The
Government provided sub-standard BWA spectrum to BSNL and collected Rs 8500
crore for it. BSNL was allotted BWA spectrum in 2.6 MHz band which cannot be
utilized for the latest LTE technology for extending 4G services whereas the
private operators were allotted BWA spectrum in 2.3 MHz band which can be
utilized to provide 4G services on LTE technology. BSNL surrendered most of this BWA spectrum,
but the money paid for it has not yet been paid to BSNL.
Recently
the EGoM has recommended collecting one time payment from the existing telecom
operators for the 2G spectrum they are holding beyond 4.4 MHz. If the Cabinet
approves this recommendation, the BSNL has to pay the highest amount which will
be Rs 6250 crore at the minimum level and it may be still higher if the price
of the 2G spectrum that would be found in the auction to be held in November
2012 is higher. The telecom operators have to pay this amount prospectively for
the remaining period of license. If the remaining period of license is more,
the payment has to be more. Since the Private operators Airtel, Vodafone etc
were given license in 1994/95/96, their remaining license period in thee total
license period of 20 years will be 2/3/4 years and hence they will pay less for
the existing spectrum. But the BSNL was allotted license for mobile services in
2000 and hence its license period of 20 years will be over by 2020 only and
thus its remaining license period will be 8 years. Because of this
discrimination from the Government, the BSNL has to pay very high amount for
the spectrum already held by it.
Now
another blow on BSNL is on the line due to the decision taken by the Telecom
Commission on 17-10-2012, in the name of refarming of spectrum. What is the
meaning of this refarming of spectrum?
2G Spectrum was allotted to Airtel, Vodafone, Idea and BSNL (The
Companies allotted licenses until 2000) in 2 bands---900 MHz and 1800 MHz.
Among these two bands, 900 MHz band is most efficient since the equipment cost
is very less whereas the equipment cost is higher for the 1800 MHz band.
Moreover, the 4G services also can be provided by using 900 MHz band spectrum.
But the present license condition is allowing only 2G services on this 900 MHz
band. While the Companies like Airtel, Vodafone, Idea, MTNL and BSNL which were
given licenses earlier were allotted initially the 2G spectrum in 900 MHz band,
it was over by 2001 and the later entrants could not get the spectrum in this
900 MHz band and they were allotted in 1800 MHz band only. Tata and Reliance
were thus denied the 900 MHz band spectrum for their GSM services.
Since
the entire 900 MHz band spectrum is with the few companies given license for 2G
services earlier, there is a demand from the later entrants like Tata and
Reliance for allocation of 900 MHz band spectrum to them also. They say that
level playing ground requires allocation of the efficient and cost effective
900 MHz spectrum to all without discrimination. But how to do this since it was
already allocated and there is nothing more available for further allocation?
TRAI recommended that the 900 MHz band spectrum should be taken away from the
existing holders after the expiry of their present license period. The 900 MHz
spectrum thus taken has to be auctioned and allotted on that basis. This is
called refarming of spectrum. The Telecom Commission in its meeting held on
17-10-2012 decided that as recommended by the TRAI, the 900 MHz spectrum
allotted already to the existing operators has to be taken back fully by the
Government without retaining any quantity, on completion of their present
license period. The 900 MHz band spectrum thus to be taken back by the Government
has to be auctioned so that there is fairness in allocation of this efficient
band of spectrum. [This decision of the Telecom Commission will come into
effect only when it gets the approval of the EGoM (Empowered Group of
Ministers) and then by the Cabinet. The decision by the EGoM and the Cabinet on
this issue is likely to be finalized in the last week or October or first week
of November.]
Since
the license period of Airtel, Vodafone etc will be over by 2014/15/16, the 900
MHz band spectrum they are holding now will be taken back by the Government in
2014/15/16. The auction for such 900 MHz band spectrum will be started earlier
so that by the time the license period of the incumbants expires, the immediate
taker is found ready by the auction. Thus the auction for the 900 MHz band
spectrum to be refarmed thus will start in 2013.
The
Airtel, Vodafone, Idea, MTNL, and BSNL have established their networks for 900
MHz spectrum operations at lesser cost. If they have to lose this 900 MHz
spectrum on expiry of their license period due to this refarming of spectrum,
then they have to get back the same in the auction. Otherwise they have to
close the networks installed for 900 MHz band and build the network for 1800
MHz band in its place. Both options will be costly. As per one study, if they
have to get back the 900 MHz band spectrum in the auction, all of them together
have to pay an amount of about Rs 1, 50,000 crores. In case they do not get the
900 MHz spectrum in the auction and have to replace their network for 900 MHz
band spectrum with the network for 1800 MHz band spectrum, they have to incur
an expenditure of Rs 1, 00,000 crores.
In
this regard, BSNL is facing a peculiar problem. Its license period will be over
by 2020. Therefore it can retain its existing 900 MHz band spectrum until 2020.
Hence the question of participating in the auction to get the 900 MHz band
spectrum will arise for BSNL only in the year 2019. But the problem is that the
Companies which will get the 900 MHz band spectrum in the auction will be able
to provide 4G services using that band, on LTE technology, where as BSNL,
although it will be having 900 MHz spectrum until 2020, will be prevented from
providing 4G services on it, since the present license condition is preventing
it. Therefore BSNL, if it wants to withstand in the competition by providing 4G
services along with other operators, has to pay the price discovered in the 900
MHz band spectrum auction to be held in 2013 for getting its license condition
changed for enabling it to provide 4G services.
Thus
BSNL, although has the eligibility to retain 900 MHz band spectrum until 2020, has to pay a large sum
immediately to get the eligibility for providing 4G serrrvices on 900 MHz band
spectrum.
The
private operators Airtel, Vodafone and Idea are demanding the Government not to
agree for this decision of the Telecom Commission since they have to pay a
large amount to get the 900 MHz band spectrum again on expiry of their present
license period. They are saying that for the next term of their license period
also, they should be allowed to continue with the 900 MHz band spectrum without
paying the auction discovered price. On the other hand, Tata and Reliance and
some other operators not having the 900 MHz band spectrum are supporting the
decision of the Telecom Commission. They are arguing that the 900 MHz band
spectrum should not be the monopoly of the Airtel, Vodafone etc and it should
be refarmed in accordance with the decision of the Telecom Commission so that
they can have a chance of getting the 900 MHz band spectrum in the auction.
Fair
play requires that the 900 MHz band spectrum has to be refarmed as per the
decision of the Telecom Commission so as to allow all operators to have a
chance to get it in the auction. But it will result in heavy expenditure for
the existing as well as new operators which will result in increase in the
tariff to the customers.
The
only solution to solve this problem is to nationalize all the telecom companies
and merge them into 3 or 4 competing PSUs in which BSNL and MTNL will be
included, so that the spectrum in any band can be allocated free of cost to the
PSUs by the Government. Pending this, the BSNL and MTNL, as PSUs should be
allowed to have their 900 MHz band spectrum liberalised, that is, they should
be allowed to provide 4G services also on 900 MHz band, without any payment to
the Government for this purpose. Also, no amount should be collected from them
for the spectrum they are holding beyond 4.4 MHz. Free allotment of spectrum in
any band along with eligibility to utilise it for providing any service with
any technology to BSNL and MTNL is required in view of the fact that they are
fulfilling so many social obligations by incurring losses along with fulfilling
the requirements of national security in telecom services sector.
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