Battle among Telecom Corporates for Spectrum

2G spectrum freed out of the cancellation of the 122 telecom licenses as per the Supreme Court’s judgment has to be auctioned. Government is planning for auction of the 4G spectrum. This is now triggering a fresh round of battle between the private telecom companies. Each company is acting as per its own interest.

Among the companies which were given 2G spectrum(GSM), it was allotted in 2 bands. One band was 900 MHz and another band was 1800 MHz. The earlier entrants Airtel, Vodafone, Idea and BSNL were allotted 2G spectrum in both these bands. But the later entrants like Reliance, Tata Teleserrvices, Uninor, Loop, Etisalaat, MTS(Systema) etc were allotted only in 1800 MHz band. The Supreme Court cancelled the licenses allotted in 2008. The licenses thus cancelled were of Uninor, MTS, Loop, Etisalaat etc.

The spectrum freed for auction due to the cancellation of 122 licenses was in 1800 MHz band only. It is now realized that by utilizing the 2G spectrum in the 900 MHz band, advanced services like wireless broadband services can be given, due to the technological developments. But for the present as per the existing license conditions this spectrum in 900 MHz band can be utilized only for providing 2G services and not wireless broadband services. As and when the Goverrnment liberalizes the license condition allowing advanced wireless broadband services by utilizing the spectrum in the 900 MHz band, it will be advantageous for the companies having 900 NHz band spectrum. 

Therefore a question has arisen about the refarming of the 900 MHz band spectrum, that is, asking the companies having the 900 MHz band spectrum to vacate their 2G services from that band to the 1800 MHz band, by allotting them additional spectrum in 1800 MHz band and then auction the 900 MHz band spectrum vacated by them. The operators having the 900 MHz band spectrum (Airtel, Vodafone, Idea) are opposing such refarming on the ground that it will impose additional cost on them for the migration of the services to the subscribers from 900 MHz band to 1800 MHz band. But the operators not having the 900 MHz band spectrum are demanding for immediate refarming of that band of spectrum. Their argument was that the 900 MHz band spectrum enabled the operators having that band of spectrum to provide services with less costly equipment and hence less capital expenditure expenditure and therefore they should not have that advantage permanently and all should be allowed to have some spectrum in the 900 MHz band.The operators whose licenses were cancelled and want to continue by getting their cancelled spectrum again in the auction to be held, and the operators whose licenses are not cancelled, but not having the spectrum in 900 MHz band are the group demanding this. They are Uninor, Etisalaat, MTS, Loop (whose licenses are cancelled) and Tata Teleserrvices and Relicance Communications (of Anil Ambani).

Another issue is whether the spectrum in 1800 MHz band freed due to the cancellation of licenses should be auctioned by allowing all the existing companies and the companies whose licenses are cancelled and also the companies who want to enter in the telecom services business now, or not. The companies whose licenses are cancelled are demanding that the spectrum thus available should be auctioned in 2 stages. They demand that in the initial stage only the companies whose licenses are cancelled and those who want to enter in the business now should be allowed and a quantum of 4.4 MHz spectrum should be auctioned in the initial stage. Their argument is that the existing companies like Airtel, Vodafone, Idea, BSNL etc are having more than 6.2 MHz spectrum in all circles and if they are allowed to participate now in the auction, they can bid aggressively since they are the established players and get more spectrum and hence a monopoly on the spectrum. They demand that first the companies whose licenses are cancelled and the new applicants be allowed to acquire the minimum 4.4 MHz spectrum in the auction and thereafter in the next stage all can be allowed to participate. But the existing established operators like Airtel, Vodafone, Idea etc are demanding that all should be allowed in the auction and the entire available spectrum should be auctioned in one go. Thus they want to get more spectrum so that there is no scope for the cancelled licensees to get it, so that only they remain in the field and dominate the sector.

The other auction for spectrum is 4G spectrum auction and that spectrum is in 700 MHz band. Anil Ambani’s brother Mukesh Ambani’s Company “Infotel Broadband” is the only company now having pan India(in all circles in India) 4G spectrum( but in 2300 MHz band). After bagging the 4G spectrum license , Infotel Broadband wants to enter now in voice telephony market also and hence it joined along with the operators whose licenses are cancelled, demanding that the auction for 2G spectrum be confined in the first stage to the cancelled licensees and the companies like Infotel broadband which are not having any 2G spectrum.

But the 4G spectrum in 700 MHz band is more efficient than the 4G spectrum in 2300 MHz band. The Communications Minister Kapil Sibal recently announced that the 4G spectrum in 700 MHz band will be auctioned in this year. Airtel, Vodafone, Tata teleservices favour immediate auction of the more efficient 700 MHz band spectrum so that they can enter the 4 G services businesses without delay. But Infotel Broadband which is having 4G spectrum in 2300 MHz band already is demanding that first the 2G spectrum freed due to the cancellation of 122 licenses be auctioned and thereafter only the Government should think of auctioning the 4G spectrum in the 700 MHz band.

There is another controversy regarding the spectrum. Some Companies like BSNL, Airtel, Vodafone, Idea etc who are the established old players are having more than the contracted amount of 6.2 MHz spectrum in several circles. BSNL is having 10 MHz spectrum in most of the circles. The new entrants whose licenses were cancelled now by the Supreme Court have demanded that since these companies are having more than the contracted amount of 6.2 MHz spectrum, the Government should collect upfront fee for the spectrum they are having beyond 6.2 MHz. But the Airtel, Vodafone, Idea etc have opposed it. At one stage the Telecom Commission recommended for collecting this amount. If collected, then BSNL has to pay around Rs 10000 crore, Airtel has to pay  Rs 8000 crore, Vodafone has to pay Rs 5000 crore and Idea has to pay Rs 3000 crore. But it seems that the Government may not collect this amount from these companies.

The battle will go on among the private telecom companies on these issues and each of them will pressurize the TRAI and the Government to recommend and decide in their favor. But why should at all the spectrum which is a natural resource and hence the property of all the people in the country should be allotted at all to any private telecom company for their commercial profit? Only the Government , through the  telecom companies of its own, that is, BSNL and MTNL should install, operate and maintain the telecom services in the mobile sector so that the spectrum in all the bands is best utilized for the benefit of the nation, without any corruption and controversy. It is better to nationalize the telecom services.