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Spectrum refarming is a hot issue in Indian telecom. Telecom Commission of India recommended to go for spectrum refarming on 900 MHz band so that this band can be used for 4G roll out. Currently incumbent players like Airtel, Vodafone, BSNL are holding most of the 900MHz spectrum and Aircel, Reliance, Idea are having it in selected circles. New players who got licenses in 2008 have using 1800MHz band of spectrum for 2G services.
Now 900MHz and 1800MHz are two bands primarily used for 2G services i.e. voice calls and EDGE based mobile internet. 900MHz has its own advantages over 1800 MHz as 900MHz networks offer almost double coverage than 1800MHz networks.
Earlier Telecom Commission said that spectrum refarming on 900 MHz can be done in three ways – 2.5MHz can be retained and extra spectrum will go for auction, 5MHz can be retained and more than 5 MHz will go on auction; or complete spectrum refarming. Operators can hold back spectrum if it wins in the auction.
However complete refarming is never acceptable, because it will create a mess. In latest development the Empowered Group of Ministers (EGoM) came up the policy that says incumbent players can keep upto 2.5MHz spectrum on 900MHz band but they have to pay the price of it as per the refarmed spectrum auction. These operators can bid maximum 2.5MHz (total 5MHz on 900MHz can be retained) in the auction of the surrendered 900MHz spectum.
Though 900MHz spectrum refarming is expected to give kind of level playing field for newer operators (though I seriously doubt it as they will be in high debt after the upcoming 1800MHz spectrum auction), incumbents are not happy. It is obvious that refarming means they have to redesign their existing networks – replacing older equipments and setting up more BTS as 1800MHz offers nearly 40-50% less coverage compared to 900MHz.
Following the 2G scam in 2008, Govt of India thinks spectrum is a cash cow, especially after the fierce bidding for 3G and BWA spectrum. But see, spectrum is not like other natural resources like coal, oil etc. Spectrum can be re-used. So if spectrum which is used for voice (read 900MHz) is given at a low price, operators can keep the tariff low. Already it has been reported that upcoming 2G auction may shoot the tariff up to Rs 1.50 per minute.
Govt. is also misunderstanding regarding the spectrum pricing. They are pricing 900MHz at 2 times of 1800MHz and 800 MHz at 1.3 times of 1800MHz. 800MHz spectrum is superior to 900MHz as high speed internet can be given over 800MHz. CDMA operators do not offer high speed data at cheaper price, the tariff of EVDO and 3G are almost same. With this pricing strategy operators who are in high debt due to 3G and BWA spectrum auction will be more cash-stripped. 3G and 4G (only Airtel has launched 4G/LTE) are both yet to see mass popularity.
Many argue that these spectrum can be used for offering LTE and thus 900MHz can also be used for LTE rollout as LTE can be offered in 1.4MHz chunks. For Indian telecom voice is still basic need, while data is luxury.
India jumped into 4G/LTE in 2012 as Airtel became first operator to kickstart LTE-TD in Kolkata. Now Indian BWA operators have 20MHz continuous spectrum in 2300MHz – which is suitable for LTE-TDD. But the whole ecosystem on LTE-TD over 2300MHz is yet to be mature. Basically India and China will make this platform mature with mass adoption. At this position Indian operators can not afford to create another ecosystem for LTE900. Rather to be as per with global standard (GSA reported nearly 33% commercial LTE rollout 0n 1800MHz band using LTE-FDD technology, which has better ecosystem than LTE-TD) India should refarm 1800MHz spectrum in a way to sell 2 x 10MHz block for 4G/BWA operations.
Saurabh November 5, 2012 at 3:29 pm
Another shocker for the Govt- Tata Tele withdraws their application for 3 circles. So now Govt will get nothing from CDMA 800MHz band. It doesn’t matter much as those 3 circles were contributing very little to revenues. So Tata’s decision not to buy spectrum is very good. CDMA operators finding it more beneficial to say bye bye to CDMA space.
MTS’s case is getting stronger and stronger.
Today was the last day to withdraw application by 3:00PM and ZeeBiz informed that Tata steps back. This is getting dramatic now.
AP November 5, 2012 at 12:36 pm
Why are we falling for the propaganda being spread by PR of mobile companies? Prices may increase slightly but not dramatically. That is absolute rubbish. This was threatened in 3G too. But now tariffs are dramatically lower since people don’t want highly priced 3G services and told the operators to F OFF. Mobile services have only seen growth in the country after price wars.
Pratul November 5, 2012 at 10:14 am
+1
I too believe there has to be level field as far as 2G services are concerned. Take back the high efficiency 900Mhz spectrum from the operators and give 1800Mhz in lieu of it. 900 is more pricier than 1800 and can be deployed in rural areas only where its not feasible to deploy wireless telephony thru 1800 spectrum.
4G can wait as 4G is still not mature enough and still in trials in many countries.
Rudradeep November 5, 2012 at 9:30 am
1. Complete refarming will create chaos nothing more than that. Though the cartel is not good for consumers, it has to be remembered that they still offer services to a lot of customers.
2. 2G aka Voice is our daily meal, while 3G aka data is kinda luxury. So Before we make maximum spectrum for data, voice services should be well nourished. Also worldwide 3G on 2100MHz is common – so 3G over 900 MHz means a new ecosystem.
3. Many are saying that 3G as more matured than 4G, and it should be considered for India’s wireless data demand for time being. But Reliance Infotel is creating a platform which can be a pioneering path for LTE on 2300MHz. So let’s see what they are bringing.
Mehboob November 4, 2012 at 10:56 pm
MTS is best. MTS should stay in INDIA.
SDee November 4, 2012 at 7:50 pm
+1
Saurabh November 4, 2012 at 6:47 pm
@Rudra,
Yeah, read about it in ET. Instead of just alerting Law Ministry, Sibbal should’ve alerted other departments also as the Tsunami by Sistema will shake others too. India getting bad-ass image??? It’s already done by Goverment. lol
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I liked your AVoId word to refer the trio. Everyone knows that Airtel, Idea and Vodafone want their monopoly in the sector so that they can have pricing power in their hand. Maybe Idea has deposited earnest money for all circles just to spoil Uninor/Videocon game. Actually during 3G auctions, Idea was the only one to pay the low amount from their pocket for their 11 circles which was around Rs.5800 crores and other one was Tata Docomo for 9 circles which also paid near about same while Airtel and Vodafone paid over 12k and 115k crores. So Idea is the only one in the cartel who has enough funds left to go for all circles in upcoming auction just to increase price for Uninor and Videocon. Maybe this cartel had a meeting and they decided to spoil other’s game. All Idea will do is bid aggressive in circles Uninor and Videocon want and pull themselves out after certain level is reached.
Btw Tata and Aircel should merge their operations in coming days to compete this trio. Together they will have Pan-India 2G operations and 3G operations in 19 circles and BWA in 8 circles.
Rudradeep November 4, 2012 at 4:27 pm
At a point I firmly believe that Indian Govt runs by different lobbies. My thought is Raja and 2G mess are due to some lobbies by AVoId group, because these trio are always against low tariff.
See AVoId continue 3G roaming with out any hassle, and that’s for sure due to good relation between Mittal and Sibal. Why is it not termed as 3G scam?
Just ET reported that Sibal mailed to Law Ministry to be ready to counteract Sistema’s attack against Govt. Already Videocon withdraws from CDMA auction, means TTSL is the sole bidder – no demand which means Sistema’s case turns stronger. Also this same govt was there in 2008. I think Sistema may win this case if the settlement goes to international courts and ultimately India will get a bad-ass image.
Esmail November 4, 2012 at 4:23 pm
Empowered group of ministers should give ruling for complete refarming of 900MHz band and force the incumbents (Airtel Vodafone Idea) to switch their operations totally to 1800MHz band since it is not feasible to have partial operations on 900MHz and partial on 1800MHz band. The released spectrum should then be refarmed to 3G rather than 4G offering HSPA+ (Upto 21.6 Mbps downlink) rather than LTE. The reason being 3G requires just 5MHz of spectrum for operating at full efficiency where as LTE TDD requires 20MHz and spectrum on 900MHz is limited and precious. Also most 3G handsets in the market have WCDMA/HSPA+ capacity on 4 bands 850/900/1900/2100 MHz so if India decides to offer HSPA+ on 900MHz, most people will not need any sort of hardware modification or upgrading to use 3G. LTE on the other hand is more supported by most devices on the 700 and 1700MHz bands, those need to be refarmed and auctioned for 4G technology not 900MHz.
Saurabh November 4, 2012 at 3:32 pm
Are you from Mars? Elborate your point on jobs.
Due to mess-up in telecom sector because of 2G spectrum scam and Supreme Court’s decision on it, many telecom companies shut their business. Recently Aircel scaled down operations in 5 circles and gave pink slips to around 600 employees. Many of their distributors lost their work. Now think what can happen when companies will pay huge amount for 900MHz band spectrum. They will have to cut their operational cost which will also include reducing work force which will result in unemployment for many.
Some point I forgot to mention in my previous post is,
Besides all this Goverment is also putting Financial System on risk by asking too much from telecom operators. They will have to reach out banks for loans and banks already have a bigger exposure to telecom sector and now they are much more cautious this time while lending. Pressurizing banks will result in Financial Breakdown in the country making thing even worst. Even foreign lenders will hesitate to lend money to Indian operators. That’s why I’ve always said Goverment always look at some points not all.
The CAG’s illogical reasoning for loss of 1.76 Lakh crores to exchequer is questioning their own ability.
We all know that where the money from auctions will go i.e some part on public welfare and large part on Minister’s own luxury way of living life. It’s better to give spectrum at low cost so that people can enjoy lowest tariffs.
Saurabh November 4, 2012 at 2:58 pm
Operators are equally responsible for the mess up in telecom sector like Goverment. Who had asked them to bid out of the pocket during 3G/BWA auctions? But looking at 2G data pickup they thought we will make windfall profits from 3G too which will be a premium service but they completely went wrong in their analysis. They forgot that Indian users are most price conscious in this world and they can’t shell out bigger amount just for extra speed. I think their think tanks really failed to get things right.
As far as refarming in 900MHz band is concerned, Goverment has all the rights to do whatever they want with spectrum after operator’s license expiry. If they want to put it on auction, they can, but that’s not the way you can reach your target of connecting the whole country and it also doesn’t make a sense too. It’s good that they’ve allowed companies to retain 2.5MHz by paying auction determined price but it will be too low for them. So they’ve to bid for another 2 blocks at any cost which will make situation worst.
Pricing for 900MHz is yet not decided. We can have anything from 1.4 times to 2 times.
TRAI in its consultation papers looked and compared with what US and UK and other European countries’ Goverment earned through spectrum auction but can’t they understand this is India and here people are not earning like that of UK or US people. From Goverment to Telecom companies to all other concerned department are misreading things.
Rudra highlig a good point that Spectrum is a re-usable commodity and it will continue to give revenues to Govt in future too after license expiry then why just think of getting huge sums of amount at once.
Whatever Govt is doing, it is not in anybody’s interest except the Government’s itself.
As far as 4G for mobile is concerned, when 700MHz band is going to be vacated after Digitization then why to think of 4G on 900MHz? 4G is not what India needs currently. They delayed 3G auction for years and in same way they shouldn’t think about 4G right now as neither India nor it’s users are ready for it. Let the market stablize first.
License renewal still have 2 years to take place. So thinking too much about it currently is not bn option.
varun November 4, 2012 at 2:07 pm
Idea base tariff in delhi ncr is 2p/sec for local n 2.5p/sec for std…lol…but std in video call is 2p/sec..lol
Asit Paul November 4, 2012 at 2:02 pm
Base Tariff will be 2p/s for local calls and 2.5p/s for STD calls after 2G Auction and Refarming! (Already this tariff exists in some circles).
Suresh November 4, 2012 at 1:17 pm
Add a clause in tender saying that maximum call rate shall not exceed 60p for std and 30p for local calls, for date 100Rs for 1Gb range. Let the operators quote the rate accordingly, In case nobody is intersted to participate the auction,let bsnl use all the spectrum, I am damn sure all private operators will participate the auction considering the amount they invested and running the show with good margin still.
Ashish Kumar November 4, 2012 at 12:49 pm
Re framing is good news for telecom…its generate lots of new project…means new job…..yes call rate may be higher but operators have no other option..