The union cabinet chaired by Prime Minister Narendra Modi on wednesday gave clearance to long awaited norms for spectrum sharing between telecom operators. The spectrum trading guidelines have yet to get clearance as the government has decided to take it up separately. Sharing of spectrum, a key demand of the industry, will be allowed in service areas where both the companies have airwaves in the same band. And for computing spectrum usage charges (SUC), the norms stipulate the inclusion of the entire spectrum holding in the band for the operators, a condition that is not being taken well by the key players. SUC rate of each company post-sharing will increase by 0.5% of their Aggregate Gross Revenue (AGR), the government stipulated.
Telecom companies and industry associations such as Cellular Operators Association of India (COAI) have often blamed paucity of spectrum for the growing menace of call drops and poor network connectivity in the country. Sharing and trading of spectrum, which have been long awaited, are among the key solutions that operators have long lobbied for as an answer to the problems. "This will allow telecom companies to expand and grow further," Rajan Matthews, Director General, Cellular Operators Association of India told CNBC-TV18.
Uninor, the Indian arm of Norwegian telecom operator Telenor, said customer experience will benefit from the move. "We applaud the clearance of the spectrum sharing norms. This was a much-awaited regulation and with this operators like Uninor will be able to optimize use of spectrum as well as offer a superior customer experience both on voice and internet," a senior company official said to Times of India. Vodafone, the country's second-biggest operator, also welcomed the move. "It is a step in the right direction for ushering in digital India," a spokesperson said.
There are, however, caps over the amount of spectrum that can be shared. So post sharing, an operator cannot have over 25% of the total assigned spectrum in a particular circle or 50% in a given band. "...spectrum holding of any licensee post-sharing shall be counted after adding 50% of the spectrum held by the other licensee in the band being shared," the government said. Sharing may be permitted where both sharing entities are having administratively allotted spectrum and where one entity has spectrum acquired through auction or liberalised spectrum and the other has spectrum allotted administratively, sharing shall be permitted only after spectrum charges are paid for liberalising the administratively allocated spectrum, as reported by Economic Times.
With respect of spectrum in 800 MHz (CDMA) acquired in the auction held in March 2013, sharing of spectrum shall be permitted only if differential of latest auction price and March 2013 auction price on pro-rata basis on the balance period of right to use the spectrum is paid. Spectrum sharing will be restricted to sharing by only two licensees subject to the condition that there will be at least two independent networks provided in the same band, leasing of spectrum has not been allowed. Telcos have to pay the differential between the price of the airwaves, if acquired at different times, on a pro-rata basis for the balance period of the validity of the spectrum. The entities have to inform the government of a deal 45 days before they start to share spectrum.
Sanjay Kapoor, former CEO of Bharti Airtel and Chairman of Micromax, said that the need for sharing is explicit in the country given the plight of networks. "The enhancement of consumer experience is paramount as businesses and individual lifestyle depends on it." The measure may see bigger operators share their spectrum in choked cities to tackle congestion. Operators with idle spectrum, however, may not immediately warm up to the proposal in the absence of attractive commercial arrangements as their SUC charges will go up, industry experts said. "For them to part with the excess airwaves, trading will be more beneficial."
