India gearing up for the next big spectrum auction, everything you need to know

Department of telecommunications is considering the sale of airwaves across most commercially used spectrum bands in the current fiscal year 2014-15. Spectrum in 900, 1800, 2100, 2300 and 2500MHz bands will be put up for sale across the 22 telecom circles in India. Dot expects a total of Rs 38,954cr proceeds from communication services this current fiscal including the revenues generated from auction. The exact dates of the auction have not been declared yet, only the quantum of spectrum that will be put up for auction in each band has been disclosed at the moment.

900 MHz:

The spectrum in this band is of utmost importance to the incumbent operators since it is in this band that they commercially operate 2G services in most circles. There will be 184 MHz of spectrum in the 900 MHz band available for auction, as 29 licences will be due for renewal in 18 telecom zones in 2015-16. Market leader Bharti Airtel has 900 MHz holdings in 13 non-metro circles, of which six will expire by April 2016 while No. 2 Vodafone has the same category of spectrum in nine non-metro service areas and six of those will need to be bought back.

mobile-tower1800 MHz:

The spectrum in this band is of value to the newer operators since spectrum in this band is more abundant than that in the 900MHz band and has a lower base price. After the new telecom policy came into force and spectrum got delinked from technology this band has become favoured among operators planning to deploy FD-LTE. However, licences on only 26 MHz of airwaves in the 1800 MHz band will expire in that time. Combined with the 78 MHz which were left unsold in a February auction, 104 MHz will be available in the upcoming auctions in this band.

2100 MHz:

This is perhaps the most sought after band amongst all GSM operators since the deployment of 3G services has only been done on this band in India. The device eco system for this band is very rich. The spectrum in this band is limited and no operator was able to win Pan India spectrum in the auctions held in 2010. The defence ministry had signed a memorandum of understanding with the Telecom ministry for vacating a total of 25MHz of spectrum in each circle in this band, out of which it has already vacated 20MHz and will vacate the remaining 5MHz by this fiscal year. Also on the proposal of COAI the DOT has proposed a spectrum swap with the Defence ministry whereby it has urged the defence ministry to swap 15MHz of additional spectrum in each circle in the 2100MHz band in exchange for 15MHz in the 1900MHz band which the DOT had reserved for future expansion of EVDO services by CDMA operators (This move could be opposed by MTS which is a pure play CDMA operator).

2300 MHz:

Spectrum in this band is suitable for deployment of 4G services using TD-LTE technology. Currently Reliance Jio is the only operator to hold Pan India spectrum in this band. Airtel and Aircel each hold spectrum in this band in 8 circles, Tikona in 5 and Augere in 1 circle. Currently the DOT has one block of 20MHz in 19 circles in this band to put up for auction. Spectrum in this band has seen limited uptake due to the lack of device eco system and the need for setting up large number of towers to achieve the same coverage as that with lower frequency bands.

2500 MHz:

The spectrum in this band has till now not been auctioned in India. This band is also suitable for 4G services using TD-LTE technology and faces the same problems as the 2300MHz band. Canada will be auctioning this band for commercial use by April 2015. DOT has 40MHz of spectrum in this band in 8 circles and 20MHz in the remaining 14 circles to put up for sale in the upcoming auction.

Spectrum band frequency Amount of airwaves to be auctioned (MHz)
900MHz 184
1800MHz 104
2100MHz Quantum depends on how much spectrum is vacated by the defence ministry.
2300MHz 380
2500MHz 600

Spectrum unlikely to be auctioned in the current fiscal year 2014-15:

700 MHz:

Spectrum in this band has traditionally been used for terrestrial cable broadcasting in India. The information and broadcasting ministry has taken up the initiative of vacating this spectrum for 4G deployment on this band by shifting to digital broadcasting through a 4 phase obligatory digitisation program across the country. Phases 1 and 2 of this program have been completed in June 2012 and March 2013 respectively and phases 3 and 4 are expected to be completed by September 2014 and December 2014 respectively. Following the complete digitisation the DOT will have 100MHz of spectrum in all 22 telecom circles which it plans to auction in 2 blocks of 45MHz each with the balance 10MHz used as guard band.

This is the absolute best spectrum available for telecom operators since it has very good indoor coverage and needs lesser number of towers and the device eco system for 4G on this band is rich and can be used for FD-LTE or TD-LTE deployment. The base price for spectrum in this band will be very high. The reason this band won’t be auctioned in the current fiscal is that the digitisation program may not be completed in time and may cause a delay in the availability of spectrum for auction on a Pan India basis.

800 MHz:

Spectrum in this band has traditionally been used for CDMA operations including voice and EVDO data services. In recent times India has seen a decreased demand for spectrum in this band due to the fall in popularity of CDMA services. Currently India has only 5 operators using this band of which only MTS is a pure play CDMA operator which was also the only operator to bid for spectrum in this band in the auction held in March 2013. Due to the lack of participation of operators in the auction of this band, TRAI had suggested DOT to not conduct another auction for 800MHz, but DOT insisted on TRAI proposing a suitable base price for this band. TRAI has recommended a reserve price of 800 MHz spectrum at Rs 2,685 crore for 1 MHz of pan-Indian airwaves. The price is 48 per cent higher than the base price for the previous auction of the band, in March 2013.

But it has kept the base price at 80 per cent of the average valuation. It will take time for DOT to take the final call on the base price of spectrum in this band based on TRAI’s suggestion, which makes it unlikely to be auctioned in this fiscal year. (Also there is pressure on DOT from COAI to refarm 10MHz of spectrum in the higher 800MHz band to form EGSM band which is of interest to GSM operators but is being opposed by MTS sighting that it will block its future growth prospects in India. Sorting of this issue will take even more time)

It remains to be seen as to when exactly the auctions will be scheduled within the current fiscal year, whether or not the 800MHz band will be included in the upcoming auctions, whether Reliance Jio will be able to win spectrum in the 8 circles where it currently does not hold spectrum in the 1800MHz band, Whether the new 2500MHz band finds any takers, and most importantly the slugfest between the incumbents (AVoId) for retaining the 900MHz band.

We will be bringing you all the live auction related news as it happens coz no one covers telecom as we do, so keep reading for the latest updates and let us know your views and opinions through your comments.

Reference : ETBusiness Standard

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28 Comments on "India gearing up for the next big spectrum auction, everything you need to know"

 

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Raghu
July 10, 2014 3:09 pm 3:09 PM

The table form for each circle seperately which will help us to understand how much spectrum the operators will get in all the circles. Thanks in advance for ur help.

SS
July 10, 2014 2:51 pm 2:51 PM

An amazing analysis by Esmail 🙂

a lot of spectrum is wasted by aircel and Stel and DOT should forfeit it immediately for use of new players like telenor in UPW. I think that stel 3g spectrum would most likely be purchased by vodafone especially in odisha where none of the biggies have 3g spectrum.

raj
July 10, 2014 1:23 pm 1:23 PM

same case in AP.Aircel should not win 2G & 3G spectrum.

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