Spectrum Refarming on 900MHz : Is it Another Mess-up for Telecom Sector?

By November 4th, 2012 AT 12:31 PM

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.

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SaurabhAPPratulRudradeepMehboob Recent comment authors
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Saurabh
Saurabh

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
AP

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.

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