Vodafone Idea has expressed concern on the fact that the 50% combined holding limit on the sub-1 GHz spectrum which is likely to be used for 5G can lead to a duopoly in the telecom sector. According to Vodafone Idea's claim, the duopoly will undermine the healthy competition in the industry which is on its way back from the trenches.
VIL Deems 2020 as Appropriate Year for Spectrum Auction
ET Telecom reported the statement of the chief regulatory officer at Vodafone Idea Limited, P Balaji who said: “While the pricing for the future spectrum is very important, access to spectrum is equally important.” He added to his words, “If 5G is the game of the future from 2020 onwards, then it is very important that all telcos should get access to 5G, and not just opportunity to buy 5G airwaves.”
Balaji also added that currently the industry currently has four distinct players – Vodafone Idea, Reliance Jio Infocomm, Bharti Airtel and the government led telecom operator, Bharat Sanchar Nigam Limited. Balaji also added that the current industry make up is just about right, and a disturbance in this might lead to a disbalance in the industry. He said, “The access will allow for a vibrant, competitive framework of providing 5G services, just like 2G, 3G, and 4G that are competitive, where the consumer gets a choice while the government’s objective is met.”
It is also worth noting that currently, Vodafone Idea is the only one who has called out for change in the rules of capping the spectrum holding. All the other telecom operators, however, have urged the authorities to bring down the 5G spectrum base prices from what has been recommended by the regulator.
700 MHz and 800 MHz Spectrum to be Used for 5G
To recall, the government had introduced norms last year which increased the individual spectrum holding by each operator to 35% up from the previous limit of 25% and had capped the combined spectrum holding to 50%. The bands which were capped included the 700 MHz, 800 MHz, and 900 MHz. Out of these three, the first two are the ones expected to be used for fifth-generation network technology.
An industry official spoke behind anonymity saying that from a long-term perspective, 5G is gold-dust. He added, “You need to have an adequate choice for consumers and enterprises…Therefore, 35% cap should be enforced for all the bands including the sub-GHz bands... This is the easiest way to ensure that there's no monopoly or duopoly in 5G.” He also said that with the new cap, there would be enough incentives for price discovery through auction. The telcos will also be able to boast of sufficient capacity with the new higher spectrum holding limits.
Vodafone Under Financial Pressure
The request for a flip in cap rules comes from Vodafone Idea partly because it is also the telco which is under much more financial pressure as compared to the other private telecom operators. Post the data tariff war; the companies are suffering from dented revenues except for Reliance Jio, which is the only telco registering profits.
Vodafone Idea executive, Balaji also said that 2020 would be the right year for 5G spectrum auction as the industry will be more mature by the time with more business and use cases.