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'20 MHz bandwidth can make the difference'

Were the defence ministry to release even 20 megahertz of spectrum over the next three to six months, it would meet the current requirements of the telecom service providers, reports M Rajendran.

business Updated: Jun 26, 2007 01:10 IST
M Rajendran

Were the defence ministry to release even 20 megahertz of spectrum over the next three to six months, it would meet the current requirements of the telecom service providers. In some cirlces there would be surplus spectrum left over for newcomers seeking to enter the Indian telecom sector, says a CitiGroup Research Asia Pacific Telecommunications Services report.

Spectrum is the band of radio waves, on which mobile calls and data travels.

The report, which draws heavily on a recent consultation paper released by the Telecom Regulatory Authority of India (TRAI), says further demand is likely to be satisfied only by 3G spectrum.

"We analysed the TRAI paper to assess the scarcity and estimate spectrum availability, especially for new entrants," says the report.

It also points out, for instance, that Reliance Communications (RCOM), which is seeking spectrum in 15 cirlces for its global system for mobile communications (GSM) plans, can get it in 14, if the defence ministry releases the spectrum right away assuming 20MHz were to be allocated today. However, in a more likely scenario of spectrum being released by the end of 2007, that number drops to only seven. "This uncertainty on spectrum availability explains RCOM's recent renewed focus on CDMA, at least for the time being," says the report.

The study estimates that the continued spectrum crunch could lead to mergers and acquisitions (M&A) driver by both small and large telecom companies with an end objective of acquiring spectrum.

The subscriber-linked allocation criteria is far from perfect as it does not factor in subscriber density as well as intra-circle differences in traffic intensity points the study. It observes that though TRAI has highlighted this issue, any change is unlikely in near term, feels the study and adds that TRAI's consultation paper is deliberating "capping" of number of operators in order to live with the limited spectrum.