Telecom operators who recently paid entry fees to the government, hoping to get new spectrum, may be headed for some bad news.
The defence ministry, which controls much of the spectrum that could be made available for network expansion by existing mobile phone companies or entry of new players, is unlikely to release any spectrum in the immediate future, according to a source.
The development follows a refusal by the department of telecommunications to build a secure optic fibre network for all of the defense forces – Air Force, Navy and Army, in lieu of which the latter is to vacate about 45 Mega Hertz of radio frequency.
The release of new spectrum is critical to the mobile phone industry, which has grown rapidly in recent years, but faces constraints because of lack of enough bandwidth to handle future demand.
The defense ministry had initially agreed to release spectrum in return for an alternative radio frequency-based network for communication among its forces that the telecom department would build. But the defense ministry has since backtracked and asked for an optic fibre network that it says would be necessary to address security concerns.
Building such a pan-India network would cost Rs. 5,000 crore and take five years, whereas the telecom department has got an approval of only Rs 1,000 crore from Planning Commission for the same purpose.
The deadlock doesn’t bode well for the industry as well as the eight telecom companies that paid entry fee to department of telecommunications earlier this month and are awaiting allocation of new spectrum.
“The growth and quality of existing services and introduction of new services will be significantly affected if no further spectrum is made available,” said Arpita Pal Agrawal of PricewaterhouseCooper.
Telecom officials did not return repeated calls, seeking their response to the latest development.