Spectrum game: new twist to old tale
The recommendations by the Telecom Regulatory Authority of India (TRAI) on auction of spectrum, if accepted by the government, will change the telecom landscape in India, affecting both consumers and service providers. HT take s a look at what it means.india Updated: Apr 25, 2012 00:18 IST
What is spectrum?
Spectrum are airwaves through which radio signal travels. In simple terms, when two users talk on mobile phones the voice travels on the spectrum. It is the backbone of mobile communications network.
How is the spectrum allocated in India?
Earlier, for 2G services spectrum was issued on a first-come-first-served basis and it was bundled with licences. But for 3G and 4G services, it was auctioned in 2010.
Yes, the spectrum was allotted for specific services. This artificially restricted the operators from using the full potential of the spectrum.
Why did the Telecom Regulatory Authority of India (TRAI) issue recommendations for the auction of spectrum?
On February 2, the Supreme Court ordered quashing of licences issued on or after January 10, 2008, when A Raja was the communications minister. This shall become operative after four months from the date of verdict. While declaring these 122 licences as illegal, the apex court also asked the the telecom regulator to make fresh recommendations for granting licences and allocating spectrum in 2G band through auction.
How the spectrum will be allotted under the proposed new regime?
The telecom regulator has recommended that the spectrum should be delinked with licences.
The telecom companies can acquire spectrum only through auction. They can use it for providing any kind of service, ie, 2G, 3G or 4G. For example, currently 2G services are offered on spectrum in 800 MHz, 900 MHz and 1800 MHz band. Now, the operators can use the same band for high speed data services also.
How much the operators will have to pay for 5Hz of spectrum, which is the minimum spectrum required for auction?
At the reserve price, the operators will have to pay Rs 18,110 crore for the spectrum in the 1800 MHz band.
The amount will be double (Rs 36,220 crore) for the spectrum in 900 and 800 MHz band.
How much did the existing operators pay for the spectrum?
The existing operators paid only Rs 1,650 crore for pan-India 4.4 MHz spectrum in 1800 MHz band and 900 MHz band.
What will be the impact of proposed TRAI recommendations on the telecom operators?
The operators will have to pay high price for the spectrum. This will delay the roll out of the networks. New operators may not enter the telecom sector as they may find the prices very high.
The price of telecom services may increase by up to 10%, say experts. However, they may get a wider choice of services as the operators will be allowed to provide 4G and 3G services.
What will be the impact on the government?
The government is set to earn Rs 95,000 crore, if all the new operators acquire spectrum at base price. The total spectrum auction (in all the bands, ie, 800, 900, 1800, 700 2100 and 2300 MHz) may earn the government about Rs 700,00 crore in the next 10 to 15 years.
Is it mandatory for the government to accept TRAI recommendations?
No, the government may or may not accept the recommendations by the telecom regulator.
In the past, the government has not accepted many recommendations of the telecom regulator. In such cases, the government sends back the recommendations to the TRAI along with its comments.
TRAI has to take a view on it within a month. The final decision making authority is the government.