Trai allows operators to share 2G, 3G spectrum
Jul 21 2014 , New Delhi
Two telecom companies can apportion 25% allotted airwaves
These operators need not bid aggressively in the next round of spectrum auctions, as they would be able to leverage the airwaves each operator already holds or has acquired in 2G and 3G auctions post-2010.
Restricting spectrum sharing between only two operators, telecom regulatory authority of India (Trai) chaired by Rahul Khullar has imposed 25 per cent cap on quantum of spectrum to be shared between the operators without any approvals. The announcement came on Monday.
Once the spectrum sharing becomes operative, it has the potential to lower cost of telecom services in all bands and technology platforms.
Telecom services will become cheaper only if the operators do not form business cartels and pass on cheaper spectrum costs to mobile telecom users. Telecom consumers could definitely breathe easy as call drops, blocked calls or their experience in larger calling areas would be much better.
For the large three telecom operators – Bharti Airtel, Vodafone, Idea Cellular – spectrum sharing works perfectly fine as they need not invest huge capital in acquiring new airwaves immediately through bidding, given that value of spectrum went up nearly five times post-2010.
For the newest entrant, Mukesh Ambani-led Reliance Jio Infocomm, the latest norms may not work in its favour given that spectrum sharing is not limited to just 800 mhz, 900 mhz or 1200 mhz bands as proposed earlier. Airwaves can now be shared even in 2100 mhz, 2300 mhz and 2500 mhz bands that will be used for rolling out the 4G services by Reliance Jio Infocomm. The company has committed to invest up to $20 billion in telecom foray.
But industry officials who refused to be identified say that Reliance Jio Infocomm plans will impacted in a limited way as it has a pan-India licence for rolling out 4G services.
All the top players, Bharti Airtel, Vodafone, and Reliance Jio Infocomm officials refused comment when contacted by Financial Chronicle.
The exact impact will depend on how much spectrum is shared and at what price. Cellular operators association of India (COAI) director general Rajan S Mathews told FC, “The big players are likely to hit this quickly. Overall, we believe this is a positive step by Trai. It’s too early to tell what the industry impact will be. We will have to wait and see how much spectrum will be shared and at what price.”
But, telecom service providers will be more than willing to share extra-spectrum they hold in similar bands as this would enhance their capacity to carry higher traffic, especially on congested metropolitan networks of Delhi, Mumbai, Chennai, Bengaluru, Kolkata and western Uttar Pradesh, apart from growing cities like Pune, Ahmedabad and Hyderabad.
For example, a telecom operator with 5 mhz spectrum can carry 33.03 Erlang traffic. But two operators combining 5 mhz spectrum each through sharing can cater to 138.6 Erlangs traffic on GSM platform. Erlangs is a measure of communication that translates to number of concurrent telecom calls carried by a telecom circuit in a particular band within a specific timeframe.
Other private players like Idea, Aircel, Loop, Quadrant, Reliance Communications, Sistema Shyam Telecom, Tata Telecom, Telewings and Videocon Telecom may have the advantage as the 25 per cent spectrum cap favours them. Further, they would be able to monetise unused spectrum to bring in additional liquid funds to their operations.
State-run telecom operators like BSNL and MTNL will also be large beneficiaries given that they hold huge unused spectrum. But some of it was surrendered to government recently, as against providing over Rs 6,000 crore cash infusion.
Government may also gain in terms of additional revenues, as the spectrum sharing would translate to extra capacity for telecom companies. These companies will have to fork out 0.5 per cent of aggregate usage revenues as additional spectrum usage charges.
However, the telecom providers will not be able to share spectrum in different bands. For instance, one telecom service provider having unused spectrum in 900 mhz band cannot tango with another in 2,100 mhz category.
Trai chairman Rahul Khullar in his recommendations said that inter-band spectrum sharing has not been allowed as of now as it would lead to mobile virtual network operators (MVNOs). Telecom regulator restricted its recommendations to ‘only intra-band sharing’ of airwaves.