DoT-defence deal will be welcome
While it is unfortunate the Telecom Commission has decided to reject most of the Telecom Regulatory Authority of India’s (Trai) suggestions on the need to get in a lot more spectrum before conducting the next round of auctions, news reports suggest there may be some breakthrough in the offing. Trai had argued that, were this to not happen, spectrum prices would skyrocket in the next auctions and possibly put several telcos out of business—while roughly 90% of the spectrum auctioned last February was brand-new spectrum, things will be the exact opposite in the February 2015 auction when just 10-15% of the spectrum will be new. As FE reported last month, the finance secretary had written to his counterpart in the telecom ministry sounding an alarm since, if the telecom and defence ministries don’t reach a solution, the ministry’s projected R27,000 crore from spectrum auctions in FY15 is not going to materialise. New reports suggest telecom minister Ravi Shankar Prasad will be meeting defence minister Manohar Parrikar soon to sort out pending issues. A start has already been made, Mint reported last week, with the telecomministry agreeing to the defence ministry’s long-standing demand for notifying a defence band and a defence interest zone. Once this is done, the defence forces are likely to release a lot more spectrum—as it is, in comparison to what was agreed to between defence and telecom in 2009, a subsequent agreement in 2011 envisaged releasing of more spectrum by the defence forces. And once BSNL completes the long-delayed optic fibre cable network, defence could be persuaded to release even more spectrum.
Trai’s proposal to get the defence ministry to free up 2×35 MHz of spectrum in the 2100 MHz frequency band will help telcos immensely and will help further India’s data revolution, but getting this done won’t be easy—despite the problem being known for years, for instance, the defence ministry continues to squat on spectrum used for commercial use in the 1800 MHz band and vice versa. The telecom ministry’s best bet, for now, is to work assiduously on spectrum swapping, and point out to the defence ministry that this does not include defence giving up any extra spectrum. The telecom ministry has reserved spectrum in the 1900-1907.5 MHz and 1980-1987.5 MHz bands for CDMA-based mobile players once they exhausted their current spectrum, but the fact is that existing CDMA-mobile phones don’t automatically work in this band unlike the GSM-mobile phones that worked on both 900 and 1800 MHz frequencies—in any case, the CDMA-mobile business is hardly growing, which is why TataTele has surrendered much of its spectrum. So, if the telecom ministry is to give up this spectrum to the defence ministry, it can easily get the same amount of spectrum in the 1939-1954 MHz spectrum band—the downlink for this is
2129-2144 MHz which is currently unoccupied and so outside the purview of the telecom-defence pact on spectrum sharing. This 2100 MHz spectrum, based on even the last auction, can fetch the government R50,000 crore in the auction, which means around R17,000 crore will be paid upfront, enough to help the finance minister meet his budget targets—the 900 MHz and 1800 MHz spectrum that is available right now is unlikely to fetch more than R10,000-12,000 crore.