Spectrum sharing is of limited use with constraints
Communications minister Ravi Shankar Prasad clearly pushed for spectrum sharing to alleviate industry’s spectrum crunch and financial stress from high auction bids—for some reason, the Cabinet didn’t clear spectrum trading which is more important. Combining spectrum across operators ensures greater spectral efficiency and download speeds, and also allows telcos with lower number of subscribers to make better use of it. So, in the case of telcos like BSNL and MTNL, this allows them to make money by sharing their vastly extra spectrum holdings with private telcos like Bharti Airtel, Vodafone, Idea or RJio—it will help the PSUs turn around and also generate more revenues for government. But with various restrictions put on this sharing, while there are still lots of interesting possibilities of firms sharing spectrum, its full potential will not be realised.
A few examples illustrate this. Take Delhi, a circle that contributes among the most to earnings of telcos and that has huge call drop issues, something Prasad has been campaigning vigorously to address. It makes a lot of sense for, say, a Bharti Airtel and a Vodafone to combine in, say, the 900 MHz band where they have, respectively, 6 Mhz and 5 MHz of spectrum since they can offer better quality services to customers by doing this. Both telcos meet the criterion of the 50% in-band spectrum cap. Where Bharti trips up, though, is on the overall cap of 25% on all spectrum. In our example, Bharti’s spectrum goes up from the current 28 MHz to 30.5 MHz—in case it is sharing 5 MHz of Vodafone’s 900 MHz spectrum—which is 26% of the total spectrum for all telcos of 115.95 MHz. But if you include the 10 MHz of BWA spectrum that MTNL has given up—Trai is in favour of including all available spectrum while DoT wants to include only spectrum with telcos—Bharti’s share comes to 24.2% which is within the 25% ceiling! Vodafone and Idea, though, can share their 900 MHz spectrum in Delhi. In Mumbai, similarly, a tie-up between Bharti and Vodafone is not possible in the 900 MHz band as Vodafone exceeds the 50% in-band cap. Move down each city, and different combinations will be allowed or disallowed—but why have caps of 25% and 50% when, in any case, there is a Trai and a CCI to ensure there is no abuse of monopoly power which can theoretically arise from firms owning too much spectrum? If call drops have to be addressed, bigger players need more spectrum, and that requires the caps to be more liberal.
There is then the restriction on allowing sharing of ‘liberalised’ spectrum with ‘unliberalised’ spectrum—the latter refers to spectrum which was not bought in an auction. The rationale is obvious, since firms have paid heavily for one and nothing for the other. But since most firms have a combination of the two spectrum, not allowing them to share their ‘liberalised’ spectrum—and separately, the ‘unliberalised’ spectrum for only 2G services—is a bad idea since this robs them of spectral efficiency. Similarly, sharing is not allowed unless both telcos have spectrum in the same band. But were this to be allowed, telcos who don’t have, say, 1800 MHz spectrum in Delhi and Mumbai could tie up with an MTNL to offer voice services, or with a BSNL to do this in the rest of the country. The reason why this is not allowed is that the DoT does not allow intra-circle roaming. Apart from the fact that the TDSAT came down heavily on DoT when it banned 3G intra-circle roaming, surely allowing this would be an optimal utilisation of a scarce national resource? Prasad would do well to relook these issues that, in the ultimate analysis, will also hold back Digital India.