Helping telcos, helping the fisc PDF Print E-mail
Monday, 11 December 2017 04:11
AddThis Social Bookmark Button

Harmonizing 900MHz spectrum will give govt 12 times more auctionable spectrum, raise Rs30,000cr-plus


Right now, with each one of them holding 25-30 MHz of spectrum in various 4G bands, most telcos are quite comfortable and can service the needs of their customers. Vodafone-Idea, for instance, has around 34 MHz, Bharti Airtel-Tata has around 33 MHz and RJio has around 26 MHz. The spectrum holdings, of course, need to be standardised since not all the spectrum is equally efficient. Only RJio has spectrum in the 800 MHz band which is the best for 4G, in all circles across the country—either on its own or in partnership with RCom. The 900 MHz band is the next best, the 1800 MHz after that, and so on. The 1800 MHz band, however, has just around half the propagation features that 800 MHz has—so, if a telco has 20 MHz of spectrum in the 1800 MHz band, that is equivalent to around 10 MHz of 800 MHz. Once you do this, the relative spectrum strengths change, and RJio emerges as the one with the most amount of spectrum.

What complicates things is that not all spectrum is contiguous or in chunks of 5 MHz each—if not, it cannot be used for data. Take a telco that has 6.2 MHz of spectrum in the 900 MHz band—obviously, 1.2 MHz of this can only be used for voice calls. But it is possible the spectrum is in chunks of 2, 2 and 2.2 MHz each—in which case, all 6.2 MHz is useless from the point of view of data delivery. In the case of Vodafone-Idea, around 8 MHz of spectrum in the 4G bands falls in this category.

So, when these telcos need more spectrum to cater to increased data traffic, the government has two choices. It can either auction the 700 MHz spectrum or it can start ‘harmonising’ various spectrum bands, or a combination of the two. The advantages of this are obvious. The telco that has 6.2 MHz of spectrum in 2, 2 and 2.2 MHz chunks can now hope to get at least one chunk of 5 MHz that is contiguous and use this for data services. In the 900 MHz band alone, roughly half the spectrum is fragmented in the manner just described, and of little use to anyone from the point of delivering data services. And if the spectrum is made useful for telcos, the government will also benefit as the same spectrum can be auctioned for more money.

Take Tamil Nadu, the most lucrative circle in the country, where over 9% of all telco revenues come from. Vodafone-Idea has 6.2 MHz of 900 MHz spectrum here and all of this is contiguous—so 5 MHz can be used for 4G services while another 1.2 MHz can be used for voice services. Aircel has 7.8 MHz, so 2.8 MHz is not worth as much as the rest—of the total, only 6.2 MHz is contiguous, the rest is in two separate chunks of 0.8 MHz each. Like Vodafone, BSNL also has 6.2 MHz of spectrum, but it can’t offer high-speed 4G broadband services on this either. It has 31 chunks of 0.2 MHz—spectrum is assigned to telcos in chunks of 0.2 MHz—but few of them are contiguous; the maximum number of chunks it has that are contiguous are six, or 1.2 MHz, and that is no good for data delivery.

If the government was to ‘harmonise’ the spectrum and, say, put all BSNL’s chunks together, it would be able to offer data services on one contiguous chunk of 5 MHz. A little caveat here, since BSNL never bought this spectrum in an auction, it is “unliberalised” and cannot be used for data services—once BSNL pays the “liberalisation” charge, though, it can use it for data services. Organisations that have spectrum in the middle of BSNL’s holdings—in this case, the spectrum is either with the Railways or Defence—can be given spectrum in another part of the band. Once the defence/railway spectrum is consolidated, this then yields a contiguous chunk of 4.6 MHz.

Like BSNL, Aircel’s spectrum is also “unliberalised” and, so, whoever buys Aircel and its spectrum will have to pay a “liberalisation” charge to be able to use the spectrum for data. Since, after harmonisation, Aircel will have its 7.8 MHz in contiguous lots, it can buy another 2.2 MHz of spectrum from the 4.6 MHz that is up for sale, and create one 10 MHz chunk—this is even better than two chunks of 5 MHz each since airwaves get more efficient as the spectrum size gets larger

This ‘harmonisation’ is precisely what the government did in the 1800 MHz band in 2015, as a result of which the amount available for auction rose from around 22 MHz across the country to 220 MHz, and this fetched the government around `18,500 crore in the auction. In the 900 MHz case, it is estimated the amount available for auction will increase from 9.4 MHz to 118.8 MHz. At the current reserve prices of around `9,600 crore per MHz in the 900 MHz band, it will fetch `52,000 crore. This price, however, is excessive and that is why there wasn’t much interest shown in the last auction. But even if you use the 800 MHz price of around `5,100 crore, the government can get at least `27,000 crore. If similar harmonisation exercises are done in other bands, the results will be a win-win for both telcos as well as the government.

Last Updated ( Monday, 11 December 2017 12:44 )

You are here  : Home Telecom Helping telcos, helping the fisc
intalk.eu - This website is for sale! - intalk Resources and Information.