One more telecom blow PDF Print E-mail
Thursday, 18 October 2012 00:00
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Refarming will badly hit larger telecom players

The telecom industry may have won a respite with the courts staying the government decision to stop intra-circle roaming in 3G networks, and with TDSAT ruling in favour of Qualcomm on Wednesday—the government had reduced the life of its broadband wireless license by 18 months but the TDSAT has said this has to be restored to the original 20 years. Wednesday’s decision by the Telecom Commission that all 900 MHz spectrum—this is the most efficient spectrum—is to be ‘refarmed’, however, will be a big blow to industry leaders like Bharti Airtel, Vodafone, Idea and PSUs BSNL and MTNL. The spectrum will be auctioned and in case the incumbent telcos don’t win the bid, the 900 MHz spectrum will be given to the highest bidder (the base price for this is R28,000 crore for a 5 MHz slot) in an auction next year—the incumbents will then be given 1800 MHz spectrum (at a base price of R14,000 crore for a 5 MHz slot). Since the 1800 MHz spectrum is not as efficient as the 900 MHz spectrum, this means telcos will have to rework their networks and spend, according to industry estimates, R55,000 crore of capex—and R12,000 crore of annual opex.

Not surprisingly, the incumbents with 900 MHz spectrum are up in arms since they argue they invested in their circles on the implicit understanding they would keep getting the 900 MHz spectrum—the corollary is that other telcos who see a chance of getting the more efficient 900 MHz spectrum are ecstatic. Even though their licenses don’t promise telcos that they will get 900 MHz forever, telcos have a point in that this has never happened in other areas. Refarming will provide a ‘level playing field’—this is the principal government argument in favour of refarming—in the sense other firms will also get a shot at the better spectrum, but the government has never taken away, say, coal mines from an NTPC and given them to a Tata Power, or iron ore mines from a Sail to give to a Jindal Steel—that too would be providing a ‘level playing field’. The other problem, the 900 MHz telcos point out, is that there hasn’t been the mandatory consultation that takes place before any policy change is contemplated. Presumably these are issues that the Cabinet will wrestle with once the Telecom Commission’s recommendations are sent to it.


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