Relooking caps a good idea PDF Print E-mail
Thursday, 10 September 2015 09:46
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Need that to make spectrum trading/sharing work


Having got the Cabinet to clear both spectrum sharing as well as trading norms – the latter was cleared on Wednesday – telecom minister Ravi Shankar Prasad has done well to set up a committee to examine the issue of raising caps. Given that India has too many telecom players and limited spectrum, consolidation is the best way out for the industry. While sharing allowed telcos to create larger pools of spectrum to operate in jointly, trading allows telcos that are not doing much with their spectrum to sell it. BSNL and MTNL have a lot of unutilized spectrum and can share/trade it. While trading offers a way out to a buyer who wants spectrum but not the employees that come with it, the rules are a dampener. If telco A trades Rs 1,000 crore of spectrum with telco B, this will be added to its revenues and it will have to pay 13% license fee/spectrum charges on it, apart from a 1% administrative charge that B will have to pay. This is unfair since the spectrum being traded has been bought at market prices.

There is also another problem since the spectrum is often non-contiguous (and therefore of limited use for data) and also ‘unliberalised’ – telcos will have to pay the last auction’s fees to liberalise it. But in cases of firms like Aircel, for instance, it can trade most of its liberalized 2300MHz spectrum with Vodafone or Idea – trading with Bharti Airtel could run up against the caps which prohibit a telco from owning more than 50% of the spectrum in any band or 25% across all bands. Similarly, an RCom can trade some part of its 800MHz spectrum with RJio in Delhi after liberalizing it – if it simultaneously enters into a trade with an MTS for its 3.75MHz to service its existing CDMA customers. Once the caps are raised them to more realistic levels, a lot more sharing/trading deals can take place, revolutionizing telecom in the country.


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