Clearing the air on 700MHz PDF Print E-mail
Wednesday, 30 March 2016 01:38
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Telecom Commission aims to unclog auction


Of all the decisions taken by the Telecom Commission (TC) on Monday, the one on the 700 MHz band is the most significant. Using 112 as India’s version of 911 for all emergency services is a good idea and, while it was quite the rage eight years ago when Trai first recommended it, there are hardly any takers for Mobile Virtual Network Operators (MVNOs) today as there are few operators, except MTNL and BSNL, that have extra spectrum but not the marketing muscle to make the most of it. It is not quite clear which non-telecom company would like to step in to create its own telecom brand today using MTNL/BSNL networks—globally, large retail chains and financial service providers with a national footprint use the MVNO route to offer mobile services—but given the state of these telcos, it is worth a try since the government has ruled out privatisation; the MVNO route may also let telcos get some value for their subscriber base.

The recommendations on 700 MHz were the most important since, going by even the base price suggested by Trai and selling all 35 MHz of spectrum in the band, telcos would need to pay R400,000 crore as compared to the R290,000 crore they have in the five auctions since 2010. Which is why, TC has asked Trai to explain the rationale for its recommendations. If for no other reason than that the market can’t possibly absorb the amount of spectrum on offer, selling the 700 MHz spectrum when the market is not ready just means burdening telcos with another ruinous spectrum auction since it will be several years before they can really deploy the spectrum commercially.

As this newspaper has argued earlier, there is no reasonable rationale for why the 700 MHz band should cost almost double the 800 MHz one, especially when the propagation properties of both bands are not too different and when there are more reasonably-priced phones available for the 800 MHz band, not for 700 MHz. The recommendation, a cut-and-paste of a 2012 Trai recommendation that 700 MHz band should be priced at 4 times that of the 1800 MHz band, was accepted by Trai in 2016 “in absence of any other better approach”. That, however, is not quite true since last year’s auction had thrown up relative valuations—R2,682 crore per MHz on a pan-India basis for the 1800 MHz frequency band, R8,681 crore for 900 MHz and R5,221 crore for 800 MHz. Also, to come to its recommendations in 2012, Trai used the relative auction prices of 700 MHz and 1800 MHz bands in various European countries and then applied the same formula to India. Using a European norm was in itself arbitrary, and while Trai used a factor of 4, this differed from 28.5 in Germany to 3.1 in Italy, 1.4 in Portugal and 1.8 in Sweden. By raising these queries, the TC has made a good beginning in clearing the air over 700 MHz.


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