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Friday, 17 February 2012 07:06
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Some clarity, but spectrum sharing policy a dampener


While telecom minister Kapil Sibal’s press conference on Wednesday shed some welcome clarity in areas like the amount of spectrum telcos can hold and on what terms licences are to be renewed, many of the big questions remained unanswered. There is, for instance, no clarity on what the older telcos are to pay for the ‘extra’ spectrum they hold. Raising the contracted spectrum from 6.2 MHz to 8, and from 8 to 10 in metros, is a good move as it means that firms can retain more spectrum at the time of renewal. So, if Vodafone has 9 MHz of spectrum in a non-metro, it would have had to surrender 2.8 MHz at the time of renewal but it will now have to surrender only 1 MHz. Another good idea is to allow firms to freely participate in auctions until such a point as they have a maximum of 25% of the spectrum auctioned.

Given that the government is fighting a case with telcos on 3G intra-circle roaming, it was never expected to say it was legal, but the policy on 2G roaming is unnecessarily restrictive and spoils a potentially good move. Spectrum sharing is to be allowed in the 2G bands, so Bharti Airtel can, for instance, tie-up with MTNL to use the latter’s under-utilised spectrum. But the spectrum usage charges will have to be paid on the basis of the total spectrum. In Delhi, if telco A and B each pay 3% based on their 4.4 MHZ holdings, they will each pay 6% once they share spectrum, since the rate for 8.8 MHz is 6%—given that the government ends up getting more revenue when the telcos join forces, it would appear the idea is to prevent spectrum sharing, not to encourage it. Buying spectrum in an auction may be cheaper.

While the auction process for the spectrum vacated by the 122 licensees has got more complicated with Telenor asking Unitech for damages now that their JV Uninor’s licences are to be cancelled—will Uninor participate if the partners are at each other’s throats and can the JV be annulled in time for auctions?—the government can heave a sigh of relief as it suggests Telenor will not be seeking compensation under bilateral investment treaties. The beleaguered telecom sector still needs a lot more clarity on policy issues.



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