The specter of spectrum

Government’s responsibilities don’t just end with eliciting maximum price from the spectrum auction. These auctions should turn out profitable for operators too

The year 2014 is critically important for the Indian telecom sector. Not only will there be a change of government, as many as 29 mobile licenses are up for renewal between December 2015 and April 2016.

The 900MHz and 1.8GHz spectrum going under the hammer is currently held by Bharti Airtel, Idea Cellular, Rcom and Vodafone India. The majority of licences in question are set to expire in December 2015.

The government has had a good start early this year when during the auction of 900MHz and 1.8GHz spectrum concluded in February operators pledged nearly $10 bn.

Despite government raking in billions from the auctions, the quality of voice calls remains poor and there is not much to write home about the spread of broadband and internet services across the country. This brings us to the issue of better utilization of available spectrum and also the spectrum lying unused with several government departments; with a major chunk lying unused with the Defence Ministry.

In India, contiguous spectrum is not available with the operators today because spectrum has been allocated at various times in small chunks to the existing operators and hence the current allocation is non-contiguous. It would be absolutely essential that rearrangement of frequency spots is carried out between the DoT/WPC and the operators to ensure contiguity of spectrum. Without this, roll out of 3G, 4G/LTE networks and services will remain impaired.

Also, since the government’s focus remains on milking the maximum price for the sale of an airwave, the winning operator is little effort to expand its infrastructure in far-flung areas. Due to high investment cost, industry prefers to create ICT infrastructure in selected urban cities because the recovery of investment is faster. Even running cost may be high in some of the rural area due to the unavailability of basic infrastructure such as electricity. Not just that; telcos are also subjected to taxes in the name of spreading the services in the areas not connected with the network. This is nothing but unjust penalty and a further add-on to the price already paid during the auction. This also impedes penetration of several services in the rural areas.