Implication: extra spectrum allocation must wait a while
Subscriber-base criterion given by the WPC study has been exceeded by the operators
All networks employ frequency hopping and several capacity-enhancing techniques
New Delhi: The Spectrum Committee, constituted by the competent authority, the Ministry of Telecommunications, to recommend a revised subscriber-based spectrum allocation criterion in a scientific and practicable manner, has concluded that “it is time to look at other criteria [that is, other than the subscriber base criterion] for deciding incremental spectrum allocation, possibly be in combination with the subscriber-linked criterion.”
One such method it has suggested is “to first grant a minimum allotment to an operator along with the licence, and then auction the remaining spectrum, with a cap on the total spectrum that any operator can have in a circle.” A key recommendation of the Spectrum Committee under the present contentious circumstances is that a technical committee should be set up to “specify the method to be followed for allotting incremental spectrum.”
If the suggestion is accepted, the norms for allocating extra spectrum cannot be settled immediately.
In its 23-page report (for the text, see www.thehindu.com), the Spectrum Committee observes: “It is important to draw the obvious conclusions from the fact that the subscriber-base criterion given by the WPC study has been significantly exceeded by the operators. This has happened without additional spectrum being allotted and is a direct result of the high demand created for mobile telephony in the less dense areas of the circles.”
The committee goes on to say in its report: “Nevertheless, the use of the subscriber base as a criterion for incremental spectrum allocation has ensured that when incremental spectrum is allotted due to felt need in the dense urban areas, significant subscriber growth takes place elsewhere in the circle as well. The subscriber base can continue to be a necessary criterion, but in the long run, it may not be a robust method by itself for releasing additional spectrum to existing operators. We also note that spectrum is a scarce resource, and if its allocation is not market-driven, at least in part if not in full, its value vis-À-vis capital expenditure on the network infrastructure does not get factored in.”
It recommends a combination of auction and subscriber-linked criterion as being worthy of consideration by the government.
One such method could be grant of a minimum allotment, and then an auction, with a cap on total spectrum that any operator can have in a circle.
The committee consisted of R. Bandyopadhyay, Additional Secretary, Telecom, as chairman, P.K. Garg, Vijay Madan, Bhaskar Ramamurthi, Ajit Kumar Chaturvedi, Dilip Sahay, T.V. Ramachandran, and A.K. Srivastava as Member Convenor. Mr. Ramachandran, who represented the association of operators (COAI), dissociated himself from the committee through a letter of December 7.
“Auctions have been employed internationally, sometimes with success and at other times, with undesirable consequences,” the committee report notes. “While auction encourages investment in spectrally efficient technologies, it can also lead to spectrum hoardings, unless the rules are carefully drawn up. The setting up of auction rules so as to achieve the desirable results is a challenging task.”
The report suggests that the eligibility of an operator to participate in the auction and bid for the next incremental quantum of spectrum would “depend on whether the operator meets a minimum subscriber base criterion for the amount of spectrum already allotted. Presumably, in such a method, the infirmities of either method when employed alone can be overcome.”
Considering the complexities in this exercise, the Spectrum Committee recommends that a technical committee should be set up “to specify the method to be followed for allotting incremental spectrum.” All the expertise in the country — particularly the academic expertise available from the IITs, IISc, IIMs, and other research bodies — could be leveraged to work out a suitable method.
In dealing with the requirements of GSM operators, the committee recommends that “incremental spectrum allocation can be reduced ...to 1 MHz steps.” Until now, the quantum allotted has been in the range of 1.8 MHz to 2.4 MHz for GSM networks, and the minimum possible quantum of 1.25 MHz for CDMA networks. The committee is of the view that since “all networks now employ frequency hopping and several capacity-enhancing advanced techniques...it is now possible to deploy an increment of 1 MHz effectively in the network.”
Interestingly, one recommendation of the committee is a split suggestion: “Keeping in view the immediate task at hand, as an interim measure, and till such time as a [technical] committee as recommended above is constituted and it completes its work, Professors Bhaskar Ramamurthi and Ajit Chaturvedi felt that criteria recommended by the TRAI, which is the regulatory body, may be considered by government. However, Shri Srivastava [member convenor] was of the view that for GSM systems, the TEC criteria may be considered while for CDMA, the TRAI criteria may be considered. In view of the sharp divisions among the members regarding this important issue, the committee felt that this decision is best left to the government.”
The report says that it was not possible for the Spectrum Committee to “arrive at definite numbers for all the circles without the detailed study” that would be required.
Hence the committee, noting that it was not in a position to recommend any specific numbers or criteria at this point of time, points out that the government “needs to take a decision in this regard.”