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Ooph, this Spectrum...

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VoicenData Bureau
New Update

This is the underlying feeling haunting Indian telecom for the last so many years, more so since 2008. Many heads rolled and many companies-domestic and global-having operations in India, had to shut shop due to this. Multiple Indian ministries, including the PMO, are still languishing under its grip. Stock prices of many big telecom firms crumbled just because they were in some way or the other connected to these invisible airwaves. The irony is that those who are in the telecommunications industry, and intend to remain there despite all the issues, have no other option but to be remain associated with these frequency bands!

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“Ooph, this spectrum...”. All the stakeholders of the telecom industry in India are gasping these words-the government because it wants the spectrum to be auctioned at the earliest at a premium so that it can plug some gap in the fiscal deficit. The operators want the spectrum to be auctioned as early as possible so that they can provide more and 'better' service (and in turn garner more revenue). The customers, who are now bugged with call drops because of the usage of scarce spectrum by their service providers, want to be rid of the frustration and enjoy a seamless, uninterrupted wireless service. But all in all, everybody wants the spectrum ghost to disappear, and the sooner the better!



Now, after much deliberations and delay, finally the base price for 2G spectrum was finalized by the cabinet upon the recommendations of an empowered group of ministers headed by Prime minister Manmohan Singh. The airwaves to be auctioned are the spectrum bands that are slated to be released from the 122 licensees whose permit to offer mobile services were canceled by the Supreme Court in February this year. The industry had been waiting for a decision to be taken by the government regarding fixing of an auction date and the base price at which the spectrum would be auctioned. But, again, the decision was not without controversies. Operators, in unison, are of the opinion that a price of `14,000 crore for 5MHz spectrum in 1800 MHz band is too much and hence not sustainable. And unless the government comes up with some revision, the industry would see a surge in tariff in mobile services. And the implications could be multitude.



Firstly, the basic objective of increasing the teledensity in the country, specially in the rural areas, would be challenged. The country had seen huge growth in the telecom sector in the last 10 years because the tariff of mobile services were lowest in the world. Secondly, 12 operators is too much for a country in a long run. The operators are bleeding big time and many of them do not have big enough pockets to even participate in the auction, leave alone winning it. So, consolidation is in the horizon and operators with huge cash reserves or those who have the market credential to get funds, would end up participating in the bidding. The smaller operators-Etisalat, Videocon and Swan Telecom-have already exited the industry. The Indian subsidiaries of Telenor and Sistema are most likely to pull out either completely or in part. The fifth- and sixth-largest private operators (subsidiaries of Tata and Maxis) may also look to consolidate, to strengthen their position, as both operators have been unable to register an operating profit so far. That means the hitherto big 5 would run the show.



All said and done, despite the 'high-price', the operators are waiting for the spectrum to be auctioned at the earliest as they have been managing with little spectrum for the last so many years and the load on it from new subscriber additions is increasing each passing day. The government needs to finalize the auction date and release spectrum so that the industry would get the much needed boost.



Pravin Prashant




pravinp@cybermedia.co.in

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