Headed Nowhere

Stakes are high due to the
enthusiasm of mobile operators to launch 3G services and additional spectrum is
up for grabs. Delay in solving the frequency allocation muddle can mar the
enthusiasm

Spectrum
for mobile services is like oxygen for human beings-noted a leading expert at
one of ITU's conferences. But ironically spectrum like oxygen is not as
abundantly available. That is a reality of life, which all countries including
India are facing. The problem in India has become more complicated due to the
existence of multiple agencies working in different directions, some involving
politicians as well. Then there are industry associations divided along
technology lines, furthering their own business interest.

As the issue dithers,
the solutions are nowhere in sight. On the other hand, the subscriber base
continues to explode, accompanied by fast pace of deteriorating services
resulting in poor customer experience. This is due to spectrum crunch. However,
spectrum is not the main factor for deterioration in the quality of services. As
according to a recent TRAI report, the maximum number of dropped calls and call
completion was in the B and C circle, where the subscriber base is on the lower
side.

DPS Seth, member of
TRAI recently said, “Increased spectrum allocation is not the only factor for
providing better quality. Spectrum is important for customers as well as for the
regulator and the operator. But the capacity of the system that is being
installed also affects the quality of service.”

Existing Status

Currently, the 1800 Mhz, 800 Mhz, and the 900 Mhz band are used for offering
mobile services. Simultaneously, some frequencies on these bands are also being
used by the various defense agencies. This results in the inability of
Department of Telecommunications (DoT) to release additional spectrum in
the same band for mobile usage. The issue criteria for spectrum allotment is
also a topic of intense debate, with TRAI proposing that operators be given
spectrum according to their subscriber base. The DoT, on the other hand, wants
spectrum allocation according to amount of traffic that an operator handles. The
latter option stands to benefit BSNL as it carries the maximum traffic.

Battle of Bands

CDMA Vs GSM fight, which reached a crescendo during limited mobility period
is once again reaching its peak on the issue of spectrum. According to CDMA
operators' contention, 5 MHz radio frequency is insufficient to roll out
Evolution Data Optimized (EV-DO) and other value-added services. GSM operators
have strongly opposed the allocation of the 1,900 MHz frequency band to CDMA
operators on grounds that it would create interference with their network. CDMA
operators, on the other hand do not want to share, saying that their equipment
is not compatible with any other frequency. 3G services in India will likely be
on UMTS WARC-92 band (1920-1980/ 2110-2170 MHz) simultaneously, both for GSM and
CDMA services. To achieve this, Ministry of Defense has to vacate 1960-1980 MHz
spectrum and migrate to a different spectrum. It was ITU, which initially
discussed with TRAI on the benefits of licensing 3G / IMT-2000 in the WARC-92
bands and received positive response from TRAI, which started discussions within
the industry. Another dimension to this fight was added when TRAI suggested an
additional spectrum 800 MHz band to be given to CDMA operators so that they
provide high bandwidth services on mobile. GSM operators vehemently opposed
this.

GSM operators have
also pointed out another anomaly in the spectrum usage charge. While GSM
operators pay 4% of their revenues as spectrum usage charges, their CDMA
counterparts have to pay only 2%. This is discriminatory, according to the GSM
operators considering that the ARPU of CDMA operators are almost at par with GSM
operators.

Implications for Broadband Services

Despite all the enthusiasm with which the wireline broadband services were
launched (post broadband policy) and ambitious targets were set, the fact
remains that we are far behind in achieving the first year target. The reason is
the high capex and slow provisioning of services together with the poor quality
of services. If India has to move fast on the broadband front and is to achieve
future targets, 3G is the most potent route considering the tremendous growth of
mobile telephony services. But for that to happen, suitable spectrum would be
needed. India still remains a laggard as far as the number of Internet
subscribers are concerned.

Free or Paid

India's Ministry of Finance has asked DoT to allocate a 3G spectrum to
mobile operators through the auction route. According to the ministry, it is
DoT's responsibility to price spectrum as per international practices, citing
the example of Europe and the US, where governments fetched billions of dollars
in revenue by auctioning spectrum. The ministry has also said that pricing of
spectrum should not be in TRAI's domain. The finance ministry has taken the
position that pricing of radio spectrum is not a regulatory issue, and hence,
should not have been referred to the telecom regulator.

To Charge or Not to Charge

Most of the countries in Europe and elsewhere have opted for auctioning of
spectrum for 3G services. There is still no unanimity amongst the operators,
regulator, and DoT on this issue. Cellular operators led by Bharti has been
demanding spectrum for free on the ground that it will result in the growth of
tele-density. In fact TRAI has similar views. However, Ratan Tata sprang a
surprise by offering Rs 1,500 crore. In reaction to this, Sunil Mittal is
reported to have argued that this money could be used to improve the
infrastructure to offer better services. DoT, not surprisingly, wants spectrum
to be auctioned; so does the Finance Ministry and other government agencies.

Way Forward

All stakeholders need to put their act together without compromising their
business interest to utilize the available spectrum efficiently and effectively.
DoT has to work with defense agencies and get the additional spectrum vacated by
offering a smooth migration path to other frequencies, without compromising
country's security aspects. Analysts have also argued that the existing
allocation on the basis of subscriber number is insufficient to expect an
efficient usage of spectrum and that allocation on the basis of traffic as
suggested by TRAI is a better way out. Service providers need to invest in
infrastructure to use spectrum optimally and deploy more micro sites for better
frequency re-use. Dayanidhi Maran, Minister of Communications sent out strong
signals to operators when he said, “One of the reasons for inefficient use of
spectrum is that the operators are not willing to invest in infrastructure. If
they increase cell sites, the same spectrum can be used to carry more
traffic.”

Operators should be
induced to deploy adequate number of micro cell sites in heavily congested areas
to enhance frequency re-use pattern. DoT and TRAI should device mechanisms to
link spectrum allocation with actual traffic generated in the network. India can
also learn from the US presidential memorandum titled 'Improving Spectrum
Management for the 21st Century', which provided a timeline for the devising
and implementing of the spectrum policy. This initiative also looks at
ultra-wideband, deployment of 90 MHz for advanced wireless services; globally
harmonized allocation of 5 GHz spectrum for unlicensed WLAN, and even deployment
of broadband over power lines. India also has an option to allow spectrum
trading, which is primarily aimed at optimizing spectral efficiency, as per TRAI
guidelines, wherein a new entrant can use spectrum of the existing operator.

Sudesh Prasad    

sudeshp@cybermedia.co.in