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All of us are aware that spectrum is a scarce resource; though it is a renewable resource, it gets degraded if it is used non-scientifically or inefficiently. It is needless to say that there is a tremendous demand for spectrum due to the proliferation of new technologies and growing demand for telecommunication services. It is essential that spectrum is utilized efficiently, economically, rationally, and optimally. It is the most valuable asset for telcos.
India is not successful in using spectrum strategically and it is not utilizing the unused spectrum efficiently. The process of spectrum allocation has failed in gaining optimal revenue generation for the public exchequer. Allocation of scarce resource, 2G and 3G spectrum, has created a negative impact amongst the South Asian countries such as Bangladesh, Pakistan, Sri Lanka, Maldives, Philippines, Indonesia, and Thailand. India is the poorest performer in allocation, followed by Sri Lanka. In the 2G frequency band, India has resorted to a purely administrative mechanism of allocation. Some of the flaws in spectrum allocation include-it is linked to subscriber numbers and not usage; misreporting, hoarding. Spectrum has stuck in lower value uses. India lacks right mechanisms to put under-utilized spectrum to a better use. India has not been able to audit spectrum and its use efficiently.
Managing Spectrum
The ample spectrum available to run digital telecom economy is 100+ Mhz in 2G, 60Mhz in 3G, and 500+ MHz for BWA services. National Frequency Allocation Plan has set aside a total of 107.5 MHz of paired 2G spectrum in the 900 and 1,800 MHz band. Only 20 MHz of this lucrative spectrum has been allocated till now and the remainder is still with the government or some government agency. The remaining 75 MHz of 2G spectrum is in the less spectrally efficient 1,800 MHz band and 50-70 MHz of it has already been allocated. For operators to run the show, 900 MHz or 1,800 MHz frequency band is required for 2G services, 2,100 MHz for 3G services, and 2,300 MHz for LTE/BWA services.
Allocation of frequency spectrum should be fair, transparent, and for betterment of the entire society. Assignment of spectrum is governed by the National Frequency Allocation Plan (NFAP) and the International Radio Regulations of the International Telecommunication Union (ITU). In India, the spectrum management functions are undertaken by Wireless Planning and Co-ordination (WPC) wing of the DoT.
It is a well known fact that the operators need additional spectrum to improve the quality of services. Industry consensus that the government should formulate a spectrum policy to promote efficient use of spectrum by developing market incentives and differential pricing of spectrum in congested areas. An open and transparent auction format will ensure that the government realizes the best price for spectrum as per the market forces and at the same time the telecom operators minimize and efficiently use the spectrum.
Each operator is assigned a set of frequencies. In normal basic telephone service, a pair of wires is used for communication. But in case of mobile/wireless communications, airwaves are used instead of wires. These spectrum/airwaves are licensed by the government. It is allocated in Mega Hertz (MHz) in telecom licenses. 4.2 MHz is given as start-up spectrum, which is topped up by 1.8 MHz to make it 6 MHz (4.2 + 1.8 MHz), etc.
A Round Up of the 2G Spectrum Scenario
As known, 2G scam in India is one of the outrageous scams. India is a late entrant in the worldwide mobile telecommunications industry, a decade later. The country had a great advantage of learning from the international market-about the spectrum auction, pricing model-but it set an unpleasant melodrama, this telecom drama is yet to culminate even though Supreme Court has scrapped 122 2G licenses. The natural resource became a private resource for a few people.
Government officials, bureaucrats, lobbyists, and corporates involved in illegally undercharging mobile telephony companies for frequency allocation licenses. The licenses were sold on the basis of first come first serve basis who complied with conditions, and they issued at 2001 rates (`1,685 crore) ignoring the market value of the spectrum in 2008. The shortfall between the money collected and the money which the law mandated to be collected is estimated to be `1,76,645 crore as valued by the comptroller and auditor general of India based on 3G and BWA spectrum auction prices in 2010. But, the exact loss is disputed.
In February 2007, Hutch sold its 67% equity to Vodafone at `75,000 crore signaling substantial increase in spectrum value. Even if 15% of this is considered to be spectrum value, then it is `11,250 corer per pan-India licenses. In November 2007, S Tel offered `6,000 crore for pan-India license; in December 2007, it increased the offer to `13,752 crore. The then telecom minister, A Raja ignored all this. After obtaining licenses at cheap rates, the private companies sold (diluted) their equities to foreign telecom companies at a very high price. Every company that had pan-India licenses was valued at about `10,000 crore in which it had assets of 2G spectrum (`1,659 crore).
Thus, the difference in these figures (`10,000 crore and `1,659 crore) is per pan-India license loss to the government and gain to private companies. Shyam Telecom sold 74% to Sistema of Russia (MTS brand), Unitech sold 67% to Telenor of Norway (Uninor brand), Swan Telecom sold DB Group about 45% to Etisalat, UAE (Cheers brand) and 5% to Genex, Chennai and Tata Teleservice sold 26% to NTT of Japan (DoCoMo brand)
Supreme Court gave a landmark judgment by canceling 122 licenses; and it directed to go in for a fresh issue of licenses. It ruled that 85 out of the 122 licenses were outside the eligibility criteria for allocation. Supreme Court penalized `5 crore for Unitech Wireless (Uninor), Swan Telecom and Tata Telecom. A penalty of `50 lakh has also been imposed on Loop, S Tel, Allianz, and Sistema Shyam. The licenses canceled include 21 of Videocon, 22 of Unitech Wireless (Uninor), 9 of Idea, 21 of Loop, 6 of S Tel, 21 of Sistema, 3 of Tata, 13 of Swan, and 2 of Allianz.
Post the judgment, Trai came up with a roadmap on Telecom Spectrum Auction. Trai's recommendations include:
Allocation of additional 1.25 MHz spectrum to the holders of 4.4 MHz in 1,800 MHz bands, subject to the legal opinion.
Auction of spectrum in the 800 MHz band-This should also be done in the current financial year.
Auction of spectrum in the 900 MHz band-This auction should be conducted in the first half of 2013-14 preferably in the first quarter so that there is adequate time for deployment as and when 900 MHz spectrum is available by November, 2014.
Balance spectrum in 1,800 MHz band-This should be done in the first half of 2013-14.
Auction of spectrum in 2,100 MHz band-This should also be carried out in the second half of 2013-14.
Auction of available spectrum in 700 MHz band-This should be carried out in the first half of financial year 2014-15.
Auction of additional spectrum in 2,300 MHz band-This should be carried out in the second half of financial year 2014-15.
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A Snapshot of the Telecommunications Developments in India |
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In 1851, telegraph line was opened for traffic particularly for the official work of the East India Company. It was later extended to public use. |
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In order to meet the needs of telecommunications service there is a dire need of adequate spectrum. The National Frequency Allocation Plan (NFAP) facilitates the development and manufacturing of wireless equipment and spectrum utilization in the country. Frequency band of 109-173 MHz, 230-450 MHz is used for satellite communication, 806-960 is used by GSM and CDMA mobile services, 1710- 1930 is used for GSM mobile services, and 2400- 2483.5 MHz is allocated for Wi-Fi and Bluetooth short range services. Frequency bands of 1,800 MHz are extensively used by defense services.
Resolving Scarcity
Worldwide different frequencies are used for different purposes depending on the characteristics of each frequency. For enabling seamless communication throughout the world, the international telecom organizations (operators, manufacturers, government of each country) have specified certain frequency bands for mobile services. These frequencies have been standardized. Every second, there are thousands of simultaneous calls. Every call has to be assigned a different frequency so that they do not cause interference. The frequencies are limited and makes it a scare resource.
Spectrum in many cosmopolitan areas is scare. However in rural areas, there are lots of unused spectrum. Although it is a scare resource, it has been discovered that much of the allocated spectrum sit idle at any given time whenever a system is not transmitting. Therefore spectrum sharing is a solution of solving spectrum scarcity. It can be shared without causing excessive harmful interference with traffic from competing operators. This technique enables competing operators can share spectrum giving room to more traffic. In 2011, India has let operators to share and trade 2G spectrum under the new telecom policy. But it is indecisive on 3G spectrum sharing.