Spectrum Management : Dealing with Scarcity

The recent expansion of mobile phones and Internet access would have been
impossible, if India had to rely on connecting everybody by laying copper wires
under the ground like most western economies did. Wireless technologies being
cheaper, faster to deploy and now support broadband speed which was
inconceivable without fixed networks, have become key enabler of governance,
education, health, entertainment, etc, to areas and people with little access to
physical infrastructure like roads and ports. However, the extent to which
wireless can play this role will depend critically on India's ability to work
strategically to create an enabling environment where users can access the
services cheaply and operators can make money providing them. Much like mobile
phones in India, where customers receive the world's cheapest services and
operators make tidy profits after paying over a third of their revenues to the
government.

However, technologists and operators depend on government to provide access
to the limited supply of radio frequencies or 'spectrum' without which wireless
communication is impossible. The amount of spectrum and the price government
charge for it, can make or break the wireless business. It would seem, by
hindsight that until now, the government has successfully reconciled the
competing agenda of users and businesses at least, for conventional 2G mobile
telephony.

However, this happy situation may change. With growing demand, spectrum is in
short supply. Operators blame this shortage for increasing dropped calls in big
cities. But allocation and pricing of spectrum today reflect little of its
increasing scarcity or increasing demand. For instance, an operator can claim
more spectrum simply by signing on subscribers, irrespective of the actual usage
of a scarce resource like spectrum. Indeed the government has exacerbated the
scarcity by issuing more licenses which in India come bundled with spectrum.
This, when India's operators face more competition in each circle and receive
less than a quarter of the spectrum than their peers internationally.

The government has failed to curb the dangerous temptation to take a call on
two fiercely competing technologies vis-a-vis 3G and WiMax. WiMax evangelists
claim that it offers superior bandwidths for Internet and is more cost-effective
for rural areas than its arch competitor. Promoters of 3G contest these claims
and say it can leverage existing 2G infrastructure better. International
Telecommunication Union (ITU) clubs 3G and BWA under the IMT2000 set of
standards. The US auctions of 700 MHz allowed winners to deploy any approved
technology-including 3G, BWA, and others. Unfortunately, in India, the upcoming
auctions for 3G/BWA prescribe different conditions. For example, there should be
base prices and quantum of spectrum for functionally similar technologies, with
their own unique strengths and weakness. This is another distortion in the
making with which the sector will have to contend in the future.

The immediate remedy for the spectrum crunch is to expand its supply, reduce
wastage, and facilitate more efficient use of existing supplies. Spectrum
supplies can increase if defense forces receive support to move to alternative
networks (for example, based on fiber) or equipments that does not need
frequencies needed for commercial use. Auctions can ensure that operators have
incentives to use spectrum more efficiently. The proposed design for auction of
3G/BWA spectrum-despite the drawbacks mentioned above which need fixing-is sound
and can serve as a basis for auction of all spectrum in the future including 2G
services. This will reduce wastage of precious 2G spectrum. If 3G and BWA
auctions can be held without further delay, we will have more efficient
technologies in place to create a regulatory environment that enables the
limited supply of spectrum to deliver the huge potential of wireless services to
more people in a cost-effective way.

Dr Mahesh Uppal

The author is director, Com First India

vadmail@cybermedia.co.in