Telcos differ on timing of 4G spectrum auction

While government plans to auction spectrum band for 4G services (700 Mhz) by end of this year, most telecom operators, except Bharti Airtel, have said it is not the right time to do it.

Updated: Mar 22, 2012, 21:52 PM IST

New Delhi: While government plans to auction spectrum band for 4G services (700 Mhz) by end of this year, most telecom operators, except Bharti Airtel, have said it is not the right time to do it.

Telecom Regulatory Authority of India (TRAI) had floated a consultation paper 'Auction of Spectrum' early this month seeking stakeholder comments on various issues including the manner in which auction of spectrum in 1800 Mhz (freed as result of 2G licence cancellation), 700 Mhz, 800 Mhz and 900 Mhz frequency band should be conducted.

Reliance Industries-owned Infotel Broadband Service in response to TRAI's consultation paper has asked the regulator to float a separate consultation paper for auction of 700 Mhz spectrum band, taking in to consideration the technology developments.

"...Auction of spectrum in 1800 Mhz band for 2G services should be framed up first and foremost..We have proposed separate consultation should be held for these (700/800/900 Mhz) bands," Infotel Broadband Service (IBSL) said in response to TRAI's consultation paper. Infotel had won pan-India BWA spectrum for Rs 12,847.71 crore but the company is yet to announce its plan for rolling out services.

In India, 2G services are being provided through 800, 900 and 1800 Mhz frequency band. TRAI has proposed to shift existing telecom players providing service in 800 and 900 Mhz to some other frequency band after expiry of their telecom licence.

However, telecom major Bharti Airtel said that 700 Mhz band should be made available preferrably with proposed 2G auction.

"There is no linkage between the auction of 700 Mhz band and any kind of refarming of spectrum in 800/900 Mhz band. We therefore recommend that auction of 700 Mhz spectrum band should be done as soon as possible and preferrably along with auction of 2G spectrum," Bharti Airtel said.

Vodafone, GSM Association and Tata Teleservices also stressed on early auction of 700 MHz spectrum.

New entrant Sistema Shyam said that government should auction 700 MHz within 6 to 12 months of auctioning 800 and 1800 Mhz spectrum band.

But, Reliance Communications pointed out that nowhere in the world 4G services has reached a level of affordability with other issues and suggested that it is not the right time to auction 700 Mhz band.

"Any action contemplated for 700 Mhz should be deferred till global market matures with available devices and infrastructure in 2015," RCom said.

Similarly, Idea Cellular said it is not the right time for auction of 700 Mhz spectrum band.

In February, Telecom Minister Kapil Sibal has said that government will auction 700 Mhz spectrum band by year-end.

On issue of 2G spectrum, suggestion made by telecom players shows clear division between the new and incumbent telecom operators on spectrum to be auctioned following the Supreme Court order to cancel 122 2G telecom licences.

The new operators like Uninor, SSTL, Videocon, S Tel and Etisalat DB are demanding that the auction should be conducted in multiple stages and in the first stage, only the new players should be allowed to participate.

"Participation in this phase (first) should be restricted to new entrants which would include the quashed licence holders as well as any new entrant who is not ineligible by virtue of ownership by an existing licencee," Videocon said in reply to TRAI's consultation paper on 'Auction of Spectrum'.

Another new operator and CDMA player Sistema Shyam TeleServices Limited (SSTL) has sought a level playing field in the upcoming auction.

"The new operators need to be given pre-emptory right of participation in the fresh auction," the company said in its reply.

Uninor too has sought a multi-stage auction and in the first stage, the cancelled 1800 MHz spectrum should be offered to bidders that were actually eligible for receiving spectrum in 2008 had they applied.

Even operators like Etisalat DB and STel, which already have expressed their intention to leave the business in India, have said that the first stage of auction should be restricted to new players only.

While Vodafone said that auction should be open to new entrants but it does not believe that there is any policy case to restrict the auction to new entrants.

"Existing operators must be given fair chance to deploy scale network of a comparable quality to international networks...This means that existing operators should be given a fair opportunity to acquire additional 1800 Mhz spectrum," it said.

Bharti Airtel highlighted various points made in SC judgement and said that all existing and new operators should be allowed to participate in auction.

On reserve price of the spectrum, SSTL said reserve price for per MHz of spectrum in 2012 for 1800 MHz should be the indexed 2001 price with SBI prime lending rate (PLR).

Videocon has said the reserve price should be kept at Rs 1,659 crore for 6.2 MHz as discovered in the last 2G auction, while Uninor has agreed to pay the reserve price of 3G auction.