DoT approaches TRAI on review of spectrum caps for telcos

New Delhi: The Telecom Department has approached the sector regulator TRAI on review of existing spectrum caps - 50 per cent within a band and 25 per cent overall across all bands - applicable on the operators.

The department's letter to Telecom Regulatory Authority of India (TRAI) in this regard follows the recommendations made by the inter-ministerial group (IMG) tasked with examining financial stress in telecom sector.

Any easing of spectrum limit within a band by TRAI may come as a relief to Idea Cellular and Vodafone which are in the process of merging.

"In light of the IMG report, TRAI is requested to provide views on whether existing applicable band-wise spectrum cap of 50 per cent of total spectrum assigned in a band for a LSA (Licensed Service Area) and and overall cap of 25 per cent of total spectrum assigned in LSA across bands, should continue or needs review," said the letter, seen by PTI.

It asked TRAI to provide views on the new band-wise and overall spectrum caps, in case of a review.

It also mentions that IMG, in its report, had stated that Idea, Vodafone and Reliance Communications had requested for removing the spectrum caps, while Airtel had represented against it.

IMG noted that the matter "merits examination and inputs from regulator" and accordingly, the telecom department has decided to consult TRAI on the issue of spectrum limit.

As per the current rules, operators in each access area are not allowed to exceed the cap of 25 per cent of total radiowaves assigned in 700, 800, 900, 1800, 2100, 2300 and 2500 Mhz bands, and 50 per cent within a specific band.

In case of a merger and acquisition, if merged entity exceeds the stipulated limits it has to surrender the excess spectrum within one year.

Relaxation in spectrum limit within a band, if it happens, may come as a relief to merging entities Idea Cellular and Vodafone, as some analysts have warned that the combined holding could breach spectrum caps in 900 Mhz band across 5 telecom circles - Maharashtra, Gujarat, Kerala, Haryana and UP West.

It may also breach the limit in 2500 Mhz band in Maharashtra and Gujarat.

The 900 Mhz band is presently used for 2G and 3G services, while the 2500 Mhz band is being used for 4G services.

Last week, the Telecom Commission (the apex decision- making body at telecom department) approved IMG's recommendation on extension of time period for the payment of spectrum bought in auctions by telcos to 16 years from the current 10 years.

The Commission also approved IMG's suggestion of lowering interest rate charged over penalties imposed on service providers with slight modification.