Telecom firms may have to wait for spectrum

Telecom firms may have to wait for spectrum
Sunil Jain and Navika Kumar

New Delhi, April 3: Fixed-line telecom service providers who had banked on getting 5 Mhz of spectrum for their Wireless in Local Loop phones (WLL phones are also commonly called the `poor man's mobile) for free, may have to wait a while. Because, after the furore raised over allegations of how the fixed line service providers had manipulated the telecom ministry to favour them over the cellular lobby, the government is doing a re-evaluation of the entire spectrum issue.

One of the options being evaluated is whether the spectrum should be auctioned the way it is in several other countries. So fixed line companies that have already been awarded letters of intent by the government are unlikely to get their spectrum licenses for some weeks at least.

In a nutshell, the charges are that while the entire cellular industry has paid a total of Rs 7,300 crore so far in order to get a total of 8.8 Mhz of spectrum -- each player has been given 4.4 Mhz and there are two players in each cellular area. In contrast, the basic service providers are to get 15 Mhz (5 Mhz each eventually, for 3 players in each circle) and there is no fixed charge for this.

While the cellular industry has been claiming that this amounts to a scam totalling several thousand crore, the Telecom Regulatory Authority of India debunks the argument stating that the cellular players had been allowed to charge high call rates from subscribers of upto Rs 16 a minute precisely so that they could recover the high fees they had paid in the past. And while the WLL firms have been given cheap spectrum (they will pay a percentage of the revenue they earn from the WLL phones to the government), according to TRAI sources, they will also be allowed to charge much less from subscribers.

What has got the government a bit jittery, however, is the fact that the response of the cellular industry to the auction of the fourth cellular license has been less than lukewarm -- just one or two companies have purchased even the bid documents. Cellular firms argue that it is cheaper for them to bid for fixed line licenses which allows them to provide WLL mobility, and so there is no point bidding for the fourth cellular license.

In addition, what's also put the government on the defensive is the fact that the Department of Telecommunication's earlier drafts on the issue are quite at variance with the final policy. In the earlier drafts, for instance, the DoT had said the fixed line service providers would be allowed only 1.25 Mhz of spectrum initially, and then an equal amount later -- now, this is to be doubled, and firms will get 2.5 Mhz immediately and another 2.5 Mhz later.

More important, the DoT has removed all the pre-conditions in the earlier draft. Earlier, for instance, the fixed line provider had to install half the phones in the initial rollout plan before even the first 1.25 Mhz of spectrum was allotted. After this, a minimum of 10,000 phones had to provided in small towns (SDCA, in jargon) and over one lakh in the metros and larger cities -- of these, at least half had to be provided by way of fixed cable.

Now, however, these conditions have been given the go by. The fixed line providers will now get 2.5 Mhz immediately -- without having done 50 per cent of their first phase rollout. In addition, they will get the second 2.5 Mhz even if half of their rollout is not done through fixed land-based cable. In other words, they can now use the fixed service license as just a mobile license.