A letter written by Ratan Tata to the Prime Minister in April started it all. Trashing the government’s subscriber-based spectrum allocation rules, Tata said this system favoured operators who had a headstart. Voicing an old grouse of CDMA players that they are being punished for being “the better technology” by being allotted less spectrum than GSM operators he demanded a new spectrum policy that was technology-neutral.

Tata, perhaps, had other reasons too for writing that letter. CDMA was initially permitted as a limited mobility service called WLL in 2002, which basic service operators like the Tatas,

Reliance, HFCL and Shyam Telecom were allowed to provide on their existing licence. By the time Tata Teleservices got this licence, Reliance was already getting established. In late-2003, after repeated complaints from GSM operators,

Reliance was asked by the government to pay the difference between its lower-priced WLL licence and the full-mobility licence that GSM players had.

Reliance paid up, as did the Tatas, and everyone migrated to a new technology-neutral, unified licence system. By this time, Reliance had grabbed more market share than the Tatas, an advantage it has since retained. Since the subscriber-linked spectrum allocations continued despite the technology-neutral telecom service licences, Tata Tele started feeling the burden: will it always end up with less spectrum than its rivals, both GSM and CDMA?

In India, GSM uses the 900 MHz and 1,800 MHz spectrum bands, while CDMA runs on 800 MHz. Both technologies started facing capacity constraints in 2004, as subscriptions grew faster than expected. Late last year, operators said that, in the metros and large towns, they were close to capacity in the bands designated for voice, SMS, 2G and 2.5G. And since they were setting their sights on 3G — the West’s ubiquitous voice and video connectivity — they wanted the spectrum allocation policy to be redrawn.

... contd.