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BW Businessworld

Big Boost To Telecom As Ministries Settle Spectrum Issue

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It has been the most contentious issue in the Indian telecom sector for years. Finally, there seems to be light at the end of the tunnel. That emerged after a meeting between the ministers - Defence Minister Manohar Parikkar and Communications Minister Ravi Shankar Prasad. The issue all along has been the vacation of 15MHz of spectrum in the 2100MHz band by the defence services. That band was auctioned for 3G services in 2010.
Basically what that means is that there will be a swap of spectrum between the two ministries in the 1900MHz and 2100MHz band. Once that happens, 15MHz of spectrum in the 2100MHz band would be provided to telecom service providers. That means three operators can get 5MHz each in the band to provide 3G services. That's critical for the sector since no operator currently has nationwide spectrum in the band. However, it will depend on the timeline adopted for swapping the spectrum.
The two ministries had initially agreed that the spectrum in the 1700-2000MHz band would be equally divided between the two, each getting 150 MHz. However, since the procedure for division wasn't decided it became a contentious issue.
The spectrum in the 1900MHz band had been reserved for providing telecom services using CDMA technology. However, over the years, existing CDMA operators - Tata Teleservices and Reliance Communications - became dual technology operators. There is only one pure play CDMA operator in Sistema Shyam, which offers services in nine circles. Also, there has been a steady slide in the number of CDMA subscribers in the country.
This move could prove to be quite beneficial for GSM-based operators like Bharti Airtel, Vodafone and Idea Cellular who have invested in 3G. As things stand, out of the 22 telecom circles, Bharti, Aircel and Reliance Communications offer 3G services in 13 circles, followed by Idea Cellular (11 circles) and Vodafone and Tata Teleservices (9).
That could mean that the government could conduct spectrum auctions in the 800MHz, 900MHz, 1800MHz and 2100MHz bands simultaneously. That decision would make it easier for operators to bid.