New Delhi: The battle lines in the forthcoming war for telecom spectrum auctions are being drawn. On one side are the Ambani brothers Mukesh and Anil and, on the other, are the incumbent biggies Bharti Airtel, Vodafone and Idea.
Even though Mukesh and Anil are not in the same game – the former has been allotted broadband wireless access (BWA) licences, while the latter is largely in 2G and 3G mobile telephony using dual technologies (CDMA and GSM) - they have aligned their interests to fight the GSM lobby which has got a free run in the crucial 900 Mhz spectrum band used for 2G services.
Two kinds of spectrum auctions are slated to be held in the next 12 months following the cancellation of 122 licences issued by Andimuthu Raja by the Supreme Court earlier in February.
While 4G licences will be on offer separately for broadband services, the 2G spectrum is the bigger prize because almost all players have a big stake in it – with incumbents seeking to retain their past status, and the challengers, including the 2G players whose licences were cancelled, seeking a share of some of the more valuable spectrum in the 900 Mhz band. At the very least, they want to keep out the old incumbents from bidding again for the 2G spectrum freed through the cancellation of licences.
The Telecom Regulatory Authority of India (Trai) had floated a consultation paper on 'Auction of Spectrum' earlier this month seeking stakeholder comments on various issues, including the manner in which auction of spectrum in the 1800 Mhz (freed as result of 2G licence cancellation), 700 Mhz, 800 Mhz and 900 Mhz frequencies should be conducted.
Trai said that 60 Mhz and 413.6 Mhz of spectrum in the 800 Mhz and 1800 Mhz frequency bands had been freed respectively due to the cancellation of licences by the Supreme Court.
It is, however, the 900-Mhz spectrum band that is considered the most efficient for 2G mobile services and most of the spectrum here is held by the incumbent mobile phone companies. Redistributing the 900 Mhz band has been among the most controversial issues confronting the sector.
The big boys of GSM (Global System of Mobile Communications), led by Bharti's Sunil Mittal, have ruled the airwaves for decades. The group that went in for a rival technology – Code Division Multiple Access, or CDMA – and lost out on spectrum is raising a banner of revolt with the blessings of big brother Reliance Industries. CDMA players were given less spectrum since the technology is inherently more bandwidth efficient.
An industry expert says that though Mukesh Ambani’s Reliance Industries (which owns Infotel, the all-India BWA licence holder) has no stake whatsoever in the 2G spectrum auction, it has presented its own approach to refarming the 900 Mhz spectrum to Trai. In effect, it is siding with Anil Ambani’s Reliance Communications (RCom) and the newer players whose licences were cancelled, and calling for a re-auction of the 900 Mhz spectrum band.
Earlier, the GSM players – who were the early birds in the game – were the stronger lobby, and the CDMA players, the later entrants, including Tata Teleservices, were the weaker players. Though the CDMA players now use dual technology (CDMA and GSM), their group has been strengthened by the companies which lost licences in Raja’s scam.
These later entrants and dual technology players, such as Reliance Communications and Tata Teleservices, contend that Bharti, Vodafone and Bharat Sanchar Nigam Ltd have made huge savings since they were allotted the 900 MHz band. They are demanding that this bandwidth be redistributed among all telcos.
In its submission to Trai, the CDMA association, called AUSPI, has supported this view, saying that the existing users of the 900 Mhz band should be held back from participating in a fresh auction.
According to a Times of India report, Trai’s new “prescribed limit on spectrum assigned to a service provider is a pair of 8 Mhz and 5 Mhz for GSM and CDMA technologies for all service areas other than in Delhi and Mumbai where it will be 10 Mhz and 6.25 Mhz (of) paired spectrum.”
Says AUSPI: "By proposing the so called ‘liberalisation’, Trai seems to suggest that we leave 5 Mhz behind in the hands of the operators who hold the spectrum today...this would be further unfair to newer operators who not only never got the benefit of the 900 Mhz spectrum for even 2G use. This is the equivalent of creating a differential access right (practically a right of first refusal) to some operators for future generation telecom services and for the totally unrelated reason that they were the first bidders for 2G services 15 years earlier. This would be a further major distortion of the level playing field principles."
According to a report in BusinessLine on Friday, the comments made by Reliance Communications and Reliance Industries on the Trai paper indicate a new alignment between the estranged Ambani brothers.
But GSM operators like Bharti have said that existing users of the 900 Mhz band spectrum should also be allowed to participate in any future auction. They have said that all available 2G spectrum, i.e. spectrum belonging to operators whose licences have been quashed and unallocated spectrum that is available with the Department of Telecom, should be collectively auctioned.
Even on the issue of the 700 Mhz auction, the telecom players are in separate camps. GSM players like Bharti and Vodafone have advocated an early auction of this band since it will be used for IMT Advanced (International Mobile Telecom-Advanced, a 4G standard) services. "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 should be done as soon as possible and preferably along with auction of 2G," Bharti said. Vodafone echoed these views, saying the 700 Mhz auctions should be conducted at the earliest.
But here again, Reliance Communications differs. It finds no logic in clubbing auction of various spectrum bands. "Keeping in view the diverse nature, economic value, availability status and utility of the said bands, clubbing the issues together would not only complicate the processes but also likely to delay the auction of spectrum in 1800 Mhz band," the company said.
A hot summer of lobbying over the spectrum auction policy lies ahead of us.