900 Mhz refarming: Panel to consider 3 options on Wed

New Delhi: The dust is yet to settle on the Empowered Group of Ministers' (EGoM's) decision on charging a one-time fee for excess spectrum when another contentious issue-refarming the 900 Mhz spectrum-is slated to come up before the Telecom Commission (TC) on Wednesday.

The Commission is expected to consider three options on refarming-which means taking away the more efficient 900 Mhz spectrum from incumbent players and instead asking these companies to bid for the less efficient 1,800 Mhz spectrum at new, higher prices in the upcoming auctions.

The Commission is expected to consider three options on refarming. Reuters

These options are: all available 900 Mhz spectrum is put up for refarming, with incumbents not allowed to retain any; incumbents allowed to retain 2.5 Mhz of 900 Mhz spectrum; and incumbents allowed to retain 5 Mhz of 900 Mhz spectrum.

A note prepared for the Commission's meeting, which was seen by Firstpost, lays out the pros and cons of each of these three scenarios:

Scenario 1: If no spectrum can be left with an incumbent and all available 900 Mhz spectrum is refarmed, this would be in line with earlier recommendations on the subject by the Department of Telecom as well as by sector regulator Telecom Regulatory Authority of India (Trai).

This option should also allow a level playing field for new and existing telcos. But, on the flipside, this would mean expensive infrastructure already put in place by incumbents could become redundant; these telcos will need substantial further investments and till new winners for this spectrum put their systems in place, coverage would be disrupted.

Scenario 2: Incumbents would be allowed to retain no more than 2.5 Mhz. This would mean lesser disruption of services, and moderation in redundancy of existing infrastructure. But significantly, this allows both incumbents and new telcos to bid and, therefore, could optimise price realisation. But the flipside is that this amount of spectrum cannot be used to deploy LTE technology (which needs contiguous 5 Mhz).

Scenario 3: If 5 Mhz can be retained, it eliminates any infrastructure redundancy and coverage gap issues. But price realisation could see an adverse impact since there won't be any need for incumbents to bid afresh. Also, this option perpetuates the current holding pattern of the 900 Mhz spectrum with only zero or one block of 5 Mhz available for non-holders.

Telecom industry sources told Firstpost that the Commission meeting will be held on the day the EGoM meets yet again, to take a final view on what the Attorney General's replies to its decision on the one-time fee. The Union Cabinet is expected to meet on Thursday to give a finality to both, one-time fee and refarming of spectrum.

Updated Date: Dec 20, 2014 12:48 PM

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