Vodafone again: Co cries foul over vacating 900 Mhz

New Delhi: Vodafone, already in a spot over the Budget’s retrospective taxation, appears to be in further trouble over the proposed ‘refarming’ of the 900 Mhz spectrum band.

The Telecom Regulatory Authority of India (Trai) has suggested that incumbent operators who hold the 900 Mhz band must relinquish it so that it can be redistributed, and instead pay to acquire the 1,800 Mhz band at a new base price.

Vodafone, which last week joined Bharti Airtel and Idea to protest the Trai proposals with Communications Minister Kapil Sibal, has sent a strongly-worded separate letter to Sibal protesting against the refarming of 900 Mhz spectrum.

Its logic? The company says any refarming exercise will impact two-thirds of its 150 million subscriber base and take anywhere between three to five years to accomplish. It has also estimated additional investments of Rs 10,000 crore in setting up base stations, etc, for migrating existing customers in the 10 circles which would be impacted, over and above the Rs 16,700 crore already invested in these 10 circles.

“Vodafone has start-up spectrum in the 900 Mhz band in each of these 10 circles. This spectrum formsthe foundation of the networks deployed. Vodafone has built around 55,000 base stations in these10 circles and achieved population coverage of around 93 percent and geographic area coverage of around70 percent. Vodafone uses 1800 Mhz spectrum primarily in the urban areas where additional capacity isrequired and 900 Mhz ‘microcells’ to provide coverage within buildings…..The withdrawal of 900 Mhz of spectrum will, therefore, result in significant ‘gaps’ in coverage and areduction in the level of service enjoyed by customers; either through a degraded quality of service(an inability to make or receive a call without changing location, or an increased frequency of dropped calls) or, in some cases, a total loss of service.”

If the impact of refarming is actually as severe as Vodafone’s letter suggests, why did Trai at all recommend that refarming be done, especially at a time when the industry is faced with the more serious issue of allocating spectrum released after the cancellation of 122 licences? Chairman JS Sarma had told Firstpost last week that the refarming issue was being discussed for the last one-and-a-half years and it was time now for closure.

Not just Vodafone, other telcos such as Bharti Airtel and Idea are also set to get impacted by the refarming proposal.