Spectrum Re-farming: An unwelcome option?

Let's face the fact: Spectrum is a scarce resource. Period. But the good thing is it does not deplete, it is just limited. The limitation only makes it mandatory that timely initiatives are taken that would encourage the use of available spectrum in most efficient manner.

To start with, Spectrum re-farming is the process of re-deploying spectrum from available users and re-allocating it to others. In India, GSM technology works in the frequency band of 900 MHz and 1800 MHz while CDMA in the 800 MHz band. At present, 100 MHz is allocated for GSM services while 20 MHz is ear marked for CDMA. Out of this, 65 MHz is with the defence forces.

The idea of Spectrum Re-farming was publically mooted for the first time in India in 2010 by TRAI and since then, Department of Telecom (DoT) has been almost obsessed with the whole idea. DoT has repeatedly included Spectrum Re-farming in the draft Spectrum Bill which is likely to be released for public consultation in near future. The regulatory body has recommended re-farming of 900 MHz spectrum when the operator's licences come up for renewal between 2014 and 2015.

Spectrum Re-farming, carried out carefully, has the capacity for good in-building coverage and wider availability of 3G technologies, opening up newer revenue streams especially for mobile broadband. It can give better rural coverage and cost reduction in operations spread over long-term because of its low CAPEX ecosystem. Spectrum Re-farming can be done especially, in cases where spectrum is being underutilised or being hoarded unnecessarily. If the Spectrum Bill comes through, BSNL and MTNL are going to be the most affected companies since they have huge amount of idle spectrum while there are other spectrum starved companies out there.

However, the telecom firms do not seem to be very keen about the idea of Spectrum Re-farming. These operators see Spectrum Re-farming as a threat to their competitive edge as well as to the quality of their networks. According to operators, Spectrum Re-farming is an unviable option at the best. It is bound to involve huge costs and disrupt services apart from hitting operator profitability adversely. It would be a challenge to move a fully functional network to a new one, according to the telecom companies. Besides, there is no clarity on how the government plans to back a running spectrum. The government is unclear if it should give any refund for spectrum surrender and on what basis. Making fresh investments in a new spectrum and giving up on an already developed network which has already taken up huge investments, pose quite a problem. Spectrum reforming might be a good idea as such but an idea that might backfire. It is better to tread carefully.

About the author : Nisha Meledath is a Contributing Editor for TradeBriefs. She can be reached at nisha_fortune@yahoo.co.in