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To offer two blocks or four slots? What base price to offer for the future auctions? Mergers and acquisitions for winning operators? Delay of auctions; Spectrum pool; and still fighting over auctions for 2G while nations of the world plan to launch 4G. This is the current scenario of India's telecom sector.

Operators have shouted themselves hoarse stating that the delay in 3G auctions has led to business losses amounting to thousands of crores of rupees. As for foreign players who want to enter into the Indian market, they are watching and waiting and possibly slowly becoming uncertain of investing in such a market scenario where confusion and uncertainty prevail, where there is no clear policy, and where even the issue of de-linking licenses does not have a clear ground.

Spectrum Hoarded?
Out of 121 new licenses issued by the telecom minister, A Raja, only thirty-five circles have received services. With the present policy of spectrum being bundled with licenses, this spells bad news as the scarce spectrum is not being optimally used, leading to the present demand-supply gap.

According to Payal Malik, sr research fellow, LIRNEasia, "It is difficult to verify whether the spectrum is actually being hoarded, but given the way allocation has taken place, I won't be surprised if it is. In an effort to eliminate competition, the existing players inflate subscriber numbers. To add to this, the verification process is difficult and has to be done by Trai which has not done anything about this issue till date." She adds, "Only 5-7 MHz on an average is the bandwith provided per operator, which is very little when compared to the 10-11 MHz allocated abroad. This in turn leads to fragmentation of spectrum."

However, according to Pinal Patel, head, network planning, Aircel, "Spectrum is not being hoarded as new operators are growing. They will use up the spectrum alloted to them within one to two years, or else they will resort to mergers and acquisitions in case they are not doing well."

On the other hand, Girish Trivedi, deputy director, South Asia and Middle East, ICT practice, Frost & Sullivan feels that since spectrum allocation is based on the previous policies, there are loopholes. "However, there cannot be hoarding as we do not have as much spectrum as is available internationally," he says.

The loopholes, according to him, have resulted due to us having created our own methodology and not having followed international standards. "Scarcity is an open debate. We have given out more spectrum than we can afford. Thus, there needs to be discussions on limiting entry of new players, since there is not even enough spectrum available," he says.

De-linking Licenses
De-linking of spectrum from licenses has been touted as the way forward and a fair means for operators to provide a wider range of VAS to customers. It is felt that operators should have the means to pay for the spectrum, and it should not be given off freely with licenses as was the case earlier, especially with the increasing scarcity of this resource. This will also ensure that spectrum is being used optimally.

However, some analysts feel that de-linking should have been introduced in the beginning, as today such a policy will affect certain industry interests, especially greenfield operators.

According to Malik, "Spectrum should not be bundled with licenses. Instead, DoT can charge a flat fee for licensing. Licensing should just be a technical verification. There should then be bidding for spectrum in the open market, and spectrum needs should be met from the secondary market (if there is need to sell/buy spectrum from the other operators). Spectrum should be priced properly; when it is linked with licenses, it leads to hoarding."

Satyen Gupta, ex-principal advisor, Trai feels that some amount of spectrum should be both licensed and unlicensed as per the international practice. He says, "Unlicensed spectrum will encourage innovation and experimentation and added services. Ideally, there should be three slots of 100 MHz, that is 300 MHz of unlicensed spectrum. The rest should be licensed as there is less supply and more demand."

According to a Tata Teleservices spokesperson. "Any new entrant in the telecom industry can obtain a Special Purpose License (eg, wireline only) without the spectrum by way of paying the lesser entry fee than the present entry fee of Rs 1,651 crore. The Department of Telecommunications should strongly consider this."

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