Recommendations On Spectrum Related Issues

Objective
In order to achieve the government's objective of 200 mn mobile subscribers by 2007, a considerable planning and definitiveness in spectrum allocation is required. For providing catalyst to second phase of growth, spectrum should not act as a bottleneck and a relatively liberal approach is desirable since the allocation of spectrum to Indian operators has been much below international benchmarks and even availability of spectrum is limited.

3G, an extension of 2G
The Authority recommends that 3G spectrum allocation to the existing operators should be viewed as an extension of 2G spectrum allocations.

Constitution of a Group
To meet the target and at the same time insurmountable difficulties faced by the Defense in vacating spectrum, TRAI recommends immediate constitution of a Group at the level of Ministers of Union Government assisted by professionals from the Defense, DoT, and TRAI to draw up a detailed, time-bound step-by-step program and monitor its implementation. The mandate of the group would have to include identification of alternative band, accessing and making available requisite funds, and assisting users on procedural aspects of quick procurement and installation of new equipment.

3G Recommendations
The allocation of available carriers in the 800 MHz band will provide immediate relief to CDMA operators but the problem will persist unless additional bands are identified. The authority is keeping the option open for allocation of additional spectrum in 1,800 MHz to both CDMA and GSM operators. It is appreciated that while the 1,800 MHz band is of immediate utility to GSM operators, the exploitation of this band by CDMA operators will take longer in terms of equipment availability. And it is expected that this band will contribute to the requirements in India beyond 2007. Keeping that in view the authority recommends that CDMA operators should be allocated additional spectrum in the 450 MHz band as and when they request. For GSM, the bands from which additional spectrum can be considered in this short time frame are 900 MHz in circles, 1,800 MHz, and IMT-2000 band.

Trials for mixed band Allocations
It is not desirable to allocate spectrum both in IMT-2000 and 1,900 MHz US PCS band in a mixed manner due to non-availability of 1,900 MHz US PCS band and interference issues.   

No Charges for 3G Spectrum
The authority recommends that there will be no one time spectrum charges for allocation of IMT 2000 spectrum to existing service providers. Presently, in addition to license fees (which varies from 0-15%), spectrum charges (2-6%, wherever applicable), the telecom service providers pay service tax of 10%. Since service providers are charged service tax, it would make economic sense to lower spectrum and license fee. So, no new spectrum charges for IMT 2000 band. For the new entrants, the authority recommends that the one time spectrum charges would be equal to UASL entry fee in that services area minus the component of registration charge based on the entry fee paid by new BSO (entered in/after 2001), specified by TRAI in its recommendations on unified licensing regime dated January 13, 2005.

Annual Spectrum Charges
As per the existing spectrum policy, the annual spectrum charges for GSM service providers are as follows: 2% of adjusted gross revenue (AGR) for spectrum usage up to 2x4.4 MHz, 3% of AGR for spectrum usage up to 2x6.2 MHz, 4% of AGR for spectrum usage up to 2x10 MHz, 5% of AGR for spectrum usage up to 2x12.5 MHz, and 6% of AGR for spectrum usage up to 2x15 MHz. For CDMA operators the annual spectrum charges are 2% of AGR for spectrum usage of up to 2x5 MHz. And beyond 2x5 MHz the charges shall be same for CDMA and GSM.

The authority recommends that the additional per MHz charge for IMT-2000 spectrum should be on the basis of highest charge per MHz per annum paid by any operators in different service areas. Authority also considers that these charges will be separate for different service areas.

Broadband Wireless Access
No specific recommendations possible as TRAI has not gathered enough information on BWA technologies

Recommendations on Allocation and Pricing of Spectrum for 3G and BWA Services

Objective
The current teledensity is 14.50 and we are close to reaching the tele-density target of 15 by 2010 as per NTP '99 targets. The Government's new target is to achieve 250 mn by the end of 2007. And future growth is dependent on availability of adequate spectrum.

3G, not an Extension of 2G
The authority recommends that 3G cannot be perceived as an automatic extension of 2G and would need to be viewed as a kind of stand alone service for specialized needs and its allocation criteria has to be specified separately.

Nripendra Misra, chairperson, TRAI

Formation of National Frequency Management Board
To coordinate the availability of spectrum it is proposed that a National Frequency Management Board (NFMB) may be constituted under the chairmanship of the minister of Communications & IT. Other members of NFMB include: chairman, TRAI; secretary, DoT; secretary, Defense; secretary, Department of Defense; secretary I&B; secretary DIT; chairman of the Railway Board; and two academicians from the field of telecom, IT spectrum policy, and related areas as its members.

3G Recommendations
The government should look into vacating 2x5 MHz spectrum in the 900 MHz band in order to refarm GSM operations within the band, and then allocate an additional 2x5 MHz for CDMA operations in the 800 MHz band. The 450 MHz band should also be identified for CDMA operators on a separate plank. The DoT should allocate 2x5 MHz in the 450 MHz band to one of the existing UASL CDMA operators. Given the current availability of 2x25 MHz of spectrum in the 2.1 GHz band, five operators should be accommodated in this band in the first lot. Spectrum allocations in the 2.1 GHz band thus should be done to all eligible UASL and CMSP licensee using fair and equitable norms.

Trials for Mixed Band Allocations
Trials should be conducted to verify practical feasibility of coexistence of mixed band allocations, and in case the coexistence is found feasible and economically practicable, then it should work towards refarming of the PCS 1900 band, specifically 2x10 MHz, to enable the future growth of 3G cellular services in India.

Spectrum Auctioning
The authority recommends an auction route for 2.1 GHz band. The auction bid priced will also affect the pricing of blocks in the 450 and 800 MHz bands. For the 2.1 GHz band, the authority recommends a simultaneous ascending auction system. The regulator recommends that the reserve price for spectrum auctions in the 2.1 GHz band for 2x5 MHz blocks of spectrum should be: Mumbai, Delhi, and category A circles-Rs 80 crore; Chennai, Kolkata, and category B circles-Rs 40 crore; and category C circles- Rs 15 crore.

The reserve price in case of bidding or spectrum acquisition fee otherwise will be equal to the second highest prorated bid price in the 2.1 GHz auction. Similarly, in the 450 MHz band, if more than one operator opts for 2x5 MHz, the regulator recommends a single stage bidding process to be conducted. The reserve price for 2x5 MHz in the 450 MHz band will be half of the reserve price set for 2.1 GHz band for that service area.

Annual Spectrum Charges
The regulator recommends that DoT should have a one year moratorium on incremental annual spectrum fess for 3G spectrum from the time of spectrum assignment. After this one year, the DoT should charge operators an additional annual spectrum charge of 1% of the operators' total AGR.                                  

Broadband Wireless Access
The regulator has opted for a forward looking spectrum policy and has taken into account the developments in BWA. And this will help in creating a clear and stable regulatory framework. The Authority recommends that at least 200 MHz of spectrum should be made available for BWA to accommodate growth requirement until 2007, and 300 MHz will be earmarked by 2010. The bands considered for BWA systems are: 700 MHz, 2.3-2.4 GHz, 2.5-2.69 GHz, 3.3-3.4 GHz, 3.4-3.6 GHz, 5.15-5.35 GHz, and 5.725–5.825 GHz.

The Authority recommends that BWA spectrum licenses should be for five years duration and renewable up to 20 years upon payment of the spectrum acquisition fee every five years.  The auction process would be a one stage sealed bid auction for every circle to allocate BWA spectrum for circle wide licenses. The reserve price for metro and A circle is Rs 10 crore for 15 MHz, B circle is Rs 5 crore for 15 MHz, and C circle is Rs 2 crore for 15 MHz. The performance bank guarantee is Rs 5 crore for metro and A circle, Rs 2.5 crore for B circle and Rs 1 crore for C circle respectively. No annual spectrum fees to be charged for the first year and after one year, the DoT should charge an annual fee of 1% of AGR.