India uncouples spectrum from telecom licenses

Melissa Chua
01 Feb 2011

India’s newly minted telecom minister has announced a policy shift that will see spectrum allocation delinked from telecom licenses.

Previously, operators paid $363 million for a pan-India license that constituted 4.4 Mhz of 2G spectrum at no additional cost.

The policy shift will affect both new and existing operators – new operators would have to pay ‘market prices’ for spectrum beyond 4.4 MHz, while existing operators would have to pay for spectrum beyond 6.2 MHz. As such, the likes of incumbents Bharti Airtel, Vodafone Essar and Idea Cellular can expect to be billed for spectrum they already hold.

New operators would be awarded the additional 1.8 Mhz of spectrum, once again at market price, based on eligibility criteria to be determined by the government, telecom minister Kapil Sibal said.

Pricing details have yet to be released, but spectrum is expected to be allocated via auction, as was the case with 3G spectrum allocation in the country.

The policy change is aimed at levelling the playing field in the country’s largely competitive telecoms market, but Tata Teleservices told the Times of India that the move would favour incumbents. The firm recommended all operators be given 6.2 MHz of spectrum to further regulate the market.

“Pricing of spectrum at market driven process will not have any impact on tariff for consumers,” Mahesh Uppal, director at ComFirst, a telecom consultancy firm told the Hindustan Times.

However, high spectrum costs could deter operators’ investments and lead to slow growth in the country, said a report in the Economic Times.

A report in the Financial Express estimated operators would have to foot 360 billion rupees ($7.86 billion) in total for the additional 1.8 Mhz of 2G spectrum if the government went according to prices set by last year’s 3G spectrum auctions.

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