Pricing India's 2G spectrum auction

Jayanth Kolla/Convergence Catalyst
06 Mar 2012

India's Supreme Court recently cancelled122 telecom licenses held by multiple carriers. The government is planning to auction the spectrum recalled from these license cancellations.

Historically in India, startup 2G spectrum was awarded along with operating licenses and additional spectrum was allocated as per subscriber-linked criteria. Spectrum for 3G and BWA (Broadband Wireless Access, potentially using 4G technologies) operations was awarded through the auction process.

The early (incumbent) GSM carriers received startup spectrum in the 900-MHz band, and over a period of time increased their spectrum holdings to between 6.2-MHz and 10-MHz per circle. The fourth carrier (and the subsequent entrants) received startup spectrum in the 1800-MHz band. The initial GSM round was allocated 4.4-MHz in metros (the 22 circles or license areas in India are classified into four different categories – metros, categories A, B & C).

When the Category B&C circles were introduced, another 1.8-MHz was allocated, with each carrier having 6.2-MHz. Category A carriers were allocated another 1.8-MHz, with their total raising to 8-MHz. Incumbent carriers lobbied for more spectrum in metros and were allocated a total of 10-MHz. In the CDMA 800-MHz band, which had limited spectrum of 20-MHz for allocation, incumbents Tata Teleservices and Reliance Communication received 3.75-MHz to 5 MHz-of spectrum, while new entrant MTS (Shyam Telelink) received only 2.5-MHz in most circles.

The BWA and 3G spectrum auctions held in mid-2010 added approximately $22 billion to the exchequer. Because of the high price paid for 3G spectrum, none of the private carriers managed to procure pan-India spectrum. Carriers primarily focused on acquiring 3G spectrum in circles in which they had an existing market leadership. During the BWA spectrum auction, new entrant Reliance-Infotel managed to acquire pan-India spectrum. But the other private carriers opportunistically acquired spectrum in various circles to compliment their 3G spectrum and/or in circles where the average mobile data usage was high.

Related content

No Comments Yet! Be the first to share what you think!