Trai spectrum pricing plan a mixed bag

Earlier this month, Indian regulator Trai issued a set of recommendations on spectrum pricing that supplemented their proposals of May 2010 on refarming and licensing.

 

The Department of Telecommunications (DoT) recently accepted Trai’s recommendation to delink spectrum allocation from the licensing process, reversing the long-standing principle of 2G spectrum bundled (up to 6.2MHz spectrum for GSM, irrespective of frequency band) with a universal access license (UASL).

 

Operators now have to pay for their entire spectrum holdings, bundled and above, on a pro-rated ongoing basis and at license renewals.

 

In the previous recommendations, Trai suggested that 3G prices be used as the spectrum price, but the new recommendations set a price for the spectrum, both for the bundled amount and for spectrum holdings above 6.2MHz.

 

If the DoT makes this recommendation policy, it is a major development that will result in significant additional costs for operators, especially those facing license renewal in 2014.

 

But Ovum believes that delinking spectrum from the license is an important and necessary break from the confusing policy of bundling spectrum with the UASL, and will provide clarity by establishing that spectrum will not be free.

 

If applied uniformly, Trai’s recommendation will ensure that all operators pay the same price per MHz, and will address at least one necessary condition for a level playing field. The second necessary condition is to ensure that all operators receive equal amounts of spectrum, regardless of frequency bands.