Spectrum refarming to disrupt services?

NEW DELHI, INDIA: Even as the telecom regulator's recommendations on 2G spectrum auction left the industry fuming, the TRAI further added fuel to the fire by advocating that the government could get Rs.300,000 crore through spectrum refarming.

The telecom watchdog in its advisory note to the department of telecom said that those telcos holding airwaves in 800 MHz and 900 MHz bands should be replaced with the 1800MHz band. The bands vacated by operators should be auctioned so that the government could obtain Rs 300,000 crore for over a period of four years.

TRAI in its letter said the spectrum required for refarming be set aside since the value to be realized from the auction of 800 and 900 MHz spectrum is very large – of the order of Rs.3 lakh crore at the reserve price – besides involving issues of level-playing field.

The regulator suggested Rs.7,200 crore per MHz as the reserve price of spectrum in 800 MHz and 900 MHz band. The regulator also said that there is sufficient spectrum available to carry out the refarming exercise. "It would be a case of a precious opportunity lost if we were not to do the refarming at this stage,” it said.

Reacting to the proposal, COAI director general Rajan S Mathews told CIOL that it would cost a whopping moolah to service providers to replace 900MHz with 1800MHz network. The watchdog, he said completely ignored the operators.

"The refarming will result in huge disruption in network and decline in service quality. In addition, the existing service cost will increase steeply," Mathews informed. The process as experts believe may have technical glitches.

The industry believes that spectrum refarming would have adverse cost implications and regulator is unnecessarily imposing refarming on service providers. "There is serious public interest which has not been acknowledged by TRAI," said COAI.

ASSOCHAM, in its letter to the Prime Minister Manmohan Singh, said that refarming is expected to impact profitability of telcos due to increase in network operating expenditure.

"The proposed immediate refarming of spectrum would be detrimental for incumbents like Bharti Airtel, Vodafone, Reliance Communications, Idea Cellular and Tata Teleservices who have considerable share of spectrum in the 900/800 MHz category" the ASSOCHAM said.

Refarming will also lead vendors to create new sites and procure equipment.